nep-int New Economics Papers
on International Trade
Issue of 2022‒04‒18
33 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The Effects of Trump's Trade War with China on Japan's Trade By ITO Tadashi
  2. Dollar Invoicing, Global Value Chains, and the Business Cycle Dynamics of International Trade By Nikhil Patel; Mr. David Cook
  3. Financial Frictions and International Trade: A Review By David Kohn; Fernando Leibovici; Michal Szkup
  4. Third Country Effects of Trump Tariffs: Which Countries Benefited from Trump's Trade War? By ITO Tadashi
  5. Foreign Direct Investment and Markups By HOSONO Kaoru; TAKIZAWA Miho; YAMANOUCHI Kenta
  6. Do Trade Agreements contribute to the decline in Labor Share? Evidence from Latin American Countries By Martin González-Rozada; Hernan Ruffo
  7. Do Standards Improve the Quality of Traded Products? By Carl Gaigné; Anne-Célia Disdier; Cristina Herghelegiu
  8. Indonesia and Vietnam in Global Supply Chains and the Age of COVID: A Tale of Two Countries By Willem THORBECKE; KATO Atsuyuki
  9. Do Trade Agreements Contribute to Technology Internationalization? By Daniela Arregui Coka; Inmaculada Martinez-Zarzoso
  10. The Effect of Tariffs in Global Value Chains By Mr. Roberto Piazza; Johannes Eugster; Ms. Margaux MacDonald; Ms. Florence Jaumotte
  11. Greenfield Foreign Direct Investment: Social Learning drives Persistence By Ng, Joe Cho Yiu; Chan, Chao Hung; Tsang, Byron Kwok Ping; Leung, Charles Ka Yui
  12. In Search of Upcoming Supply Chain Surprises: The World Export Market Shares of Belarus, Russia and Ukraine By Ali-Yrkkö, Jyrki; Hirvonen, Johannes; Rouvinen, Petri
  13. Impacts of CBAM on EU trade partners: consequences for developing countries By Guilherme MAGACHO; Etienne ESPAGNE; Antoine GODIN
  14. A 'Sudden Outrcry' for Free Trade: Autonomy, Empire and Political Economy in the Irish Free Trade Campaign, 1779-1785 By Carlos Eduardo Suprinyak
  15. The multi-dimension of international logistics performance and export flows: An empirical study from developing countries By Huynh, Cong Minh; Hong, Thien Huong
  16. Bridging Africa’s Income Inequality Gap: How Relevant Is China’s Outward FDI to Africa? By Isaac K. Ofori; Toyo A. M. Dossou; Simplice A. Asongu; Mark K. Armah
  17. Testing the Triple Deficit Hypothesis for Sub-Saharan Africa: Implications for the African Continental Free Trade Area By Samson N. Okafor; Chukwunonso Ekesiobi; Ogonna Ifebi; Stephen K. Dimnwobi; Simplice A. Asongu
  18. Local Labor Market Effects of Chinese Imports and Offshoring: Evidence from Matched-Foreign Affiliate-Domestic Parent-Domestic Plant Data in Japan By KIYOTA Kozo; NAKAJIMA Kentaro; TAKIZAWA Miho
  19. Impacts of Firm GVC Participation on Productivity: A Case of Japanese Firms By URATA Shujiro; Youngmin BAEK
  20. Migration and Social Preferences By Diego Marino Fages; Matias Morales
  21. Does terrorism affect greenfield investment? A structural gravity approach By Federico Carril-Caccia; Juliette Milgram Baleix; Jordi Paniagua
  22. Does firms' position in global value chains matter for workers' wages? An overview with a gender perspective By Nicola Gagliardi; Benoit Mahy; François Rycx
  23. The Covid-19 pandemic and international supply chains By Kleifgen, Eva; Roth, Duncan; Stepanok, Ignat
  24. Do PTAs with environmental provisions reduce GHG emissions? Distinguishing the effectiveness of climate-related provisions By Sorgho, Zakaria; Tharakan, Joe
  25. Fdi spillover effects on innovation activities of knowledge using and knowledge creating firms: evidence from an emerging economy By Vujanovic, Nina; Radosevic, Slavo; Stojcic, Nebojsa; Hisarciklilar, Mehtap; Hashi, Iraj
  26. The impact of carbon pricing in a multi-region production network model and an application to climate scenarios By Frankovic, Ivan
  27. Dynamic Macroeconomic Implications of Immigration By Olovsson, Conny; Walentin, Karl; Westermark, Andreas
  28. Individual Preferences Toward Inward Foreign Direct Investment: A Conjoint Survey Experiment By TANAKA Ayumu; ITO Banri; JINJI Naoto
  29. For inflation relief, the United States should look to trade liberalization By Gary Clyde Hufbauer; Megan Hogan; Yilin Wang
  30. Supply and Demand Situation and Prices on the Global and Polish Sugar Market By Chmielewski, Łukasz
  31. Agricultural R&D investments and policy development goals in Sub-Saharan Africa: Assessing prioritization of value chains in Senegal By Benfica, Rui
  32. Centralised and Decentralised Approaches to Multi-Country Macroeconometric Modelling at the Commission of the European Communities: The Short-Lived EUROLINK Model By Acosta, Juan; Rancan, Antonella; Sergi, Francesco
  33. West African Economic and Monetary Union: Staff Report On Common Policies for Member Countries-Press Release; Staff Report; and Statement by the Executive for the WAEMU By International Monetary Fund

  1. By: ITO Tadashi
    Abstract: Using monthly trade data for the United States (U.S.), Japan, and China, this study investigates the effects of 45th U.S. President Trump's trade war with China on Japan's trade. Although Japan's import values and quantities of Trump-targeted goods from China did not increase, the import price did decrease slightly. Japan seems to have enjoyed a terms of trade effect because of Trump's trade war with China. Contrary to a priori expectation, Japanese industries which are linked as the upstream industry of China's (downstream) industries subjected to Trump tariffs are shown to have increased their exports to China. To investigate this unexpected result, this study analyzes China's exports of Trump tariff-targeted goods to the world and finds that China's exports of these goods to the world increased. An increase in China's exports to countries other than the U.S. more than offset the decrease in its exports to the U.S.
    Date: 2022–03
  2. By: Nikhil Patel; Mr. David Cook
    Abstract: Recent literature has highlighted that international trade is mostly priced in a few key vehicle currencies and is increasingly dominated by intermediate goods and global value chains (GVCs). Taking these features into account, this paper reexamines the relationship between monetary policy, exchange rates and international trade flows. Using a dynamic stochastic general equilibrium (DSGE) framework, it finds key differences between the response of final goods and GVC trade to both domestic and foreign shocks depending on the origin and ultimate destination of value added and the intermediate shipments involved. For example, the model shows that in response to a dollar appreciation triggered by a US interest rate increase, direct bilateral trade between non-US countries contracts more than global value chain oriented trade which feeds US final demand, and exports to the US decline much more when measured in gross as opposed to value added terms. We use granular data on GVCs at the sector level to document empirical evidence in favor of these key predictions of the model.
    Keywords: Dollar invoicing, global value chains, exchange rates, monetary policy; business cycle dynamics; dollar invoicing; EU importer; EU exporter; goods trade; Exports; Global value chains; Currencies; Trade balance; Imports; Global
    Date: 2022–02–11
  3. By: David Kohn (Pontificia Universidad Católica de Chile); Fernando Leibovici (Federal Reserve Bank of St. Louis); Michal Szkup (University of British Columbia)
    Abstract: This paper reviews recent studies on the impact of financial frictions on international trade. We first present evidence on the relation between measures of access to external finance and export decisions. We then present an analytical framework to analyze the impact of financial frictions on firms’ export decisions. Finally, we review recent applications of this framework to investigate the impact of financial frictions on international trade dynamics across firms, industries, and in the aggregate. We discuss related empirical, theoretical, and quantitative studies throughout.
    Keywords: financial frictions, international trade, export decisions, trade distortions, firm dynamics
    Date: 2022–02
  4. By: ITO Tadashi
    Abstract: Using monthly US tariff-line trade data, this paper analyzed the third country effects of Trump's trade war against China; more specifically, whether other countries captured the US market at the expense of China. The findings demonstrate that Trump tariffs against China substantially decreased US imports from China, whereas many US import partner countries increased exports to the US at the expense of China. The study also finds that although there was no sign of a decrease in border prices for US imports from China (no terms-of- trade improvement), US imports from other partner countries of Trump listed goods (targeting China) show a decrease in border price.
    Date: 2022–02
    Abstract: This study investigates the effect of foreign direct investment (FDI) on markups using parent-foreign subsidiary matched data on Japan from 1997 to 2018. Using the cost of goods sold (COGS) as a measure of expenditure on variable inputs, we find that for manufacturing firms, the parent firm increases markups as the ratio of sales of foreign subsidiaries to those of the parent firm (i.e., the intensive margin of FDI) increases, while the parent firm does not significantly change markups in response to the FDI status (i.e., the extensive margin). We also find that the average markup of the corporate group, i.e., the weighted average of the markups charged by the parent firm and foreign subsidiaries, increases with both the extensive and intensive margins of FDI for manufacturing firms. Finally, we find that if we divide the host countries into developed and developing economies, a positive effect on markups is mainly observed for FDI to developing economies. Overall, our results suggest that firms increase markups by increasing vertical FDI.
    Date: 2022–02
  6. By: Martin González-Rozada; Hernan Ruffo
    Abstract: In this paper, we explore the role of trade on the evolution of labor share in Latin American countries. We use trade agreements with large economies (US, EU, and China) to capture the effect of sharp changes in trade. In the last two decades, labor share has a negative trend among those countries that signed trade agreements while in the remaining countries labor share increased, widening the gap in 7 percentage points. We apply synthetic control methods to estimate the average causal impact of trade agreements on labor share. While effects are heterogeneous in our eight case studies, the average impact is negative between 2 to 4 percentage points of GDP four years after the entry into force of the trade agreements. This result is robust to the specification used and to the set of countries in the donor pool. We also find that, after trade agreements, exports of manufactured goods and the share of industry to GDP increase on average, most notably in the case studies where negative effects on labor share are significant. A decomposition shows that all the reduction in labor share is explained by a negative impact on real wages.
    Keywords: Labor share, trade agreements, synthetic control methods.
    JEL: C01 C1 F1 F16
    Date: 2021–08
  7. By: Carl Gaigné; Anne-Célia Disdier; Cristina Herghelegiu
    Abstract: We examine whether standards raise the quality of traded products by correcting market failures associated with information asymmetry on product attributes. Matching a panel of French firm-product-destination export data with a dataset on sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBTs), we find that such quality standards enforced on products by destination countries: (i) favor the export probability of high-quality firms provided that their productivity is high enough; (ii) raise the export sales of high-productivity high-quality firms at the expense of low-productivity and low-quality firms; (iii) improve the average quality of consumption goods exported by France. We then develop a simple new trade model under uncertainty about product quality, in which heterogeneous firms can strategically invest in quality signaling, to rationalize these empirical results on quality and selection effects.
    Keywords: firm exports, quality standards, information asymmetry, product quality, heterogeneity
    JEL: D21 D22 F12 F14
    Date: 2021
  8. By: Willem THORBECKE; KATO Atsuyuki
    Abstract: Indonesia's economic performance since 2000 has been respectable. It has not succeeded, however, at joining global value chains (GVC). Vietnam on the other hand is a key link in GVCs for electronics, textiles, and other sectors. This paper recounts the experiences of Indonesia and Vietnam at attracting foreign direct invest, exporting, and coping with the COVID-19 pandemic. It considers why Indonesia has been less successful than Vietnam at joining GVCs. It then concludes with several recommendations for how Indonesia could attract FDI and avoid scarring from the pandemic.
    Date: 2022–02
  9. By: Daniela Arregui Coka (University of Goettingen); Inmaculada Martinez-Zarzoso (University of Goettingen and University Jaume I)
    Abstract: This paper investigates the effect of free trade agreements (FTAs) on technology internationalization. We estimate the effect of FTAs on domestic ownership of foreign inventions with a gravity model using a panel of 6,480 country pairs of high- and middle-income countries for the period 1980-2015. The main results indicate that FTAs lead to a significant increase in technology internationalization, especially when the FTAs cover trade in goods and services. This effect increases over time considering the period of implementation, subsequent to the ratification and depends on the policy scope of the FTA and the economic distance between trading partners. Moreover, countries that are geographically and institutionally closer exchange more knowledge and technology and provisions on intellectual property rights add to the positive effect.
    Keywords: Technology internationalization, trade agreements, knowledge flows, international technology transfers, gravity model, IPR
    JEL: F
    Date: 2022
  10. By: Mr. Roberto Piazza; Johannes Eugster; Ms. Margaux MacDonald; Ms. Florence Jaumotte
    Abstract: This paper empirically investigates the impact of tariffs when production is organized in global value chains. Using global input-output matrices, we construct four different tariff measures that capture the direct and indirect exposure to tariffs at different stages of the production chain for a broad set of countries and industries. Our results suggest that tariffs have significant effects on economic outcomes, including on countries and sectors not directly targeted. We find that tariffs higher up and further down in the value chain depress value added, employment, labor productivity and total factor productivity to varying degrees. We find no benefits for the sector that enjoys additional protection, yet there is some evidence of economic activity being diverted, i.e. positive effects on value added and employment from tariffs imposed on competitors. Our paper relates to recent innovations in theoretical gravity models and provides an empirical assessment of possible long-term effects of recent trade tensions.
    Keywords: Tariffs, global value chains, value added, productivity
    Date: 2022–02–25
  11. By: Ng, Joe Cho Yiu; Chan, Chao Hung; Tsang, Byron Kwok Ping; Leung, Charles Ka Yui
    Abstract: This paper argues that the persistence of greenfield foreign direct investment (FDI) comes from information frictions. First, our simple social learning model shows that, through signaling effects, information frictions generate persistent greenfield FDI inflows. Second, we show empirically that the autoregressive coefficient of greenfield FDI increases in value with different proxies for information frictions, including six institutional and governance indicators and two common language measures. We also find that greenfield FDI persistence varies across industries. In particular, greenfield FDI by service firms is more persistent than that by manufacturing firms. Finally, our findings suggest that better governance, predictability, and transparency reduce information frictions and thereby avoiding drastic and persistent ups and downs in FDI.
    Keywords: Greenfield FDI, persistence, information, social learning
    JEL: C23 D21 D23 F23
    Date: 2022–03–19
  12. By: Ali-Yrkkö, Jyrki; Hirvonen, Johannes; Rouvinen, Petri
    Abstract: Abstract This brief considers the world export market shares of Belarus, Russia and Ukraine across over five thousand commodities (the full dataset is provided online at the same web address as this brief). The aim is to provide a tool for gauging where supply chain disruptions might emerge next. Earlier discussion regarding the international trade presence of the three countries has largely revolved around crude oil and natural gas. While they also prominently appear in our analysis, foodstuffs and fertilizers (and the materials thereof) appear to be even more important. With the La Niña weather pattern affecting North American crops in the same time window, a global food catastrophe after the coming autumn, if not sooner, seems imminent. The three countries account for about 70% of sunflower oil exports globally. Their corresponding share for colza and rape oils, popular substitutes for sunflower oil, is over 25%. There are also several narrow and globally minor categories in which the three countries have huge markets shares and in which they might cause disruptions in specific supply chains; examples include specific types of fish and other seafoods. Finland is highly exposed to the consequences of the war (it should be noted, however, that the role of domestic provision in is not considered in this brief). For example, practically all of Finland’s nickel imports come from Russia, as do a significant share of methanol, sawn wood, and crude oil.
    Keywords: Ukraine, Russia, Economy, Exports, Dependency, Imports, Trade, War
    JEL: F14 F1 F51 F52
    Date: 2022–03–29
  13. By: Guilherme MAGACHO; Etienne ESPAGNE; Antoine GODIN
    Abstract: This article analyses the impact of the introduction of the Carbon Border Adjustment Mechanism (CBAM) on the European Union (EU) trade partners, focusing especially on its potential socio-economic and external consequences for developing and emerging economies. It uses trade data and Multi-regional Input-Output (MRIO) matrices to investigate the geographically and sectorally uneven distribution of CBAM’s impacts. The introduction of CBAM by the EU is under discussion, and most of the literature on the topic has analysed the consequences for the EU economies. However, this carbon adjustment mechanism, which seeks to reduce the incentives for firms to outsource their carbon emissions and promote a more generalized low-carbon transition, might disproportionally impact some non EU economies. Despite most carbon revenues would be generated by Russia, China and Ukraine, the degree of exposure of economies that export the CBAM products to Europe varies substantially, with many developing economies having more than 2% of their exports, and 1% of their production impacted by this measure. East European economies, mainly in the Balkans, as well as Mozambique, Zimbabwe and Cameroon, in Africa, are those where exports are the most exposed. In socioeconomic terms, we can also include Morocco and Tajikistan in the group of most exposed economies. CBAM is certainly an important step towards a European pricing carbon dynamics. Its implementation conditions may also promote a global (rather than local) lowcarbon transition if the carbon revenues generated by this mechanism are used to support the most impacted developing countries outside the EU.
    JEL: Q
    Date: 2022–03–10
  14. By: Carlos Eduardo Suprinyak (The American University of Paris - The American University of Paris)
    Abstract: In November 1779, the group of Irish militias known as the Volunteers rallied around a statue of King William III in Dublin protesting for free trade between Ireland and Britain. The episode kickstarted a series of political negotiations around the topic that culminated in the abortive proposal for the establishment of a free trade area in 1785. From the Irish perspective, free trade was regarded as a strategy for eliminating the restrictions and regulations, emanating from London, which had so far stifled the development of local industry. In Britain, however, the proposal faced hostilities due to the expected dislocations for established manufacturing interests. Newly appointed prime minister William Pitt tried to justify the case for free trade with Ireland before the British public by appealing to its beneficial effects for a unified and coherent imperial trade policy. This, in turn, proved unacceptable to Irish politicians and agitators, who regarded free trade as a step in the route to more -- not less -- political autonomy. Exploring public arguments on this topic, the paper investigates the economic and political meanings associated with free trade during the later decades of the 18th century, while discussing how these notions related to the literature on political economy circulating at the time.
    Keywords: free trade,protection,British Empire,Ireland,Josiah Tucker,Adam Smith
    Date: 2022–02–23
  15. By: Huynh, Cong Minh; Hong, Thien Huong
    Abstract: This research empirically examines how the overall logistics performance index (LPI) and its different dimensions affect export flows in 38 developing countries during the period 2007-2018. Results significantly shows positive impacts of the overall index of international logistics performance and its five dimensions on export flows, including Customs (C), Infrastructure (I), International shipments (IS), Logistics quality and competence (LQC), and Timeliness (T). Notably, three dimensions of LPI that have the strongest impacts on export flows are LQC, T, and C. The findings provide policymakers strong evidence on making the right decisions to facilitate and enhance the export flows by promoting international logistics performance in developing countries.
    Keywords: Developing countries; International logistics performance; Export flows
    JEL: F14 H54 O24
    Date: 2022–01–21
  16. 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
  17. 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 (Nnamdi Azikiwe 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
  18. By: KIYOTA Kozo; NAKAJIMA Kentaro; TAKIZAWA Miho
    Abstract: This study examines the local labor market effects of offshoring on manufacturing activities. One of the contributions of this study is that it develops matched foreign affiliate-domestic parent-domestic plant data on Japan from 1995 to 2016 to measure the manufacturing employment and offshoring of manufacturing activities at the local level. Our results indicate that while exposure to Chinese import competition negatively affects local manufacturing employment, offshoring exposure contributes to mitigating such negative effects. We find that a 10 percent increase in foreign manufacturing employment drives a 1 percent increase in local employment. We also find that offshoring exposure has a significantly positive effect on the employment of non-offshoring firms in the same local labor market. Our results indicate that offshoring has a negative impact on local employment.
    Date: 2022–03
  19. By: URATA Shujiro; Youngmin BAEK
    Abstract: This article examined the effect of participation in global value chains (GVCs) on productivity for Japanese manufacturing firms by using firm-level data obtained from the Basic Survey of Japanese Business Structure and Activities [Kigyo Katsudo Kihon Chosa], Ministry of Economy, Trade and Industry. We define a firm that is engaged in both importing and exporting as a GVC firm. Our analysis is conducted for the period 1994-2018, and it covers approximately 10,000 firms for each year with some variation during the period. We combine the Propensity Score Matching (PSM) and Difference in Differences (DID) estimation methods in order to examine the impact of a shift from being a non-GVC firm to a GVC firm, or participation in GVCs by a non-GVC firm, on its productivity. To test the importance of experience in GVC participation on productivity (learning effect), we estimated the impact not only for the first year of GVC participation but also for subsequent five years. Our analysis showed the impact of GVC participation on productivity is positive for our 110 estimations with few exceptions, and the estimated coefficients are statistically significant for approximately 35 percent of the cases. These findings indicate that the impact of GVC participation on productivity for Japanese manufacturing firms is generally positive, but the impact is not very strong. We also found that the magnitude of the positive coefficient increased over time, indicating that it takes GVC participating firms time and the accumulation of experience to assimilate new technology and management know-how they acquired through GVC participation.
    Date: 2022–03
  20. By: Diego Marino Fages (University of Nottingham); Matias Morales (New York University)
    Abstract: Anti-immigrant sentiment is frequently motivated by the idea that migrants are a threat to the host country’s culture (Rapoport et al., 2020). We contribute to the discussion by investigating whether migrants adapt their social preferences (SPs) to those prevalent in their host country. For this, we rely on a global and experimentally validated survey to show that migrants’ preferences strongly correlate with their host population’s SPs and provide some evidence of a causal relationship.
    Keywords: Migration, Assimilation, Social Preferences
    Date: 2022–07
  21. By: Federico Carril-Caccia (Universidad de Granada, Departamento de Economia Española e Internacional); Juliette Milgram Baleix (Universidad de Granada, Departamento de Teoría e Historia Económica); Jordi Paniagua (Universidad de Valencia)
    Abstract: This work assesses the impact of terrorism suffered by a country on the capacity of attracting greenfield investment. To this end, we estimate a theoretical consistent structural gravity equation which accounts for several well-known estimation biases such as “home bias”, endogeneity and multilateral resistance. This specification makes possible identifying the effect of a country-specific timevarying characteristic such as terrorism. We exploit a dataset which covers domestic and foreign investment of 182 countries during 2003-2016 on both, the extensive and intensive margins. Our study highlights that foreign investors are reluctant to invest in countries affected by terrorism and also reduce the amount of their investments in such cases. The sensitivity to terrorism is higher for foreign investors than for domestic ones. Terrorist attacks have a more intense impact on foreign investors’ decision when they come from international groups or when these violent acts hurt governments. Though, our results also evidence that good governance appears as an effective tool to counterbalance these damages in the eye of foreign investors.
    Keywords: Home bias, gravity equation, terrorism, FDI, greenfield investments, institutions
    JEL: C23 F21 F23 O17
    Date: 2022–03–25
  22. By: Nicola Gagliardi; Benoit Mahy; François Rycx
    Abstract: This article provides an overview of the economic literature regarding the impact of firms' position in global value chains on workers' wages and the gender pay gap. Particular attention is devoted to empirical results obtained for the Belgian economy. The latter suggest that workers earn significantly higher wages when employed in relatively more upstream firms. Nevertheless, such gains are found to be very unequally shared. Male top-earners are the main beneficiaries, whereas women, irrespective of their earnings, appear to be unfairly rewarded.
    Keywords: Gender; Global value chains; Upstreamness; Wages
    Date: 2020–04–01
  23. By: Kleifgen, Eva (Institute for Employment Research (IAB), Nuremberg, Germany); Roth, Duncan (Institute for Employment Research (IAB), Nuremberg, Germany); Stepanok, Ignat (Institute for Employment Research (IAB), Nuremberg, Germany)
    Abstract: "The Covid-19 pandemic has caused major disruptions in international trade and has raised concerns about adverse effects on international supply chains. Using a unique establishment survey matched with administrative data from Germany, we provide novel evidence on how establishments have adjusted their supply chains in response to pandemic-induced disruptions. We find that establishments that experienced difficulties in obtaining intermediate inputs as a result of the pandemic are significantly more likely to change their network of suppliers than establishments without such problems, especially if disruptions affected imports from abroad. If an establishment experienced disruptions, it is also more likely to replace a distant with a closer supplier. However, these supply chain adjustments in response to the pandemic appear to be temporary." (Author's abstract, IAB-Doku) ((en))
    Keywords: IAB-Datensatz BeCovid ; IAB-Open-Access-Publikation ; IAB-Betriebs-Historik-Panel
    JEL: F14 D22
    Date: 2022–03–28
  24. By: Sorgho, Zakaria; Tharakan, Joe (Université catholique de Louvain, LIDAM/CORE, Belgium)
    Abstract: This paper assesses the effectiveness on climate change mitigation of the environmental-related commitments contained in preferential trade agreements (PTAs). The starting question is does any PTA with environmental provisions reduce emissions? Because of a lack of detailed data on PTAs, the academic literature on the role of PTAs with environmental provisions (PTAwEP) in global climate governance remains limited. A novel and detailed database identifying nearly 300 different types of environmental provisions from more than 680 PTAs since 1947 allows us to distinguish the PTAs with climate-related provisions (PTAwCP) from those with provisions related to other environmental issues. Using panel data covering 165 countries over the period 1995 to 2012, controlling for endogeneity issues, our main result shows that PTAwCP statistically reduce the emissions while the effect of PTAs with provisions related to other environmental issues remains a negative but not significant on emissions. Our results suggest that it is rather the specific climaterelated provisions in PTAwEP that positively affect the environmental quality. Thus, to be effective in terms of mitigating climate change, PTAwEP should contain climate-related commitments.
    Keywords: Preferential trade agreements ; Climate-related provisions ; Environmental policy ; Greenhouse gases ; Global warming ; Climate change
    JEL: F13 F18 Q51 Q54
    Date: 2022–01–01
  25. By: Vujanovic, Nina; Radosevic, Slavo; Stojcic, Nebojsa; Hisarciklilar, Mehtap; Hashi, Iraj
    Abstract: The beneficial effects of innovation for firm performance and competitiveness are well established but it has been suggested in recent years that innovation regimes differ between advanced and emerging economies. While advanced economies rely on knowledge generation, their emerging counterparts follow mainly knowledge use regime through the application of existing knowledge and technology. Climbing up the technological ladder can be helped through spillovers from foreign investors to local firms. We investigate whether FDI spillovers influence different phases of innovation process (from decision to innovate to productivity) among knowledge using and knowledge creating firms in an emerging European economy. The results show that innovation process in emerging economies is closer to imitation than creation of novel products. Local firms benefit from foreign counterparts in the early phase of innovation process. Stronger FDI effects are found on firms that undertake innovation through knowledge use than through knowledge generation.
    Keywords: knowledge use; knowledge generation; FDI; innovation; emerging economy
    JEL: O31
    Date: 2022–01
  26. By: Frankovic, Ivan
    Abstract: This paper builds on existing production network models to study the impact of global and sub-global carbon pricing. It uses the World Input-Output Database (WIOD) to calibrate intersectoral trade between seven regions and 56 economic sectors per region as well as EXIOBASE's sectoral accounts of greenhouse gas emissions to calibrate emission costs per sector for a given carbon price. The latter taxes emissions associated with the intermediate and final demand of fossil fuels as well as other emissions inherent to production. The global setup of the model allows the international propagation of carbon prices to be analyzed along worldwide value chains. The simulated sectoral impacts of carbon taxes are highly heterogeneous across sectors and regions, with the agricultural, mining, fossil fuel processing and transport sector exhibiting the largest impacts across all regions. For several sectors in Germany and Europe, particularly manufacturing sectors, international spillovers from carbon pricing outside of Europe can be substantial and increase value added losses by up to 100% relative to the impact of European-only carbon prices. The paper furthermore outlines a simple approach for applying the sectorally disaggregated results to global climate scenarios.
    Keywords: climate scenarios,carbon pricing,input-output data,production network models
    JEL: D57 E23 H23 Q54
    Date: 2022
  27. By: Olovsson, Conny (Research Department, Central Bank of Sweden); Walentin, Karl (Research Department, Central Bank of Sweden); Westermark, Andreas (Research Department, Central Bank of Sweden)
    Abstract: International immigration flows are large, volatile and have recently increased. This paper is the first to study the dynamic effects of immigration shocks on the economy within a search and matching framework. Since the microdata indicates that some of the key macroeconomic effects of immigration are largest in the short run, a steady state analysis would be insufficient. To construct a quantitatively relevant general equilibrium framework, we use extensive Swedish microdata. We then study the effect of a large immigration shock on various macroeconomic aggregates. Due to compositional effects, there is a substantial negative effect on GDP per capita and the employment rate on impact that then decreases over time.
    Keywords: Immigration; dynamics; search and matching
    JEL: J21 J31 J61
    Date: 2021–10–01
  28. By: TANAKA Ayumu; ITO Banri; JINJI Naoto
    Abstract: In this study, we conduct a conjoint survey experiment in Japan to analyze the determinants of preferences toward the acquisitions by foreign firms. Conjoint survey experiments allow us to simultaneously estimate the effects of various attributes of foreign acquisitions, enabling us to analyze the complex causal relationships between various attributes of an acquisition project and people's antipathy toward it. The results of the experiment demonstrate that the nationality of the foreign firm, reciprocity, and the economic conditions of the location of the firm being acquired are important factors. Specifically, our respondents' approval rates for acquisitions by US firms are higher and those for acquisitions by Chinese, Korean, and Russian firms are lower compared to those for the acquisitions by the baseline "foreign firms." Moreover, their approval rates are higher for acquisitions by firms from countries that have been receptive to Japanese investment and for the foreign takeover of firms in areas with a high unemployment rate.
    Date: 2022–02
  29. By: Gary Clyde Hufbauer (Peterson Institute for International Economics); Megan Hogan (Peterson Institute for International Economics); Yilin Wang (Peterson Institute for International Economics)
    Abstract: With US inflation running at 40-year high rates, the Federal Reserve is signaling more interest rate hikes in 2021 and 2022. President Joseph R. Biden Jr. has also vowed to act against what he calls anticompetitive behavior by corporations. But policymakers are overlooking one set of actions that could make a meaningful contribution to taming inflation: trade liberalization. The data cited in this Policy Brief indicate that a feasible package of liberalization could deliver a one-time reduction in consumer price index (CPI) inflation of around 1.3 percentage points, amounting to $797 per US household, about half the size of pandemic relief in 2021. As a bonus, the embrace of trade liberalization would curb inflationary expectations taking hold in American firms now protected by trade barriers from foreign competition.
    Date: 2022–03
  30. By: Chmielewski, Łukasz
    Abstract: The aim of the paper is to present the global and Polish sugar balance and the price situation. Several issues have been given particular attention. Firstly, the relationship between the production of sugar and bioethanol in Brazil and world sugar prices. Secondly, the relationship between Brazilian sugar and bioethanol exports and world sugar prices. Thirdly, the relationship between sugar prices in Poland and the world ones when the market support mechanisms at the EU level are in force and after they expire. The study used data from Statistics Poland, USDA-FAS, FAOSTAT, OECD-FAO, to name a few, and was based on correlation and linear regression analysis, as well as the Herfindahl-Hirschman index. The data analysis showed a statistically significant correlation between the production and exports of sugar from Brazil, as well as between Brazilian exports and world sugar prices. The analysis also showed a greater correlation between food prices than sugar and oil price quotas. A much greater correlation was also observed between the selling and retail prices of sugar in Poland and the world sugar prices after the abolition of sugar production quotas and minimum prices for sugar beet in the EU, as compared to the period of application of the support mechanisms.
    Keywords: Demand and Price Analysis, Research Methods/ Statistical Methods
    Date: 2021–12–23
  31. By: Benfica, Rui
    Abstract: This paper looks at the prioritization of agricultural value chains (VCs) for the allocation of R&D resources that maximize development outcomes (poverty, growth, jobs, and diets). Considering that growth in VCs affects those various outcomes differently, as expansion pathways result in the diverse use of production factors and inputs, trade-offs from linkages across sectors, and changes throughout the agri-food system, this analysis uses (i) the RIAPA dynamic computable general equilibrium model to identify which agricultural VCs, when expanded through TFP growth, provide the strongest effects on the development outcomes of interest; (ii) the perpetual inventory model (PIM) to represent the lagged effect of research through knowledge stocks of agricultural R&D investments; and (iii) information on the elasticities of VC agricultural activity TFP with respect to agricultural R&D knowledge stocks, to discuss the VC priority allocations of R&D resources in Senegal. Results indicate that no one VC (crop- or livestock-related) is the most effective at improving all development outcomes. When accounting for policy preferences that attribute relative priority weight to development objectives, results (based on a ranking scale) indicate that R&D investments for maximizing development objectives can be most effective in Senegal’s VCs for traditional export crops (growth, diets, jobs, and to some extent poverty), groundnuts (poverty, diets, and jobs), rice (poverty and jobs), poultry/eggs (diets and jobs), sorghum/millet (poverty and growth), and cattle (diets and growth). Other promising VCs with potential effects at scale if strategically targeted include vegetables (poverty, diets, and jobs), oilseeds (poverty and growth), and fruits (diets and jobs). While these results can inform strategies aimed at improving multiple development outcomes, future modeling needs to focus on deepening the standardization and integration of R&D investments costs into the framework, disentangle the relevance of different types of R&D investments sources, and bring together other factors and complementary agrifood system investment dimensions relevant to sustainable and inclusive agricultural VC growth.
    Keywords: SENEGAL; WEST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; models; agriculture; investment; computable general equilibrium models; productivity; research; poverty reduction; agrifood systems; dietary diversity; agricultural value chains; value chains; diet; poverty; total factor productivity; knowledge stocks; agrifood system growth; job creation
    Date: 2022
  32. By: Acosta, Juan; Rancan, Antonella; Sergi, Francesco
    Abstract: In 1979, Paolo Ranuzzi, a senior economist within the Commission's Directorate General for Economic and Financial Affairs (DG II), led the development of "EUROLINK", a short-term macroeconometric multi-country model of the European Economic Community (EEC). EUROLINK was used by the Commission for a few years, for producing macroeconomic forecasts, the EEC budget, and various studies about the dynamics of the EEC economy. However, after two years of intense criticisms, the use and development of EUROLINK was abandoned in 1983. This article documents the history of the short-lived EUROLINK model. We highlight the reasons pushing the DG II to develop such a multi-country model, then the reasons bringing to its abandonment. We argue that, compared to single-country macroeconometric models, multi-country models were considered more suitable to analyse, theoretically and quantitatively, interdependencies across national economies and spillover effects of national policies. To address these issues, EUROLINK combined, via original bilateral trade equations, four heterogeneous large-scale macroeconometric models of European countries, developed by national modelling teams. We characterise this methodology as the "decentralised approach". Thanks to original archives, we show how this approach was deemed overly complicated and costly by the DG II. After EUROLINK, DG II economists shifted to a different modelling approach (the "centralised approach"), in which the multi-country model (COMPACT, then QUEST) combines identical models of national economies, all entirely built by the DG II team. This approach was considered as one preserving DG II's "intellectual command" over the modelling activities.
    Keywords: Multi-Country Models, European Macroeconomics, Commission of the European Communities, Eurolink
    JEL: B22 B27 F41
    Date: 2022–03–29
  33. By: International Monetary Fund
    Abstract: The WAEMU has, so far, demonstrated strong resilience to the Covid crisis. The economic rebound that started in the second half of 2020 firmed up in 2021, while fiscal and monetary policies remained supportive. External reserves have risen to comfortable levels and the financial system appears to be broadly sound. However, the region faces significant challenges to ensure the sustainability of macroeconomic policies, while supporting the economic recovery and navigating the uncertain outlook.
    Date: 2022–03–02

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