nep-int New Economics Papers
on International Trade
Issue of 2022‒03‒28
thirty papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Cutting through the Value Chain: The long-run effects of decoupling the East from the West. By Gabriel Felbermayr; Hendrik Mahlkow; Alexander Sandkamp
  2. Does distance shape the effect of PTAs on bilateral trade flows? A multilevel approach. By Alejandra Martínez Martínez; Silviano Esteve Pérez; Salvador Gil Pareja; Rafael Llorca Vivero
  3. The Effect of COVID-19 on Foreign Direct Investment By Hayakawa, Kazunobu; Lee, Hyun-Hoon; Park, Cyn-Young
  4. Standards and regulatory cooperation in Regional Trade Agreements: What the effects on trade? By Santeramo, Fabio; Lamonaca, Emilia
  5. Triangle Inequalities in International Trade: The Neglected Dimension By Foellmi, Reto; Hepenstrick, Christian; Torun, David
  6. On export duration puzzles By Carl Gaigné; Bruno Larue; Wendkouni Jean-Baptiste Zongo
  7. EU in Search of a WTO-Compatible Carbon Border Adjustment Mechanism By Cecilia Bellora; Lionel Fontagné
  8. On the Trade Effects of Bilateral SPS Measures in Developed and Developing Countries By Santeramo, Fabio; Lamonaca, Emilia
  9. The Impact of Technical Barriers to Trade and Sanitary and Phytosanitary Measures on Trade in the Forest-Wood-Paper Sector. By Bossoma Doriane N'Doua
  10. On Export Duration Puzzles By Carl Gaigne; Bruno Larue; Wendkouni Jean-Baptiste Zongo
  11. Global Value Chains in the Post-pandemic World: How can the Western Balkans Foster the Potential of Nearshoring? By Zuzana Zavarská
  12. The Long-Term Effects of War on Foreign Direct Investment and Economic Development: Evidence from Vietnam By Nguyen, Cuong; Tran, Tuyen; Vu, Huong
  13. Integrating Sustainable Trade Principles in Uzbekistan By Rahmetov, Anvar; Rakhmetova, Malika
  14. Trade Wars, Currency Wars By Stéphane Auray; Michael B. Devereux; Aurélien Eyquem
  15. The Dispersion of Mark-ups in an Open Economy By Stéphane Auray; Aurélien Eyquem
  16. The Real Effects of Invoicing Exports in Dollars By Antoine Berthou; Guillaume Horny; Jean-Stéphane Mésonnier
  17. French domination of markets in Francophone Africa: Post-colonialism at its finest? By Kohnert, Dirk
  18. Duration of WTO Membership and Investment-Oriented Remittances Flows By Gnangnon, Sèna Kimm
  19. Trade and Environment Policies: Synergies and Rivalries By Santeramo, Fabio
  20. 탄소국경조정제도(CBAM)에 대한 중소기업 대응방안 연구 (A Study on Korean Smes Policies for the Carbon Border Adjustment Mechanism (CBAM)) By Park, Hyeri; Park, Ji Hyun
  21. Monthly Report No. 9/2021 By Vasily Astrov; Rumen Dobrinsky; Olga Pindyuk; Leon Podkaminer
  22. M&As and Their Economic Effects on Target Companies By Ali-Yrkkö, Jyrki; Mattila, Juri; Pajarinen, Mika; Ylhäinen, Ilkka
  23. Intellectual Property Rights Protection and Trade: An Empirical Analysis By Emmanuelle AURIOL; Sara BIANCINI; Rodrigo PAILLACAR
  24. Charting the Development of a Global Market for Low-Carbon Hydrogen By Schönfisch, Max
  25. Multi-product Firms in International Economics By Michael Irlacher
  26. Export performance and productivity: Rationale for a macro level evidence in Economic Community of Central African States (ECCAS). Case of AFCON 2021 By Kuikeu, Oscar
  27. Do immigrants take or create natives' jobs? Evidence of Venezuelan immigration in Peru By Celia P. Vera; Bruno Jiménez
  28. Importing to Feed International Tourists: Growth Implications for Islands across the Globe By Baidoo, Francis; Pan, Lei; Fiador, Vera Ogeh Lassey; Agbloyor, Elikplimi Komla
  29. Immigrant labour market outcomes: new insights from a lack of language proficiency in Italy By Pieroni, Luca; d'Agostino, Giorgio; Lanari, Donatella; Scarlato, Margherita
  30. Can a country borrow forever? The unsustainable trajectory of international debt: the case of Spain By Vicente Esteve; María A. Prats

  1. By: Gabriel Felbermayr; Hendrik Mahlkow; Alexander Sandkamp
    Abstract: With ever-increasing political tensions between China and Russia on one side and the EU and the US on the other, it only seems a matter of time until protectionist policies cause a decoupling of global value chains. This paper uses a computable general equilibrium trade model calibrated with the latest version of the GTAP database to simulate the effect of doubling non-tariff barriers - both unilateral and reciprocal - between the two blocks on trade and welfare. Imposing trade barriers almost completely eliminates bilateral imports. In addition, changes in price levels lead to higher imports and lower exports of the imposing country group from and to the rest of the world. The targeted country group increases exports to the rest of the world and reduces imports. Welfare falls in all countries involved, suggesting that governments should strive to cooperate rather than turning away from each other. By imposing a trade war on Russia, the political West could inflict severe damage on the Russian economy because of the latter’s smaller relative size.
    Keywords: Trade, non-tariff barriers, global value chains, quantitative trade model, China, Russia, European Union
    JEL: F11 F13 F14 F17
    Date: 2022–02
  2. By: Alejandra Martínez Martínez (University of Valencia); Silviano Esteve Pérez (University of Valencia and INTECO Research Group); Salvador Gil Pareja (University of Valencia and INTECO Research Group); Rafael Llorca Vivero (University of Valencia and INTECO Research Group)
    Abstract: This research applies the multilevel method to the analysis of trade flows. This paper argues that this methodology could be complementary to the standard gravity equation to address some relevant questions as that pointed out here: the influence of geographical distance on the impact of trade agreements on bilateral trade. Our results suggest that the simplest, most obvious and useful way for nesting country-pairs with international trade data is by distance. Using a sample of 69 countries over the period 1986-2016, we find that the pro-trade effects of Preferential Trade Agreements (PTA) fall with distance to trade partners, while this does not occur with the multilateral system (GATT/WTO). More interesting, the former result only holds for those PTAs involving goods, providing support to the natural trading partner hypothesis in this case, but not for those also including services. In this last case, the impact increases with distance. This suggest that deeper PTAs reduce the cost of distance as a barrier to trade, probably reflecting “cultural†(regulation) distance.
    Keywords: Domestic flows, International flows, Multilevel modelling, PTAs, GATT/WTO
    JEL: C1 F14 F15
    Date: 2022–03
  3. By: Hayakawa, Kazunobu (Institute of Developing Economies); Lee, Hyun-Hoon (Kangwon National University); Park, Cyn-Young (Asian Development Bank)
    Abstract: This study empirically examines how the coronavirus disease (COVID-19) has impacted foreign direct investment (FDI), using the quarterly data on bilateral FDI flows from 173 home to 192 host countries from the first quarter of 2019 to the second quarter of 2021. We measure the severity of COVID-19 damage using three indicators—the number of confirmed cases, the number of deaths, and the stringency index of government policies that restrict people’s activities. We also differentiate FDI flows via two different entry modes—greenfield FDI and cross-border mergers and acquisitions (M&A). We find heterogeneous effects of COVID-19 impacts on FDI by sector and entry mode. The severity of COVID-19 in host countries adversely affected FDI in the manufacturing sector regardless of the entry mode, but the effect of home countries’ COVID-19 situation on FDI was insignificant. On the other hand, in the service sector, the severity of COVID-19 in both host and home countries has significantly negative impact on greenfield FDI, not on cross-border M&A.
    Keywords: COVID-19; greenfield FDI; cross-border M&A
    JEL: F21 F23 I15
    Date: 2022–03–17
  4. By: Santeramo, Fabio; Lamonaca, Emilia
    Abstract: The agenda of trade negotiation in the agri-food sector is characterised by an exponential increase of Sanitary and Phytosanitary (SPS) measures and of Regional Trade Agreements (RTAs). Their joint effect on trade is puzzling and still an open empirical question. Once assessed the trade effect of standards provided in SPS measures, the study evaluates how regulatory cooperation and commitments beyond WTO requirements affect trade between signatories of RTAs. Trade between signatories seems obstructed by non discriminatory (multilateral) SPS measures. However, SPS-specific commitments negotiated in joint SPS committees within RTAs tend to create conditions to meet standards, contributing to boost trade.
    Keywords: RTA, SPS measures, Agri-food, Trade policy
    JEL: F13 O24 O57 Q17 Q18
    Date: 2021–12–15
  5. By: Foellmi, Reto; Hepenstrick, Christian; Torun, David
    Abstract: The so-called triangle inequality (TI) in international trade should, theoretically, hold for any three countries to avoid cross-border arbitrage. When trade costs change, re-routing opportunities – as captured by the TI – might arise because a shipment through an intermediary becomes cheaper under adjusted trade costs. We show that the widely used “exact hat algebra” approach, which does not require a calibration of trade costs, is unable to measure potential gains from re-routing. In addition, we show that standard empirical estimates of iceberg trade costs often violate the TI and are therefore inconsistent with the theory. We propose an estimation routine that respects the TI and yields estimates that are consistent with the workhorse models. This measure of trade costs allows us to compute the impact of changes in trade barriers while complying with the TI. First, we compute the welfare gains using only “direct” changes in trade costs (the standard approach). Second, we update the trade cost matrix to allow for re-routing whenever the TI is violated. We show that welfare gains are often substantially different (and usually higher) when taking the TI into account.
    Keywords: trade costs, re-routing, triangle inequality, welfare
    JEL: F10 F14 F17
    Date: 2022–03
  6. By: Carl Gaigné; Bruno Larue; Wendkouni Jean-Baptiste Zongo
    Abstract: We investigate two puzzles in the export duration literature. The first puzzle has to do with the frequent entries and exits of firms in export markets, which are at odds with the large fixed export costs in such markets. We introduce convex production technologies in a trade model to show how variable marginal costs create direct linkages between export markets. As fixed export costs vary across destinations, more productive firms need not necessarily export to more destinations. Cost convexity implies that the probability of supplying a given export market is adversely affected by positive export shocks in other markets. This is supported by our empirical analysis of bilateral flows for over 200 agri-food products to 176 destinations originating from six large exporting countries. The second puzzle has to do with the paradoxical effect of tariffs reported in empirical export duration studies. When endogeneity is addressed, tariffs increase the probability of an export failure.
    Keywords: cost convexity, export failure, gravity
    JEL: F12 F14 Q17
    Date: 2021
  7. By: Cecilia Bellora; Lionel Fontagné
    Abstract: To meet the targets of the EU’s ”Fit for 55” package, the European Commission proposes to implement a Carbon Border Adjustment Mechanism (CBAM). The CBAM is firstly intended to avoid carbon leakages, but it also deals with the thorny issue of the compliance by European producers in carbon-intensive industries. In addition, its design, as voted by the European Council on March 15, 2022, questions the compatibility of the CBAM with World Trade Organization (WTO) rules. The CBAM puts a price on carbon contained in imported products whose production-related emissions have not been taxed (or not at the same level as in the European Union) by the exporter country, in order to offset the difference in carbon prices at the border. This paper aims to quantify the economic and environmental impacts of different CBAM design choices with the aim of complying with WTO rules. Different from the previous literature, we evaluate the various options with a dynamic general equilibrium model featuring imperfect competition, global value chains, green-house gas emissions and endogenous price of emission quotas. We show that CBAM is effective in reducing carbon leakages. But its design leads to an increase in the price of carbon quotas in the European Emission Trading System (ETS) market. Losses in competitiveness on export markets are expected, also for downstream sectors not covered by the EU ETS nor the CBAM. Eventually, offsetting the difference in carbon prices at the border comes at a cost to the enforcing jurisdiction, suggesting that the CBAM was not designed as a beggar-thy-neighbour policy.
    Keywords: Carbon Border Adjustment;International Trade;Climate Change
    JEL: F14 F13 F17 Q56
    Date: 2022–03
  8. By: Santeramo, Fabio; Lamonaca, Emilia
    Abstract: The agri-food trade has expanded considerably over decades, with a remarkable increase in the market share of developing countries. The upward trend in trade flows has been parallel to the proliferation of non-tariff measures, particularly of sanitary and phytosanitary (SPS) measures in the agri-food sector. SPS measures may have a dual impact on trade, i.e. standards as catalysts versus standards as barriers, and the net effect is likely to depend on the level of economic development of countries involved. We investigate whether the trade effects of SPS measures is correlated with the economic development of trading partners. In particular, we disentangle the trade effects of SPS measures implemented by developed and developing countries and look at differential impacts due to a mismatch in the economic development of trading partners. Using a structural gravity approach on bilateral trade and regulation data, we conclude that SPS measures are catalysts for developing importers, whereas no evidence is found for developed importers. We also find a pro-trade effect of SPS measures when traders have different levels of economic development. Our findings have important policy implications: sharing SPS measures is strategic for economies characterised by different abilities to alter trade terms.
    Keywords: Agri-food trade; Economic development; Gravity model; Non-tariff measure; Trade pattern.
    JEL: F13 O24 O57 Q17 Q18
    Date: 2021–12–15
  9. By: Bossoma Doriane N'Doua (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBTs) govern trade in several sectors, including the forest-wood-paper sector. Using a gravity model, we analyze the impact of SPS and TBT measures on trade flows in the forest-wood-paper sector by distinguishing between technical regulations and conformity assessment procedures. Our results show that SPS and TBT conformity assessment procedures and TBT technical regulations increase trade flows. We also find that the impact of these measures differs depending on the level of development of imposing countries when imports come from developing countries. In particular, SPS and TBT conformity assessment procedures and SPS technical regulations imposed by developed countries tend to restrict trade with developing country exporters, while TBT technical regulations tend to increase it. In contrast, SPS and TBT conformity assessment procedures imposed by developing countries contribute to increasing such trade. In analyzing the differences or similarities in regulatory patterns between these countries, we find that, on average, developing countries exhibit less regulatory intensity than developed countries. This result suggests that it will require more technical and financial resources for developing countries to comply with measures imposed by developed countries that adopt more stringent technical measures than they do.
    Keywords: Sanitary and Phytosanitary (SPS) Measures,Technical Barriers to Trade (TBT),Gravity Model,Forest-Wood-Paper Sector
    Date: 2022–02–14
  10. By: Carl Gaigne (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Bruno Larue (ULaval - Université Laval [Québec]); Wendkouni Jean-Baptiste Zongo (Agriculture and Agri-Food Canada, Saskatoon Research Centre - AAFC - Agriculture and Agri-Food [Ottawa])
    Abstract: We investigate two puzzles in the export duration literature. The first puzzle has to do with the frequent entries and exits of firms in export markets, which are at odds with the large fixed export costs in such markets. We introduce convex production technologies in a trade model to show how variable marginal costs create direct linkages between export markets. As fixed export costs vary across destinations, more productive firms need not necessarily export to more destinations. Cost convexity implies that the probability of supplying a given export market is adversely affected by positive export shocks in other markets. This is supported by our empirical analysis of bilateral flows for over 200 agri-food products to 176 destinations originating from six large exporting countries. The second puzzle has to do with the paradoxical effect of tariffs reported in empirical export duration studies. When endogeneity is addressed, tariffs increase the probability of an export failure.
    Abstract: Dans cet article, nous tentons de réconcilier deux constats empiriques en lien avec la durée des exportations et les théories du commerce international. Tout d'abord, les entrées et sorties fréquentes observées des entreprises sur les marchés d'exportation sont en contradiction avec les théories modernes pour lesquelles les coûts d'exportation fixes ont un rôle central dans les décisions d'exportation. Nous introduisons des couts marginaux de production non constants dans un modèle de commerce international et montrons comment les coûts marginaux variables créent des liens directs entre les différents marchés d'exportation. La convexité des coûts implique que la probabilité de maintenir son activité d'exportation vers un pays dépend négativement des chocs positifs d'exportation vers d'autres marchés. Notre analyse empirique des flux bilatéraux de plus de 200 produits agroalimentaires vers 176 destinations, provenant de six grands pays, confirme cette hypothèse. Ensuite, on questionne l'effet positif paradoxal des tarifs douaniers dans les études empiriques sur la durée des exportations. Lorsque l'endogénéité des tarifs est prise en compte, l'effet devient négatif en accord avec la théorie.
    Keywords: Cost convexity,Export failure,Gravity,Gravité,Durée d’exportation,Convexité des couts,Tarifs douaniers
    Date: 2022–02–17
  11. By: Zuzana Zavarská (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The organisation of business activities into global value chains was a defining component of the significant advancements in globalisation witnessed in the three decades leading up to the Great Recession. In the years that followed the speed of global trade integration slowed down, and the COVID-19 pandemic exacerbated the uncertainty surrounding internationally fragmented production processes. More importantly, it made nation states keener to build up greater autonomy in the production of strategic goods, which resulted in notable increases in the scale of restrictive trade policies adopted by countries in the wake of the pandemic. Hence, the ‘new normal’ is likely to see a greater regionalisation of FDI flows and may lead to some restructuring of existing value chains. This presents an opportunity for transition economies in the Western Balkans, as it implies that firms from major FDI sources in Western Europe will be less inclined to look beyond the continent, giving geographically closer locations a competitive edge over traditional offshoring superpowers like China or India. While it is too early to tell whether the current relatively strong rebound in FDI inflows in the Western Balkans can indeed be attributed to the restructuring of value chains, it paints a relatively optimistic picture regarding the prospects of these economies to establish a firmer FDI presence, particularly in the areas of business services and logistics, which have gained momentum following the pandemic. To reap the full benefits of these opportunities, however, the countries of the Western Balkans must first and foremost step up their investment promotion activities, above all by focusing on improving their infrastructure and education systems and by enhancing their institutional capacities.
    Keywords: FDI, global value chains, value chain restructuring, near-shoring, Western Balkans, COVID-19
    JEL: F21 F6 O24
    Date: 2022–03
  12. By: Nguyen, Cuong; Tran, Tuyen; Vu, Huong
    Abstract: In this study, we find that the negative effect of unexploded ordnance (UXO) on the geographical density of foreign direct investment and large firms is a new channel through which the war legacy impedes local development in Vietnam. A 1% increase in the proportion of UXO-contaminated area leads to a 0.78% relative decrease in the density of FDI firms within districts. Point estimates for the elasticity of the density of joint-venture FDI firms and state-owned enterprise (SOEs) due to UXO are smaller, equal to -0.56 and -0.54. Consequently, a 1% increase in the proportion of UXO-contaminated areas leads to a 0.46% relative decrease in the intensity of nighttime light.
    Keywords: War; FDI; unexploded ordnance; local development; Vietnam.
    JEL: O12 R12
    Date: 2021–08–15
  13. By: Rahmetov, Anvar; Rakhmetova, Malika
    Abstract: This article is an assessment of the current state of affairs in Uzbekistan’s SDG policies. It is based on an analysis of UN compiled data on SDGs, as well as an overview of Uzbekistan’s key SDG-related strategies, as well as unstructured interviews with a dozen respondents. Desk research suggests that Government’s key SDG priorities remain in export promotion, job creation and increased economic competitiveness. Interviews suggest that sustainability is understood as political and economic stability, economic growth, environmental conservation and rule of law. From the SDG issues, respondents identified SME and female entrepreneur support, employment generation and e-commerce as the ones with the highest priority, while concurring that corruption, monopolies and market distortions, low policy implementation capacity and limited public awareness of sustainability were the greatest obstacles. The greatest strength of Uzbekistan in integrating international trade into SDGs is the current reform momentum. Significantly improved relations with neighbors is another strength, with a window of opportunity to improve on regional trade, transit, connectivity, as well as water management and water-energy nexus. The greatest challenge, on the other hand, remains the government’s focus on exports, FDI, job creation and GDP growth, even if at the expense of the other SDGs. The other significant challenge is the insistence on import substitution and local production, and economic mercantilism in general, at the expense of the free-trade, value-chain-integration-based development model. Agriculture and food production, energy and e-commerce will be the sectors with highest potential in scaling up sustainable trade principles.
    Keywords: sustainable trade, SDGs, international trade, Uzbekistan, sustainability, energy, economy, agriculture, e-commerce
    JEL: O19 O24 O53
    Date: 2022–01–15
  14. By: Stéphane Auray (CREST-Ensai and Université du Littoral Côte d’Opale, France); Michael B. Devereux (Vancouver School of Economics, University of British Columbia, Canada); Aurélien Eyquem (Université Lumière Lyon2, France)
    Abstract: Countries distort trade patterns (‘trade wars’) to gain strategic advantage relative to one another. At the same time, monetary policies are set independently and have spillover effects on partner countries (‘currency wars’). We combine these two scenarios, and show that they interact in deep and interesting ways. The stance of monetary policy has substantial effects on the equilibrium degree of protection in a Nash equilibrium of the monetary and trade policy game. Trade wars lead to higher equilibrium inflation rates. Cooperation in monetary policy leads to both higher inflation and greater degree of trade protection. By contrast, when monetary policy is constrained by pegged exchange rates or the zero lower bound on interest rates, equilibrium tariffs are lower. Finally, when one country has the dominant currency in trade, it gains a large advantage in a trade war.
    Keywords: Protectionism, Currency Wars, Trade Wars
    JEL: F30 F40 F41
    Date: 2021–09–19
  15. By: Stéphane Auray (CREST-Ensai and ULCO, France); Aurélien Eyquem (Université Lumière Lyon2, France)
    Abstract: We introduce heterogeneous mark-ups through Bertrand competition in a two-country model with endogenous firms' entry and tradability à la Ghironi and Melitz (2005). Bertrand competition generates a distribution of mark-ups according to which firms that are larger and more productive charge lower prices, attract larger market shares and extract larger mark-ups. First, we characterize first-best allocations and their implementation. We find that they are independent from the degree of mark-ups' heterogeneity, suppress the dispersion of mark-ups and imply zero distortions on labor as well as substantial subsidies to preserve firm's incentives to enter. Second, second-best alternative policies with a restricted number ofi nstruments and a balanced budget significantly reduce the potential welfare gains from fiscal policies. Third, the total welfare losses from passive policies are lower under heterogeneous mark-ups than under homogeneous mark-ups: while th edispersion of mark-ups has negative effects on the intensive margin, output per firm, it also raises expected profits for potential entrants and raises the extensive margin, the number of firms in both domestic and export markets, pushing them closer to their efficient levels. Fourth, we also investigate the dynamic properties of allocations under passive and optimal policies considering aggregate productivity shocks and trade liberalization experiments.
    Keywords: Heterogeneous firms, Endogenous Entry, Open economy, Strategic pricing, Optimal taxation
    JEL: D4 E20 E32
    Date: 2021–06–15
  16. By: Antoine Berthou (Centre de recherche de la Banque de France - Banque de France, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Guillaume Horny (Centre de recherche de la Banque de France - Banque de France); Jean-Stéphane Mésonnier (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, Centre de recherche de la Banque de France - Banque de France)
    Abstract: Exporting firms face foreign exchange risk when the export contract is invoiced in a foreign currency. For instance, for firms located outside of the United States, the US dollar is often used as a vehicle currency. The cost of hedging against this risk represents an additional trade cost for exporters, which is specific to the targeted destination. In this paper, we exploit an episode of heightened tensions in the USD/EUR foreign exchange market in July 2011, which increased the cost of hedging against US dollar fluctuations for French exporters. Using disaggregated information on bank balance sheets, bank-firm relationships and individual export flows for France, we show that exporters with a higher propensity to use hedging instruments reduced more their exports to "US dollar destinations" after this shock. For the average "treated" individual export flow in our sample, the increased hedging cost is equivalent to a counterfactual rise in trade costs by about 3 percentage points.
    Keywords: Dollar invoicing,Trade finance,Firm-level exports
    Date: 2022–03
  17. By: Kohnert, Dirk
    Abstract: Francophone Africa has been dominated to date by the political, economic and cultural repercussions of France’s colonial rule. A major instrument to assert France's interests was the upkeep of a common monetary policy and currency, the CFA Franc. Although this has been increasingly resented by African politicians and economists, who wanted to replace it with a West African currency (the 'Eco') the CFA still prevails, due to the social network of French and African political leaders, the ‘messieurs Afrique’ who benefit from the system. The controversial international discussion concentrates on questions of sovereignty and formal political and economic questions. However, the rules of the informal sector proved to be at least as crucial in structuring the CFA-zone as the institutions and policies of the formal economic sector, including its monetary institutions. For decades, for example, prices of French imports were overpriced, due to protection by tied aid and other political and cultural non-tariff trade barriers. The cost of this rent-seeking was carried not only by the French Treasury, who guarantees the peg, but by the French and EU taxpayers, who financed budgetary bail-outs and development aid, and last, but not least, by the poorer African member countries and social strata. Although this applies strictly speaking only to the CFA zone, there are strong indicators that things haven't changed much since then for Francophone Africa in general. The repercussions of rent-seeking in Francophone Africa impact up to date negatively on economic performance. For example, growth levels have been significantly lower for two decades compared with Anglophone competitors.
    Keywords: France, Francophone Africa, post-colonialism, regulated market, special interests, regulatory capture, monetary policy, CFA franc, international trade, free trade area, customs union, African Studies,
    JEL: E26 E31 E42 E52 F13 F15 F22 F35 F45 F52 F54 L13 N17 N97 O17 R11 R58 Z13
    Date: 2022–02–18
  18. By: Gnangnon, Sèna Kimm
    Abstract: This article examines the effect of the duration of the membership in the World Trade Organization (WTO) on investment-oriented remittances inflows (i.e., the portion of total remittances invested by remittance-receiving households in business activities). The analysis covers 120 countries over the period 1996-2019, and employs the two-step system generalized methods of moments estimator. It provides support for the hypothesis that by improving the stability and predictability of the business environment (i.e., by reducing tariffs volatility, trade uncertainty and economic uncertainty) would provide strong incentives to remittance-receiving households to invest a fraction of their total remittances in business activities. This positive effect of the membership duration on investment-oriented remittances inflows appears to strong for less developed countries. Additionally, longstanding WTO Members enjoy higher investment-oriented remittances inflows when they have large populations (a proxy for larger amounts of total remittances inflows), and experience high trade volumes, and a higher economic growth performance. These findings complement previous works that highlighted the relevance of the WTO in promoting the development of the private sector in its member states (including developing members and the poorest among them).
    Keywords: Duration of WTO membership,Investment-oriented remittances inflows,Tariffs volatility,Trade uncertainty,Economic uncertainty,Developing countries
    JEL: D31 E22 O11 O16
    Date: 2022
  19. By: Santeramo, Fabio
    Abstract: This IATRC Policy Brief summarizes outcomes of the Annual Meeting Theme Day presentations, held December 12 -14, 2021, in San Diego, CA and via virtual platform. The Annual Meeting program and presentations are available at:‐iatrc‐annual‐ meeting/
    Keywords: Agricultural and Food Policy, International Relations/Trade
    Date: 2022–02–23
    Abstract: Korean Abstract: 이 보고서는 탄소국경조정제도(CBAM)의 영향을 중소기업 측면에서 분석하여 CBAM에 대한 중소기업의 대응방안과 정책지원 방향을 제시한다. CBAM 대상품목의 수출 현황과 국내 기업분포를 통해 CBAM으로 인한 국내 중소기업의 영향범위를 측정하고, CBAM에 대한 산업별 취약성을 평가하며, 중소기업 수출에 내재된 탄소배출량을 추산하였다. 아울러 최근의 해외 중소기업 탄소중립정책 사례 분석을 통해 참고할 만한 유용한 사례를 발굴하여 제시한다. English Abstract: In July 2021, the EU announced the Carbon Border Adjustment Mechanism (CBAM), which obligates importers to purchase certificates corresponding to the emissions embedded in imported products. Implementation of the CBAM will have a negative effect on the Korean economy, which is highly dependent on trade and carbon-intensive industries. Another point of particular concern lies in that domestic SMEs will also be affected by the CBAM directly or indirectly. Therefore, this study examines the impact of the CBAM on SMEs in Korea, and evaluates different industries for their vulnerability to the CBAM. Implications for government policies and strategies for SMEs to effectively respond to CBAM are drawn. This study differs from previous studies in that it analyzes the impact of the CBAM from the perspective of SMEs. Few domestic studies have analyzed the impact of the CBAM on SMEs. This study examines various aspects of the CBAM, including statistical analysis of vulnerabilities to the CBAM in the area of SMEs, and case studies of carbon neutrality support policies for SMEs in major countries. Various analysis methods are attempted, such as measuring the export status of SMEs’ CBAM target items and domestic SMEs' distribution of CBAM target industries, evaluating the SMEs’ vulnerability to the CBAM by sectors, and measuring carbon emissions embedded in SMEs’ exports. Moreover, overseas carbon neutrality support policies for SMEs are investigated to identify recent policy trends in major countries and learn from benchmarking cases. (the rest omitted)
    Keywords: Korea; SMEs; CBAM
    Date: 2021–12–30
  21. By: Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Rumen Dobrinsky (The Vienna Institute for International Economic Studies, wiiw); Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw); Leon Podkaminer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Chart of the month A fourth wave of COVID-19 taking a grip by Olga Pindyuk Opinion Corner Ostracism is a painful side effect of the Western sanctions on Belarus by Rumen Dobrinsky Following the forced landing of a Ryanair flight in May 2021, Western states imposed harsh economic sanctions on Belarus. For the first time, these included sanctions that targeted specific Belarusian industries and businesses, while Belarus’s access to international financial markets was further restricted. The sanctions also hurt ordinary Belarusians, due to the restrictions imposed on air traffic. These measures can be expected to trigger Belarus’s further orientation towards Russia. Searching for a new growth model in the Visegrád countries by Leon Podkaminer Although the Visegrád countries have done fairly well in recent decades, their current growth model is reaching its limits. A reliance on foreign direct investment-led export growth, especially based largely on cheap labour, does not seem likely to deliver an acceptable amount of convergence in coming years. This is even less likely under the currently restrictive fiscal framework, the recent (temporary) relaxation notwithstanding. A real breakthrough may require a radical overhaul of the basic economic paradigms at the EU level. The Georgian economy caught between Russia and the EU by Vasily Astrov The Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU has so far brought Georgia few economic benefits. There has been little trade reorientation, and sizeable inflows of foreign trade investment into the productive sector have failed to materialise. Given that membership of NATO and the EU is unrealistic for Georgia in the foreseeable future, a conceivable alternative could be a neutral political status. That could allow Georgia to benefit from increased trade links with Russia, without sacrificing its ostensibly pro-European economic policy course. Monthly and quarterly statistics for Central, East and Southeast Europe
    Keywords: COVID-19 new cases, deaths from COVID-19, vaccination rate, economic sanctions, ostracism, trade re-orientation, neoliberal growth model, reliance on foreign trade, fiscal constraints, DCFTA, foreign direct investment, neutral political status
    Date: 2021–09
  22. By: Ali-Yrkkö, Jyrki; Mattila, Juri; Pajarinen, Mika; Ylhäinen, Ilkka
    Abstract: Abstract This study examines mergers and acquisitions and their economic impact on companies. The study examined which companies in Finland become the targets of acquisitions, how the economic activities of the target companies develop after the change of ownership and whether there is a difference between domestic and foreign acquisitions in these respects. The study was conducted using firm-level data that included nearly 2,000 acquisitions, supplemented by a qualitative review of 19 research interviews. The results of the study show that companies’ innovation activities have a positive relation to the likelihood of being acquired, especially by foreign buyers. However, foreign acquisitions did not have a significant impact on the development of the value added, productivity, profitability or employment of target companies when compared with the control group.
    Keywords: Mergers and acquisitions, M&A, Impact, Foreign ownership, Foreign company, Productivity
    JEL: D22 F23 G34 O30
    Date: 2022–03–23
  23. By: Emmanuelle AURIOL; Sara BIANCINI; Rodrigo PAILLACAR
    Abstract: The paper proposes an empirical analysis of the determinants of the adoption of intellectual property rights (IPR) and their impact on innovation in manufacturing. The analysis is conducted with panel data covering 112 countries. First, we show that IPR enforcement is U-shaped in a country's market size relative to the aggregated market size of its trade partners. Second, reinforcing IPR protection reduces on-the-frontier and inside-the-frontier innovation in developing countries, without necessarily increasing innovation at the global level.
    JEL: Q
    Date: 2022–03–21
  24. By: Schönfisch, Max (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))
    Abstract: This paper analyses the impact of supply technology choices and costs on structures and prices on the emerging low-carbon hydrogen market using a novel, integrated natural gas and hydrogen market model. It shows that natural gas-based low-carbon hydrogen production pathways predominate in technology-neutral scenarios in 2050. In scenarios where hydrogen production is gas-based, hydrogen is produced close to the point of consumption. Natural gas prices determine local hydrogen prices. In scenarios characterised by high shares of RES-based low-carbon hydrogen production, long-distance, cross-border trade in pure hydrogen becomes an economically viable proposition due to the heterogeneous distribution of low-cost RES potentials and significant hydrogen price spreads between countries with high hydrogen demand but poor RES potentials, and countries that are well endowed with cost-competitive RES. Trade is conducted almost exclusively via pipeline. The analysis finds the most significant potential for cross-border trade in and around Europe. It suggests that it would be economical for Europe to import substantial quantities of low-carbon hydrogen from North Africa.
    Keywords: Hydrogen
    JEL: Q40 Q42 Q49
    Date: 2022–03–23
  25. By: Michael Irlacher
    Abstract: A striking pattern in transaction-level data is the concentration of international shipments in the hands of a few large firms. One common feature of dominating high-performance firms is that they produce multiple products and ship them to many destinations. Motivated by the emergence of highly detailed data at the firm-product-destination level, a series of theoretical and empirical papers studies the role of multi-product firms (MPFs) in international trade. This survey reviews the evidence on the importance of MPFs in international markets and highlights the key theoretical as well as empirical results that the literature has produced in the last decade.
    Keywords: Survey; Multi-product firms; International Economics; Theory; Empirics
    JEL: F10 F12 F14
    Date: 2022–02
  26. By: Kuikeu, Oscar
    Abstract: Since the classical theory of comparative advantage costs have been well assess with productivity’s firms level evidence considering the lack of data’s about this productivity’s firm level evidence on Sub-Saharan Africa Region the main aim of this study is to give rationality of this classical theory of comparative advantage costs even with macro level evidence on this Region. In the idea that the player’s added value is an unpreceding indicator to predict on the final result of an tournament this international trade’s comparative advantage cost can be used as an related evidence of the achievement of the final AFCON with winning country heavily desserved with players of world great team. To assess on the rationale of this macro level evidence the assessment lied on the one hand on the stochastic growth model with evidence of this scheme giving by panel data Bayesian estimates and shrinkage estimates and on the other hand on the Balassa Samuelson Effect with a evidence of them realized by the panel cointegrating technique. Globally speaking, the obtained results with a subset of countries in Africa Region the namely Economic Community of Central African States are supportive of the macro level evidence for the classical theory of comparative advantage costs and a good predictor of the final issue of an tournament as the AFCON.
    Keywords: comparative advantage, productivity, Bayesian estimates, Shrinkage estimates, panel cointegration, ECCAS, AFCON
    JEL: C23 C33 O47
    Date: 2022–02–11
  27. By: Celia P. Vera (Universidad de Piura); Bruno Jiménez (Universidad Nacional de La Plata)
    Abstract: Peru is the second largest host nation of Venezuelan migrants. This paper combines newly available data on Venezuelans residing in Peru and the Peruvian Household Survey to assess the impact of migration on natives? labor market outcomes. We first rely upon education-experience groups to define labor markets and find that immigration does not affect the wages of competing native workers. We then slice the labor market into occupations based on the observation that in Peru, immigrants and natives with similar education and experience are likely to work in different occupations. Our instrumental variable estimates confirm the null effect on wages. We finally examine whether natives respond with changes in employment and find that 10 Venezuelan workers create informal employment for 38 Peruvians and displace 13 Peruvians from formal jobs, suggesting a change in the Peruvian employment composition toward informality.
    Keywords: Immigration, education-experience cells, occupation cells, informality
    JEL: J24 J31 J46
    Date: 2022–03
  28. By: Baidoo, Francis; Pan, Lei; Fiador, Vera Ogeh Lassey; Agbloyor, Elikplimi Komla
    Abstract: Employing bootstrapped fixed and random effects estimation techniques on five-year-non-overlapping-averaged data, covering 1980 through 2019, this study, firstly, investigates, empirically, the potential bi-causal relationship between international tourist arrivals and the importation of consumables/merchandises, in the case of 45 sovereign islands. The growth implication of a concurrent pursuit of tourism expansion and merchandise importations is also examined. The study further investigates how over-reliance on imported merchandise to feed international tourists, and over-specialisation in the tourism sector, affect the tourism-led-growth hypothesis in case of these islands. Results from the study postulate that an increase in arrivals of international tourists significantly leads to an increase in the importation of consumable merchandises, and vice versa. Moreover, a moderate importation of merchandises to sustain tourist arrivals is significantly observed not to be detrimental to the growth of islands across the globe. However, the results further reveal that over-reliance on imported merchandises for the sake of international tourists, as well as over-specialisation in tourism with the help of imported merchandises, both exert significant detrimental net effects on the economic growth of islands across the globe. The findings hold policy guidelines for the pursuit of tourism-led and merchandise-import-led growth strategies among global islands.
    Keywords: Merchandise importation; Tourism specialisation; Economic growth; Global islands; Fixed and random effects
    JEL: O4
    Date: 2022–02–13
  29. By: Pieroni, Luca; d'Agostino, Giorgio; Lanari, Donatella; Scarlato, Margherita
    Abstract: In this paper, we examine how immigrants' proficiency in the Italian language affects their labour market performance using hitherto unexploited immigration survey published by the Italian Institute of Statistics. With respect to immigrants with good proficiency in the Italian language, our empirical findings suggest that weak language proficiency reduces employment by about 25-30 percentage points. Language proficiency in Italian also significantly affects the hourly wages of immigrants. The point estimates suggest an hourly wage gap of more than 30% between immigrants with good proficiency in the Italian language compared to those with weak proficiency, irrespective of gender. Robustness checks confirmed our estimates.
    Keywords: Immigrants, Language skills, Employment, Hourly wages
    JEL: J15 J20 J31
    Date: 2022
  30. By: Vicente Esteve (Universidad de Valencia and Universidad de Alcalá, Spain); María A. Prats (Universidad de Murcia, Spain)
    Abstract: We address the issue of the sustainability Spain's external debt, using data for the period 1970-2020. To detect episodes of potentially explosive behavior of the Spanish net foreign assets over GDP ratio and the current account balance over GDP ratio, as well as episodes of external adjustments over this long period, we employ a recursive unit root test approach. Our empirical analysis leads us to conclude that there is some evidence of bubbles in the ratio between Spanish net foreign assets and the GDP. In contrast, the evidence that the ratio between the Spanish current account balance and the GDP had explosive subperiods is very weak.The episode of explosive behavior identified in the position of net foreign assets during the period 2002-2015 was the result of the country's economic expansion 1995-2007. The results also show an external adjustment during the period 2008-2019 after the start of a cyclical economic recession.
    Keywords: external imbalances; sustainability; intertemporal external budget constraint; explosiveness; recursive unit root test
    JEL: F32 F36 F37 F41 C22
    Date: 2022–03

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