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on International Trade |
| By: | Vincenzo Bove; Jessica Di Salvatore; Roberto Nisticò |
| Abstract: | We investigate the effect of economic sanctions on trade flows in countries sharing a border with the sanctioned state. On the one hand, trade models suggest that trade flows should decrease as sanctions disrupt trading routes and economic ties with suppliers and customers. On the other hand, countries can circumvent trade restrictions by clandestinely exchanging goods with sanctioned countries across the border and trading on its behalf. If this is the case, we should expect an increase in their imports and/or exports. |
| Keywords: | Economic sanctions, Trade, Synthetic control method, Sanctions |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2021-184&r= |
| By: | Robert Stehrer; Nina Vujanovic |
| Abstract: | The RCEP agreement, signed between ASEAN+3, New Zealand and Australia, forms the largest trade bloc in history, and will likely change the gravity of trade more towards Asia. This will pose large implications for its members that, due to economic and trade diversities, may not incur all economic benefits equally. This policy brief demonstrates that the countries encompassing the current trade bloc are large trade partners of the EU and Austria, and this trade embeddedness has been on the rise. High tech industries are particularly trade dependent on imports from this trade bloc, while significant value added from China is embodied in EU and Austrian service and goods exports. The assessment based on Caliendo-Parro is that due to formation of the bloc, trade with the EU may decline by -1%. Austrian export will suffer slightly more (-1.2%). However, more positive welfare effects might be generated from successful EU FDI inflows to the newly formed trade bloc, when possible. |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:wsr:pbrief:y:2022:i:054&r= |
| By: | Cigna, Simone; Vanessa.Gunnella; Quaglietti, Lucia |
| Abstract: | Global value chains (GVCs) have shaped the dynamics of globalisation in recent years. This paper reviews key concepts and tools to measure countries’ involvement in GVCs, explores recent trends and investigates the underlying drivers of GVC participation empirically. The analysis in the paper finds that in the last decade, GVCs have undergone an important transformation, with participation falling on the back of rising trade costs and the trade integration of some large emerging market economies slowing, while the role of recent technological developments remains unclear. In addition, supply chains appear to have become increasingly regional over time. The paper also offers an insight into the role of production chain linkages in the transmission of recent global shocks across countries, uncovering important amplification effects on trade and activity. Finally, it discusses future prospects for GVCs and global trade, including in the light of developments associated with the coronavirus pandemic. JEL Classification: F13, F14, F15, F23, F62 |
| Keywords: | COVID-19, globalisation, global value chains, gravity equation, trade slowdown |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:2022289&r= |
| By: | Robert W. Staiger |
| Abstract: | The design of a trade agreement should reflect its purpose. Does digital trade change the purpose of a trade agreement? To explore this question, I first describe the definitional and classification issues associated with digital trade, and for modeling purposes I adopt a simple taxonomy of the ways in which digital trade can arise and the policies that can be used to restrict such trade. I then review what the theoretical literature on the economics of trade agreements has to say about the purpose of a trade agreement in a pre-digital model world economy, and how this purpose can be seen to be reflected in the broad design features of both GATT and GATS, the WTO agreements that govern international trade in goods and services respectively. Finally, I introduce digital trade into the model world economy and revisit the purpose of a trade agreement. From this perspective I consider whether the rise of digital trade warrants changes in the design of the WTO. |
| JEL: | F02 F13 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29578&r= |
| By: | Dorn, David (University of Zurich); Levell, Peter (Institute for Fiscal Studies, London) |
| Abstract: | The share of low-income countries in global exports nearly tripled between 1990 and 2015, driven largely by the rapid emergence of China as an exporting powerhouse. While research in economics had long acknowledged that trade with lower-income countries could raise income inequality in Europe and the US, empirical estimates indicated only a modest contribution of trade to growing national skill premia. However, if workers are not highly mobile across firms, industries and locations, then the unequal impacts of trade can manifest along different margins. Recent evidence from countries across Europe and the US shows that growing import competition from China differentially reduced earnings and employment rates for workers in more trade-exposed industries, and for the residents of more trade-exposed geographic regions. These adverse impacts were often largest for lower-skilled individuals. We show that domestic manufacturing employment declined much more in countries that saw a large growth of net imports from China (such as the UK and the US), than in countries that maintained relatively balanced trade with China (such as Germany and Switzerland). Drawing on a new analysis for the UK, we further show that trade with China contributed to job loss in manufacturing, but also to substantial declines in consumer prices. However, while the adverse labour market impacts were concentrated on specific groups of workers and regions, the consumer benefits from trade were widely dispersed in the population, and appear similarly large for high-income and low-income households. Globalisation has thus created pockets of losers, and recent evidence indicates that in addition to financial losses, residents of regions with greater exposure to import competition also suffer from higher crime rates, a deterioration of health outcomes, and a dissolution of traditional family structures. We argue that new import tariffs such as those imposed by the US in 2018 and 2019 are unlikely to help the losers from globalisation. Instead, displaced workers may be better supported by a combination of transfers to avert financial hardship, skills training that facilitate reintegration into the labour market, and place-based policies that stimulate job creation in depressed locations. |
| Keywords: | trade, globalisation, inequality, employment, wages, consumer prices, public policy |
| JEL: | E31 F13 F14 F16 F23 I14 I38 J21 J23 J31 J61 J62 R11 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14914&r= |
| By: | Amendolagine, Vito |
| Abstract: | As the world becomes more and more integrated, participating in global production fragmentation by connecting to global value chains (GVCs) can provide a "golden" opportunity for developing countries to access international markets and boost economies. Vito Amendolagine analyses the extent to which international development lending can support African countries in trading intermediate goods with foreign partners with the goal of further specializing in high value-added activities within cross-national production networks. Based on his research, it appears that Chinese lending increases the involvement of borrowing countries in the international trade of intermediate goods, while World Bank loans contribute to move African countries toward higher valued added activities along international production chains. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:caripb:572021&r= |
| By: | Chang-Tai Hsieh (Booth School of Business, University of Chicago, Chicago, United States); Nicholas Li (Department of Economics, Ryerson University, Toronto, Canada); Ralph Ossa (Department of Economics, University of Zurich, Zurich, Switzerland); Mu-Jeung Yang (Department of Economics, University of Oklahoma, Norman, United States) |
| Abstract: | We propose a new suffcient statistic to measure the ex-post welfare gains from trade in CES models featuring any productivity distribution or pattern of selection into production and exporting. Our statistic is based on a single data moment, the change in the market share of continuing domestic producers, and a single structural parameter, the elasticity of substitution between products. We apply our statistic to measure Canada's gains from the Canada-US Free Trade Agreement using data on observed firm selection and simulated firm selection in a calibrated model with a flexible extensive margin. We find that welfare gains are substantially smaller than implied by welfare formulas that assume that the extensive margin behaves according to a standard Melitz-Pareto model with iso-elastic import demand. |
| Keywords: | welfare; gains; trade; liberalization; agreement; intra-industry; selection; extensive margin; |
| JEL: | F12 F14 F15 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:rye:wpaper:wp083&r= |
| By: | Marco A. Hernández Vega |
| Abstract: | This paper studies the macroeconomic impact of higher tariffs using a two-country DSGE model with endogenous trade and heterogeneous firms. The analysis consists of two scenarios. First, we assume that one country increases tariffs while the other does not. Second, both countries raise tariffs. In the first case, the country that did not raise tariffs suffers an economic contraction due to lower external demand. In turn, the one that imposed higher tariffs ends with a slight gain in output triggered by a surge in internal consumption originated from the transfer of tariff revenue to households. In the second case, however, both countries suffer a significant drop in exports, reducing dividends and wages paid, and decreasing consumption and output. |
| JEL: | F12 F13 F17 F41 F62 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdm:wpaper:2021-25&r= |
| By: | Nicolas Groshenny; Benedikt Heid; Tayushma Sewak |
| Abstract: | Uncertainty shocks have been shown to affect the real economy, but uncertainty remains about their trade effects and whether effects are similar across different types of uncertainty. We investigate how global economic, financial, and trade policy uncertainty affect the trade flows of the seven largest emerging economies (EM-7) using a panel structural vector autoregressive model. We find that: (1) Global economic and trade policy uncertainty shocks induce a protracted decline of about 4 to 5% in EM-7’s imports and exports. (2) Global economic and trade policy uncertainty act as trade barriers, reducing the EM-7’s degree of openness and their trade balance to GDP ratio. (3) Financial uncertainty only has a short-term impact on EM-7’s trade flows. (4) Trade policy uncertainty is the most important type of uncertainty affecting trade flows, explaining 11% of the variation in trade flows. |
| Keywords: | International trade, trade policy, uncertainty, emerging economies, panel VAR |
| JEL: | F13 F41 F62 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2021-84&r= |
| By: | Harvey, Oliver |
| Abstract: | The merits of Britain’s trade policy in the late nineteenth century have been long debated. Williamson and O’Rourke found a positive correlation between tariffs and growth across countries in the period, suggesting that free trade harmed the British economy. By contrast, Crafts and Broadberry disagree with the idea that the late Victorian slowdown in British productivity can be ascribed to weak exports, and instead highlight the benefits of openness to Britain’s services sector. This dissertation will aim to contribute to this debate by examining a little studied example of British soft protectionism. In 1887, Britain sought to protect manufacturers from competition in home and foreign markets by passing the Merchandise Marks Act. This required that a large share of imports had to be marked with an indication of their country of origin. It was hoped the Act would protect the reputation of British products, curtail unfair foreign trade practices, and encourage consumers to buy British products. While the Act was not a tariff, it generated controversies that echo those today over geographical indicators (GIs) and can be seen as an early form of non-tariff barrier. The second part of the dissertation addresses whether the Act affected British trade. I do not find evidence the Act was able to halt the advance of German manufacturing exports to Britain. But there is strong evidence that it damaged Britain’s entrepot trade and enhanced trade between commercial rivals and colonial markets. This supports Broadberry and Craft’s assertion that economic openness benefitted the British economy. |
| JEL: | N73 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:113000&r= |
| By: | Ahn, Soojung; Steinbach, Sandro |
| Abstract: | This paper assesses the determinants of temporary non-tariff measures (NTM) in response to the coronavirus pandemic and their implications for agricultural and food trade. Using a control function approach, we show that economic and pandemic considerations played an essential role in implementing such NTMs. Relying on variation between treated and untreated varieties, we estimate a dynamic postevent trade response of 29.9 percent for import facilitating and -10.7 percent for export restricting NTMs. After revoking them, their trade effects fade away, implying that they were effective in achieving the set policy goals, causing only a limited degree of long-term trade disruptions. |
| Keywords: | International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:assa22:316789&r= |
| By: | Gabriela López Noria |
| Abstract: | This paper assesses the effects of trade and technological change on Mexico''s labor market between 1994 and 2019. The implications of the exposure of local labor markets to greater trade integration under NAFTA and to greater competition from China in the US market are analyzed, as are the consequences of the exposure of local labor markets to automation. The main results show that trade integration under NAFTA promoted employment in Mexico for all demographic groups, especially for women and the less educated. In addition, it is also found that trade integration reduced unemployment and the non-participation rate. China''s competition in the US market had the opposite effects on these indicators. Finally, the analysis by sector (manufacturing and non-manufacturing) suggests that those markets susceptible to automation experienced a pattern of labor polarization. |
| JEL: | F13 F16 O33 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdm:wpaper:2021-22&r= |
| By: | Althouse, Jeff; Carballa Smichowski, Bruno; Cahen-Fourot, Louison; Durand, Cédric; Knauss, Steven |
| Abstract: | The ecologically unequal exchange (EUE) literature has provided ample empirical evidence for asymmetric transfer of material and energy resources from low-income to high-income countries. However, research has not been able to clearly specify the causal mechanisms driving these processes. This paper relates participation in global value chains (GVCs) to development patterns and ecologically unequal exchange. We conduct a principal components analysis and a clustering analysis along six dimensions (GVC participation, GVC value capture, investment, socioeconomic development, domestic environmental impact and international environmental balance) for 133 countries between 1995 and 2015. We find three social, ecological, productive development and GVC insertion patterns: “curse of GVC marginalization”, “ecologically perverse upgrading” and “reproduction of the core”. While our results confirm the asymmetry in ecological degradation between high-income and low-income economies shown by EUE, they support the existence of alternative mechanisms to account for it. We argue that environmental asymmetries are driven in large part by differences in how countries articulate within GVCs, and therefore cannot be ascribed to relations of ecologically unequal exchange, alone. Countries with a higher capacity to capture value from GVC participation (“reproduction of the core”) are able to displace environmental impacts to countries facing a trade-off between the positive socio-economic impacts of rapid GVC integration and ecological degradation (“ecologically perverse upgrading”). GVC marginalization, in turn, constitutes a barrier to socio-economic benefits and to imported ecological degradation. However, the lack of diffusion of more ecologically-efficient processes through GVCs has a negative impact on domestic ecological degradation for countries of the “curse of GVC marginalization” group. |
| Keywords: | Global Value Chains; Ecologically unequal exchange; Development patterns |
| Date: | 2022–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus045:8529&r= |
| By: | Bouklia Nawel (Algiers3 University Algeria) |
| Abstract: | This study aims to identify the foreign trade and its impact on economic growth in Algeria for the period (1991-2017). The results indicate that there is a positive relationship between exports and economic growth. Thus, the result of study recommends the need to encourage and develop the non-oil sectors, as it is exposed to risk due to the volatility of their prices. Therefore, it calls for the elimination of the unilateral sector . |
| Keywords: | Foreign trade,Trade balance,Gross Domestic Product,Model ARDL. |
| Date: | 2021–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-03452780&r= |
| By: | Christophe Gouel; Sébastien Jean |
| Abstract: | This paper shows how gains from trade are conditioned by love of variety, defined as the extent to which an additional product variety generates benefits in either final or intermediate consumption. We develop a multi-country, multi-sector gravity trade model where love of variety is parameterized separately from product substitutability using a generalized CES demand function, and show analytically how gains from trade depend on love of variety through different channels that we identify and interpret. In this context, except for very specific parameterizations, gains from trade differ between a heterogeneous- and a homogeneous-firm model. Counterfactual simulations based on a calibrated version of this model show that, all other things being equal, the assessed gains from trade commonly vary by a proportion of one to three depending on the value of the love-of-variety elasticity, in a way that differs significantly across countries. Trade war simulations also point to the strong sensitivity of the assessed impacts. We conclude that love of variety is a key determinant of the gains from trade, an aspect that has so far been overlooked for the sake of convenience in the modeling framework and due to lack of empirical estimates. |
| Keywords: | international trade, firm heterogeneity, gains from trade, gravity, love of variety |
| JEL: | F11 F12 F13 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9460&r= |
| By: | Kohnert, Dirk |
| Abstract: | The social fabric of the migrant’s host country largely embodies major traits of the exclusion of ‘strangers’. The latter often focus on ethnicity, race, religion, sexual orientation and gender. This applies also to the Afrophobia which spreads in contempory China. Thus, current news focused on the eviction of African migrants from apartments and hotels in China. Actually, an estimated 500.000 Africans live in China. The Corona pandemic aggravated their situation. The scarcity of Chines immigration assistance posed a challenge for Africans looking to secure residence permits, renew visas, or amend their status in other ways. They had to rely on informal or illicit networks to remain in the country. The African Union, various African governments and even the United States put pressure on Beijing over the ill-treatment of migrants, predominantly from Nigeria, Ghana, Kenya and Uganda. Shortly before, five Nigerians had been reportedly tested positive for Covid-19 in Guangzhou, the metropolis where most Africans live and work, nicknamed ‘Little Africa’. These reports seem to be what has sparked the current wave of suspicion and anti-foreigner sentiment. Many African students and other migrants had left China already at the start of the outbreak. The remaing got stranded and chased around. Yet, even Chinese state media admitted that non-African foreigners like Americans and Filipinos, who accounted for more than half of foreigners living in Guangzhou who had the virus, were not singled out as scapegoats. However, racist attacks on Africans in China had a depressing long tradition, related to the expansion of bilateral petty trade of Chinese in Sub-Sahara Africa since the early 2000s and the subsequent influx of African traders in China. Already in 2008 African migrants had blocked a major street in Guangzhou protesting against the death of a Nigerian in an immigration raid. |
| Keywords: | China, Africa, international migration, xenophobia, Afrophobia, racism, political violence, Afro-China relations, informal sector, illegal immigration, forced migration, slave-trade, minorities, remittances |
| JEL: | F16 F22 F24 F51 F54 I24 I31 J46 J61 N15 N35 O15 O17 O35 Z13 |
| Date: | 2022–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:111346&r= |
| By: | Yotov, Yoto (Drexel University) |
| Abstract: | On the eve of its 60th anniversary, the gravity model of trade is a `celebrity', due to its intuitive appeal, solid theoretical foundations, and remarkable empirical success. Yet, many economists still view gravity simply as an intuitive but naive reduced-form estimating equation and apply it without guidance from theory, while others are skeptical about its usefulness for counterfactual projections. The objective of this paper is to celebrate the anniversary of gravity by offering a historical overview of its evolution from an a-theoretical application to an estimating computable general equilibrium (E-CGE) model, which can be nested in more complex frameworks. Along the way, I address some misconceptions about the gravity model, summarize the current best practices for gravity estimations, and highlight some properties that have made gravity so successful |
| Keywords: | Structural Gravity; Evolution; Theory; Estimation; General Equilibrium |
| JEL: | F10 F14 F16 |
| Date: | 2022–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2022_001&r= |
| By: | Piyush Panigrahi |
| Abstract: | Larger Indian firms selling inputs to other firms tend to have more customers, tend to be used more intensively by their customers, and tend to have larger customers. Motivated by these regularities, I propose a novel empirical model of trade featuring endogenous formation of input-output linkages between spatially distant firms. The empirical model consists of (a) a theoretical framework that accommodates first order features of firm-to-firm network data, (b) a maximum likelihood framework for structural estimation that is uninhibited by the scale of data, and (c) a procedure for counterfactual analysis that speaks to the effects of micro- and macroshocks to the spatial network economy. In the model, firms with low production costs end up larger because they find more customers, are used more intensively by their customers and in turn their customers lower production costs and end up larger themselves. The model is estimated using novel micro-data on firm-to-firm sales between Indian firms. The estimated model implies that a 10% decline in inter-state border frictions in India leads to welfare gains ranging between 1% and 8% across districts. Moreover, over half of the variation in changes in firms’ sales to other firms can be explained by endogenous changes in the network structure. |
| Keywords: | production networks, international trade, economic geography |
| JEL: | F11 F12 D24 C67 C68 L11 O11 O12 R12 R15 D85 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9466&r= |
| By: | JaeBin Ahn; Jee-Hyeong Park |
| Abstract: | An exploration of Korean MNCs¡¯ foreign affiliate-level data reveals that a signi`ficant portion of manufacturing foreign affiliates sell both to related and unrelated firms at the same time. We refer to this as hybrid vertical FDI. We rationalize the presence of hybrid vertical FDI by modifying the otherwise standard property?rights model of global sourcing with the subsidiarylevel option of supplying inputs to unrelated customers in addition to related firms. Given the positive production externality from serving additional customers?that is proportional to the MNC¡¯s productivity?and the costs of getting such benefit?that are increasing in relationship-specificity of the outsourced inputs, the model predicts a couple of testable hypotheses that are robustly confirmed by our subsequent empirical analysis. |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:snu:ioerwp:no140-1&r= |
| By: | Mr. Alexei Goumilevski; Narek Ghazaryan; Aneta Radzikowski; Mr. Joannes Mongardini |
| Abstract: | This paper extends earlier research by adding SWIFT data on documentary collections to the short-term forecast of international trade. While SWIFT documentary collections accounted for just over one percent of world trade financing in 2020, they have strong explanatory power to forecast world trade and national trade in selected economies. The informational content from documentary collections helps improve the forecast of world trade, while a horse race with machine learning algorithms shows significant non-linearities between trade and its determinants during the Covid-19 pandemic. |
| Keywords: | SWIFT; trade forecast; machine learning |
| Date: | 2021–12–17 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2021/293&r= |
| By: | Ofori, Isaac K.; Asongu, Simplice A. |
| Abstract: | This study examines whether the remarkable inflow of resources in the form of foreign direct investment (FDI) to SSA contributes to inclusive growth in the region. The study further investigates whether SSA’s institutional fabric modulates the effect of FDI on inclusive growth in SSA. To this end, we draw data on 42 SSA countries for the period 1990 – 2020 for the analysis. The evidence, which are based on the GMM estimator shows that: (1) though FDI fosters inclusive growth in SSA, the effect is weak, and (2) the weak inclusive growth inducing-effects of FDI are weakened or nullified completely by SSA’ fragile governance quality. Nonetheless, the optimism, which we provide by way of threshold analysis shows that channelling resources into the development of these governance dynamics yield positive net effects from the short-term through to the long-term. Notably, the results show that the short-term to long-term FDI-induced inclusive growth gains of developing frameworks and structures for fighting corruption while addressing fragilities in regulatory quality and government effectiveness are outstanding. A few policy recommendations are discussed in the end. |
| Keywords: | AfCFTA; Africa; Economic Integration; FDI; Governance; Inclusive Growth |
| JEL: | F21 F6 F63 I3 O17 O55 R5 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:111359&r= |
| By: | Ibrahim A. Adekunle (Ilishan-Remo, Ogun State, Nigeria); Abayomi T. Onanuga (Ago-Iwoye, Ogun State, Nigeria); Ibrahim A. Odusanya (Ago-Iwoye, Ogun State, Nigeria) |
| Abstract: | In this study, we examine the benefits of financial integrations in four of Africa regional trade blocs: COMESA, ECCAS, CEN-SAD and ECOWAS. We regress de-jure and de-facto indices of financial integration on growth outcome using the dynamic system generalised method of moment and pooled mean group estimation procedure. Findings revealed that total foreign asset and liabilities and foreign liabilities as a percentage of GDP are inversely related to growth outcomes in COMESA. In CEN-SAD, we found that foreign liabilities as a percentage of GDP hurts growth. In ECCAS, growth-financial integration relationship showed that foreign liabilities as a percentage of GDP inhibit real per capita GDP in the long run. In ECOWAS, foreign liabilities as a percentage of GDP is inversely related to real per capita GDP in the long run. Policy implications of our findings were discussed. |
| Keywords: | Financial Integration; Economic Growth; system GMM; Pooled Mean Group; Regional Trade Bloc; Africa |
| JEL: | F36 F43 O47 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:abh:wpaper:21/052&r= |
| By: | Isabelle Tsakok |
| Abstract: | The African Continental Free Trade Area (AfCFTA) gives Mauritius the golden opportunity to access Africa’s vast market of 1.3 billion people, with an estimated GDP of $3.4 trillion. This opportunity could not have come at a better time, as Mauritius suffered a heavy blow from the COVID-19 pandemic in 2020. It also lost its preferential trade agreements on sugar and textiles in the 2000s, and has struggled with diminished export and productivity growth. To turn this opportunity into a new engine of growth, Mauritius must once again transform itself from an economy that relies on labor-intensive sectors to a new foundation of knowledge-intensive sectors of the fourth industrial revolution (4IR). This is a daunting challenge, especially in the fiscally constrained environment post COVID-19. The successful experiences of the European Union, ASEAN and MERCOSUR (though to a lesser extent) show that their visionary leaders transformed their shattered countries into vibrant economies delivering sustained growth and poverty reduction by relentlessly pursuing and expanding regional market integration. Mauritius can derive useful insights on how to move forward not only from these successful experiences but also from its own ability to turn crisis into opportunity by developing new and diversified markets. |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:ocp:ppaper:pb39-21&r= |
| By: | Sebastián Fanelli (Centro de Estudios Monetarios y Financieros); Juan Carlos Hallak (IIEP-UBA / CONICET) |
| Abstract: | Two central facts characterize the dynamics of firm exports. One is the known fact that export survival rates are strikingly low one year after entering a foreign market. The other is the novel fact that re-entrants in export markets are more likely to survive than first-time entrants. Traditional models of exporter dynamics cannot explain these two facts. In this paper, we develop a tractable model of exporter dynamics that can explain them by introducing uncertainty and experimentation. The model delivers analytical predictions on survival probabilities upon entry in a foreign market. We test the main mechanism of the model by exploiting variation in the degree of uncertainty across products and markets. The results support the relevance of uncertainty and experimentation as a central feature that characterize exporter dynamics. |
| Keywords: | Exporter dynamics, uncertainty, experimentation, foreign demand, geometric brownian motion |
| JEL: | F10 F12 F14 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:aoz:wpaper:87&r= |
| By: | Gary Clyde Hufbauer (Peterson Institute for International Economics); Megan Hogan (Peterson Institute for International Economics) |
| Abstract: | Rapidly expanding digital flows have significantly contributed to world economic growth. The exponential expansion of digital flows since 2005 has partially compensated for lethargic growth in global conventional trade and foreign direct investment flows. COVID-19 accelerated the digital revolution in 2020, as businesses and consumers increasingly "went digital" in everything from online education and work to shopping. Many countries, particularly the United States, have enormous commercial and cultural interests in preserving the freedom of cross-border digital traffic. Strong international agreements can keep digital highways open, but agreements reached so far do too little to discipline government practices that threaten to restrict digital flows, allowing ample room for ideological and protectionist obstacles. A new and better agreement is necessary to safeguard the growth of digital flows. |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb21-22&r= |
| By: | Barlow, Pepita; Gleeson, Deborah; O'Brien, Paula; Labonte, Ronald |
| Abstract: | Background Accelerating progress to implement effective alcohol policies is necessary to achieve multiple targets within the WHO’s Global Strategy to Reduce the Harmful Use of Alcohol and the Sustainable Development Goals. Yet, the alcohol industry’s role in shaping alcohol policy through international avenues, such as trade fora, is poorly understood. We investigate whether the World Trade Organization (WTO) is a forum for alcohol industry influence over alcohol policy. Methods We studied discussions on alcohol health-warning labelling policies at WTO’s Committee on Technical Barriers to Trade from 2010-2019 using written meeting minutes (n=83 documents). We identified instances where WTO members indicated that their statements represented industry. We further developed and applied a taxonomy of industry rhetoric to identify whether WTO member statements advanced arguments made by industry in domestic forums. Findings WTO members made 212 statements on ten alcohol labelling policy proposals. Statements featured many arguments used by industry to stall alcohol policy at the domestic level. They included de-scaling and re-framing the nature and causes of alcohol-related problems, promoting alternative policies such as information campaigns and industry partnerships. WTO members stated that their claims represented industry in 3.3% of statements, whereas 55.2% of statements featured industry arguments. Interpretation WTO discussions on alcohol health-warnings advance arguments used by the alcohol industry in domestic settings to undermine effective alcohol policy. WTO members appear to be influenced by alcohol industry interests, despite a minority of challenges explicitly referencing industry demands. Greater transparency about vested interests may be needed to overcome industry influence |
| Keywords: | Internal OA fund |
| JEL: | L81 |
| Date: | 2021–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:112962&r= |
| By: | Pierre L Siklos |
| Abstract: | I revisit the 1918-20 pandemic and ask whether it led to a reversal in the rise of trade and financial globalization that preceded it. Using annual data for 17 countries for the 1870-1928 period, a variety of tests and techniques are used to draw some robust conclusions. Overall, the pandemic a century ago interrupted, but did not put an end, the first globalization of the 20th century. However, two blocs consisting of combatant and non-combatant countries, experienced significantly different consequences. Globalization was sharply curtailed for the combatant countries while there were few, if any, consequences for globalization in the non-combatant group of countries. That said, there was considerable resilience especially in trade openness among several of the combatant economies. Perhaps changes in the make-up of economic blocs, post-pandemic, is a fallout from shocks of this kind. While there are lessons for the ongoing COVID pandemics differences between the 1920s and today also play a role. |
| Keywords: | Great Influenza 1918-20, globalization, openness, financial integration |
| JEL: | N10 O57 F15 F36 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2021-95&r= |
| By: | Isaac K. Ofori (University of Insubria, Varese, Italy); Toyo A. M. Dossou (Chengdu, China); Simplice A. Asongu (Yaoundé, Cameroon); Mark K. Armah (University of Cape Coast, Cape Coast, Ghana) |
| Abstract: | In line with the SDG 10 and Aspiration 1 of Africa’s Agenda 2063, this study examines whether: (i) the remarkable inflow of Chinese FDI to Africa matters for bridging the continent’s marked income inequality gap, (ii) Africa’s institutional fabric is effective in propelling Chinese FDI towards the equalisation of incomes in Africa, and (iii) there exist relevant threshold levels required for the various governance dynamics to cause Chinese FDI to equalise incomes in Africa. Our results, which are based on the dynamic GMM estimator for the period 1996 – 2020, reveal that though: (1) Chinese FDI contributes to equitable income distribution in Africa, the effect is weak, and (2) Africa’s institutional fabric matters for propelling Chinese FDI towards the equalisation of incomes across the continent, governance mechanisms for ensuring political stability, low corruption, and voice and accountability are keys. Finally, critical masses required for these three key governance dynamics to propel Chinese FDI to reduce income inequality are 0.8, 0.5 and 0.1, respectively. These critical masses are thresholds at which governance is a necessary but no longer a sufficient condition to complement Chinese FDI in order to mitigate income inequality. Hence, at the attendant thresholds, complementary policies are worthwhile. Policy recommendations are provided in the end. |
| Keywords: | Africa, Agenda 2063, China, Corruption, Governance, FDI, Income Inequality |
| JEL: | F6 F15 O43 O55 R58 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:21/098&r= |
| By: | Basu, Arnab K. (Cornell University); Chau, Nancy H. (Cornell University); Park, Brian (Cornell University) |
| Abstract: | Canonical models of migration feature border enforcement as a strategy to contain undocumented immigration by effectively exacting a mobility cost. This paper revisits the role of border enforcement policy in a task-based model of the labor market where employers simultaneously hire circular migrants to take temporary tasks at low wages, in addition to permanent and native workers who perform complementary tasks at the efficiency wage. We show that stricter border enforcement is effectively a tax on temporary employment, and as such it incentivizes the reallocation of work along the task spectrum. Employers’ dependence on low-wage transient work force diminishes, while more migrants prefer permanent migration, with labor market tightness consequences that favor both native and migrant workers. We explore the empirical implication of this finding, by investigating the pattern of spousal reunion among Mexican agricultural workers in the United States subsequent to major border enforcement reforms in the 1990’s. |
| Keywords: | labor shortages, family migration, circular migration, border enforcement |
| JEL: | F22 J61 J68 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14867&r= |
| By: | Selcuk Gul; Abdullah Kazdal |
| Abstract: | Previous evidence on the impact of real exchange rate developments on Turkey's exports suggests that the effect is weak while the key determinant of exports is foreign income. Using recent data, this study provides rolling estimates that indicate an increase in the statistical significance and absolute magnitude of the real exchange rate elasticity of exports after the real depreciation of the Turkish lira in recent years. In this context, the cumulative decline in the real exchange rate in recent years is considered one of the factors that boosted Turkish exports. However, the findings confirm that the main determinant of Turkey’s exports is the changes in the incomes of trading partners and real exchange rate movements have a relatively limited effect on exports compared to that of the foreign income. Given that the sectors have quite different structures, the significance of the real exchange rate elasticities and their absolute size differ; yet, the effect of the real exchange rate on exports has increased more recently in most sectors. Finally, while interpreting the findings of the study, it should be taken into account that, in addition to trade channel, real exchange rate movements have effects on the economy through firm and household balance sheet channels. |
| Keywords: | Export, Real exchange rate elasticity, ARDL, Rolling estimates |
| JEL: | C22 F14 F31 F41 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:2138&r= |
| By: | Arthur Blouin; Sayantan Ghosal; Sharun W. Mukand |
| Abstract: | We analyze whether or not the globalization of capital, 'disciplines' governments and improves governance. We demonstrate that globalization affects governance, by increasing a country's vulnerability to sudden capital flight. This increased threat of capital flight can discipline governments and improve governance and welfare by placing countries in a 'golden straitjacket'. However, globalization may also 'overdiscipline' governments - resulting in a perverse impact on governmental incentives that catalyzes (mis)governance. Accordingly, the paper suggests a novel (and qualified) role for capital controls. Finally, we provide some evidence consistent with the predictions from our theoretical framework. |
| Keywords: | Globalization, Governance, Capital Flight, Capital Controls, Discipline. |
| JEL: | F55 F36 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2022_01&r= |
| By: | V\'it Mach\'a\v{c}ek |
| Abstract: | This study measures the tendency to publish in international scientific journals. For each of nearly 35 thousands Scopus-indexed journals, we derive seven globalization indicators based on the composition of authors by country of origin and other characteristics. These are subsequently scaled up to the level of 174 countries and 27 disciplines between 2005 and 2017. The results indicate that advanced countries maintain high globalization of scientific communication that is not varying across disciplines. Social sciences and health sciences are less globalized than physical and life sciences. Countries of the former Soviet bloc score far lower on the globalization measures, especially in social sciences or health sciences. Russia remains among the least globalized during the whole period, with no upward trend. Contrary, China has profoundly globalized its science system, gradually moving from the lowest globalization figures to the world average. The paper concludes with reflections on measurement issues and policy implications. |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2112.02672&r= |
| By: | Kurmas Akdogan; Laura Werner |
| Abstract: | This article examines hysteresis in export entry-exit decisions of the Turkish manufacturing sector using the Preisach method. As the argument goes, sunk costs imply threshold levels of the exchange rate affecting the export market entry-exit behaviour of firms. The wait-and-see behaviour of firms in between these thresholds results in hysteresis in export markets at the aggregated level. Our results suggest sunk cost hysteresis for five subsectors of the Turkish manufacturing sector: clothing, textiles, machinery, tobacco products and communication equipment. The article also provides a more detailed look on the determinants of hysteresis behaviour in the clothing sector. |
| Keywords: | Hysteresis, Exports, Preisach method, Nonlinearity, Path-dependency |
| JEL: | C19 F14 L60 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:2136&r= |
| By: | Samuel Bazzi; Lisa Cameron; Simone G. Schaner; Firman Witoelar |
| Abstract: | Job seekers often face substantial information frictions related to potential job quality. This is especially true in international labor markets, where intermediaries match prospective migrants with employers abroad. We conducted a randomized trial in Indonesia to explore how information about intermediary quality shapes migration choices and outcomes. Information reduces the migration rate, lowering use of low-quality intermediaries. However, workers who migrate receive better pre-departure preparation and have higher-quality job experiences abroad, despite no change in occupation or destination. Information does not change intentions to migrate or beliefs about the return to migration or intermediary quality. Nor does selection explain the improved outcomes for workers who choose to migrate with the information. Together, our findings are consistent with an increase in the option value of search: with better ability to differentiate offer quality, workers become choosier and ultimately have better migration experiences. This offers a new perspective on the importance of information and matching frictions in global labor markets. |
| JEL: | D83 F22 L15 O15 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29588&r= |
| By: | Samson N. Okafor (Central Bank of Nigeria, Abuja, Nigeria); Chukwunonso Ekesiobi (Chukwuemeka Odumegwu Ojukwu University, Nigeria); Ogonna Ifebi (Chukwuemeka Odumegwu Ojukwu University, Nigeria); Stephen K. Dimnwobi (NnamdiAzikiwe University, Awka, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon) |
| Abstract: | Aware of the nature of deficits in the current account, fiscal account, and the financial account balances of the countries in the Sub-Saharan Africa (SSA) region, this inquiry assessed the relationship between these deficits and the implication of such relationship for the African Continental Free Trade Area (AfCFTA). To do this, the study adopted panel data analysis techniques using the Pooled Mean Group-Autoregressive Distributed Lag (PMG-ARDL) specifications to test for the Triple Deficit Hypothesis (TDH) in the region. The findings of the study revealed the presence of the TDH in SSA where bidirectional causality exists between current account balance and budget balance, and between saving gap and current account balance, with a unidirectional causality running from budget balance to saving gap. The adoption of sound fiscal, monetary, and trade interventions in the region constitutes the major policy recommendations. |
| Keywords: | Triple Deficit Hypothesis; Sub-Saharan Africa; African Continental Free Trade Area |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:21/093&r= |
| By: | Pairault, Thierry |
| Abstract: | Although little research exists on business engagement between French and Chinese companies in Africa, Thierry Pairault offers in this policy brief many significant examples of French and Chinese engagement. While African governments want to carry out infrastructure projects at the lowest cost, they also want to ensure projects are carried out according to certain technical standards they are familiar with. Hence, at least in French-speaking countries, we see the choice of Chinese contractors to build and French engineering firms to supervise and manage. Read on to see how the future of any cooperation will lie with the business sector, and with individual firms. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:caripb:502020&r= |
| By: | Zhang, Hong |
| Abstract: | Do Chinese international construction and engineering contractors (ICEC) in Africa have any agency themselves, or are their strings tightly controlled by the Chinese state? Join Hong Zhang as she unpacks the role of ICECs in China's international economic relations – her findings based on primary Chinese sources may surprise you. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:caripb:562021&r= |
| By: | Taiwo, Kayode |
| Abstract: | Remittance flows to developing countries are now triple official development assistance and larger than foreign direct investment. The surge in remittances now occupies important position in development equation as remittances are seen as cheap resources for development. African governments are no exception among developing nations chasing remittances. Policymakers are making efforts to attract remittances to provide needed resources for economic transformation. In this study, an attempt is made to explore the impact of remittance flows on economic growth in Africa, considering efforts at attracting remittances. The impact of remittances is estimated using static and dynamic panel methods with data spanning 1975 to 2015. The study finds that remittances do not have an impact on economic growth in Africa. This conclusion is hinged on measurement issues, internal conditions, labour market implications, and the effect of remittances on tradable sectors. |
| Keywords: | Migration, Remittances, Economic growth, Panel data, Africa |
| JEL: | C33 F22 F43 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:111029&r= |
| By: | Munyi, Elijah |
| Abstract: | The past decade has seen a rise in the global share of Chinese defense sales – in this publication, Elijah N. Munyi looks at the implications for the African continent. Munyi examines the motivations for some African states' growing preference for Chinese arms with a particular focus on case studies conducted in Uganda and Kenya. Read on to find out how Prof. Munyi delves into the nuance behind the preferences for military procurement. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:caripb:492020&r= |
| By: | Munemo, Jonathan |
| Abstract: | As Chinese loans to Africa have been on an upward trajectory for more than a decade, there are questions about the economic consequences that large scale borrowing from China has on African economies. Jonathan Munemo investigates the impact these rising loans have on entrepreneurship and finds that African countries with a higher percentage of economic infrastructure loans have greater entrepreneurship in the form of new business startups. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:caripb:552021&r= |
| By: | Ibrahim A. Adekunle (Ilishan-Remo, Ogun State, Nigeria); Sheriffdeen A. Tella (Olabisi Onabanjo University, Ago-Iwoye, Nigeria) |
| Abstract: | African nations have in time, passed over-relied on remittances inflow to augment domestic finances needed for growth. Despite the volume and magnitude of remittances that have to serve as an alternative source of investment financing, African remains mostly underdeveloped. The altruistic motives of sending remittances to Africa are likely to fade with time. In this study, we argued that the altruistic connection that has been the bedrock of sending money to African countries would eventually fade when the older generation passes away. To lean empirical credence to this assertion, we examine the structural linkages and the channels through which remittances predicts variations in financial developmentas a threshold for gauging the future of African economies. We gathered panel data on indices of remittances and financial development for thirty (30) African countries from 2003 through 2017. We employed the dynamic panel system generalised method of moment (dynamic system GMM) estimation procedure to establish a baseline level relationship between the variables of interest. We adjusted for heterogeneity assumptions inherent in ordinary panel estimation and found a basis for the strict orthogonal relationship among the variables. Findings revealed that a percentage increase in remittances inflow has a short-run, positive relationship with financial development in Africa. The result further revealed that the exchange rate negatively influences financial development in Africa. Based on the findings, it is suggested that, while attracting migrants' transfers which can have significant short-run poverty-alleviating advantages, in the long run, it might be more beneficial for African governments to foster financial sector development using alternative financial development strategies in anticipation of a flow of remittance that will eventually dry up. |
| Keywords: | Remittance; Financial Development; African Economies; System GMM; Africa |
| JEL: | F37 G21 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:abh:wpaper:21/053&r= |
| By: | Chen, Yunnan |
| Abstract: | Nigeria has been a primary destination for Chinese investment in the last two decades, as Chinese entrepreneurs and investors have been drawn by rich resources and huge market potential. However, challenges remain in harnessing the potential of this growing manufacturing investment for the structural transformation of the economy. This paper assesses the evolving landscape of Chinese investment in manufacturing and potential for technology transfers, finding a growing Chinese presence in manufacturing sectors, particularly in construction and consumer sectors. However technology transfer within these is highly uneven, and challenged by economic and policy instability in recent years. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:caripb:432020&r= |
| By: | Michel Beine; Gary Charness; Arnaud Dupuy |
| Abstract: | Estimating the impact of risk aversion on emigration at the individual level is complicated by selection issues. In this paper, we use original data from Albania on mobility intentions and elicited risk aversion to provide causal estimates on this relationship. Our identification strategy relies on the occurrence of two earthquakes during data collection that unambiguously led to upward shifts in risk aversion as shown in a companion paper (Beine et al., 2021). While OLS estimates fail to capture a (negative) relationship between risk aversion and emigration intention, a Control Function strategy using the two earthquakes as instruments uncovers such a relationship. We argue that our results highlight a new channel through which risk preferences explain the trapped population phenomenon documented in the climate change and migration literature. |
| Keywords: | emigration, risk aversion, earthquakes, trapped population phenomenon |
| JEL: | F22 O15 P16 O57 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9484&r= |