nep-int New Economics Papers
on International Trade
Issue of 2022‒05‒02
53 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The impact of non-tariff barriers on trade and welfare By Dhingra, Swati; Freeman, Rebecca; Huang, Hanwei
  2. Import liberalization as export destruction? Evidence from the United States By Breinlich, Holger; Leromain, Elsa; Novy, Dennis; Sampson, Thomas
  3. Firm export responses to tariff hikes By Albornoz, Facundo; Brambilla, Irene; Ornelas, Emanuel
  4. WTO 2025: Restoring binding dispute settlement By Alan Wm. Wolff
  5. EU's Unilateral Trade Liberalisation for Belarusian Services By Sierž Naurodski
  6. Worker and firm responses to trade shocks: the UK-China case By De Lyon, Joshua; Pessoa, João Paulo
  7. The survival of Latvian products and firms in export markets By Konstantins Benkovskis; Peter Jarrett; Zeev Krill; Olegs Tkacevs; Naomitsu Yashiro
  8. Economic geography, politics, and the world trade regime By Rickard, Stephanie
  9. Revisiting the Economic Impacts of the EU CBAM on Finland and the EU By Kaitila, Ville; Kuusela, Olli-Pekka; Kuusi, Tero; Pohjola, Johanna; Soimakallio, Sampo
  10. Artificial Intelligence and international trade: Some preliminary implications By Janos Ferencz; Javier López González; Irene Oliván García
  11. Labor unions and the electoral consequences of trade liberalization By Molina Ogeda, Pedro; Ornelas, Emanuel; Soares, Rodrigo R.
  12. Intra-bloc tariffs and preferential margins in trade agreements By Ornelas, Emanuel; Tovar, Patricia
  13. Long-run impacts of the conflict in Ukraine on food security in Africa By Balma, Lacina; Heidland, Tobias; Jävervall, Sebastian; Mahlkow, Hendrik; Mukasa, Adamon N.; Woldemichael, Andinet
  14. Trade protection along supply chains By Bown, Chad P.; Conconi, Paola; Erbahar, Aksel; Trimarchi, Lorenzo
  15. The validity of the export-led growth hypothesis: some evidence from the GCC By Kalaitzi, Athanasia Stylianou; Chamberlain, Trevor William
  16. Trade and innovation By Melitz, Marc J.; Redding, Stephen J.
  17. Trade, gravity and aggregation By Breinlich, Holger; Novy, Dennis; Santos Silva, J. M. C.
  18. Regional Economic Impacts of Trans-Caspian Infrastructure Improvement: Implications for the Post-COVID-19 Era By Li, Xinmeng; Wang, Kailai; Chen, Zhenhua
  19. Domestic Supplier Spillovers of Global Value Chains in Central and Eastern European Countries By Knez, Klemen
  20. The Effect of Trade Liberalization on Expenditure Structure of Pakistan By Ahmad, Khalil; Ali, Amjad; Yang, Michael
  21. Board Diversity and Outward FDI: Evidence from Europe By Valeria Gattai; Piergiovanna Natale; Francesca Rossi
  22. Is the United States Trying to Undermine the WTO? By Edward J. Balistreri
  23. The Incidence of the U.S.-China Solar Trade War By Sébastien Houde; Wenjun Wang
  24. The backlash of globalization By Colantone, Italo; Ottaviano, Gianmarco; Stanig, Piero
  25. Enhancing Connectivity and Trade Between Central Asia Regional Economic Cooperation Countries and the World: Benefits, Risks and Policy Implication By Kalyuzhnova, Yelena; Holzhacker, Hans
  26. The Conceptual Framework of Economic Cooperation and Integration between OIC: Empirical Evidence on Effects of Trade on Cooperation and Integration By Ibrahim Mohamed Ibrahim Eldeeb
  27. Legitimacy of the Criticism by the United States against the Trade Remedy Findings of the WTO Appellate Body in Connection with its Refusal to Appoint Appellate Body Members (Japanese) By UMEJIMA Osamu
  28. Minimum wages and the China syndrome: causal evidence from US local labor markets By Heath Milsom, Luke; Roland, Isabelle
  29. Opposing firm-level responses to the China shock: horizontal competition versus vertical relationships By Aghion, Philippe; Bergeaud, Antonin; Lequien, Matthieu; Melitz, Marc J.; Zuber, Thomas
  30. Working Paper 359- Comparative Advantage and Growth Potential of the Democratic Republic of Congo By Rachidi Kotchoni; Franck M. Adoho
  31. Structure of international trade hypergraphs By Sudo Yi; Deok-Sun Lee
  32. Population growth, immigration and labour market dynamics By Elsby, Michael W. L.; Smith, Jennifer; Wadsworth, Jonathan
  33. Occupational regulation, institutions, and migrants' labor market outcomes By Koumenta, Maria; Pagliero, Mario; Rostam-Afschar, Davud
  34. Granular Linkages, Supplier Cost Shocks & Export Performance By Santiago Camara
  35. The Migration of Belarusians to Poland and The European Union: The Situation after August 2020 By Oskar Chmiel; Piotr KaŸmierkiewicz; Karalina Sauka; Agnieszka Kulesa
  36. Appendix for: Optimal Cooperative Taxation in the Global Economy By V. V. Chari; Juan Pablo Nicolini; Pedro Teles
  37. Productivity effects of trade in natural resources – comparison with mechanisms of technological specialisation. By Zuzanna Bazychowska; Aleksandra Parteka
  38. Global value chain analysis of the automotive and garment sectors: A study of Germany, Spain, Romania, Indonesia and Mexico for 2000-2014 By BRONDINO Gabriele
  39. Export of Medium and High-Tech Products in Europe By LEOGRANDE, ANGELO
  40. The Brexit vote, inflation and U.K living standards By Breinlich, Holger; Leromain, Elsa; Novy, Dennis; Sampson, Thomas
  41. Exports and the Exchange Rate: A General Equilibrium Perspective By Patrick Alexander; Abeer Reza
  42. Chinese investment in Turkey: the Belt and Road Initiative, rising expectations and ground realities By Gürel, Burak; Kozluca, Mina
  43. Income and the desire to migrate By Langella, Monica; Manning, Alan
  44. Bribery—Export Nexus under the Firm’s Growth Obstacles By Phan, Trang Hoai; Stachuletz, Rainer
  45. Dynamic spatial general equilibrium By Kleinman, Benny; Liu, Ernest; Redding, Stephen J.
  46. The politics of export restrictions: a panel data analysis of African commodity processing industries By Schulz, Nicolai
  47. EU Sanctions on Belarus as an Effective Policy Tool By Anders Aslund; Jan Hagemejer
  48. ASEAN Education Cooperation: An Assessment of the Education Divide and Measuring the Potential Impact of Its Elimination By Das, Sanchita Basu; Narayanan, Badri
  49. The resilience of the multirelational structure of geopolitical treaties is critically linked to past colonial world order and offshore fiscal havens By Pier Luigi Sacco; Alex Arenas; Manlio De Domenico
  50. Logistics Policy Analysis and Network Model Simulation for Cross-Border Transport in the Trans-Caspian Transport Corridor: Global Intermodal Logistics Network Simulation (GLINS) Model By Watanabe, Daisuke; Shibasaki, Ryuichi; Arai, Hirofumi
  51. The Global Distribution of College Graduate Quality By Paolo Martellini; Todd Schoellman; Jason A. Sockin
  52. Global distributions of capital and labor incomes: capitalization of the global middle class By Ranaldi, Marco
  53. The Long-Run Effects of Immigration: Evidence across a Barrier to Refugee Settlement By Ciccone, Antonio; Nimczik, Jan Sebastian

  1. By: Dhingra, Swati; Freeman, Rebecca; Huang, Hanwei
    Abstract: Deep trade agreements are widespread and have taken the world beyond tariff liberalization in goods trade. As the importance of global supply chains and the services sector increased across the world, shallow tariff reductions gave way to deeper commitments that address non-tariff barriers and behind the border barriers to trade. This paper shows that deep trade agreement commitments increase trade by 25% for trade in goods and by even more for trade in services. Taking reduced form estimates to a quantitative model enables general equilibrium analysis of the trade and welfare impacts of deep trade agreements. We find that China, India, and the Eastern European bloc have benefited the most from trade agreements since the Uruguay Round. While a large share of the gains to Eastern Europe come from deep commitments during its accession to the EU, gains for China and India come largely from tariff reductions. Applying the framework to ex-ante analysis of the UK’s departure from the deepest trade agreement in the world suggests that the potential benefits the UK may gain, post-Brexit, from future deep agreements with the EU and selected nonEU trade partners would not offset its losses from leaving the EU. Overall, deep trade agreements have contributed over 40% to the welfare gains from trade globally and even more so for advanced economies.
    Keywords: trade agreements; deep agreements; economic integration; provisions; non-tariff barriers
    JEL: F14 F10 F15
    Date: 2021–01–12
  2. By: Breinlich, Holger; Leromain, Elsa; Novy, Dennis; Sampson, Thomas
    Abstract: How does import protection affect export performance? In trade models with scale economies, import liberalization can reduce an industry's exports by cutting domestic production. We find this export destruction mechanism reduced US export growth following the normalization of trade relations with China (PNTR). But there was also an offsetting boost to exports from lower input costs. We use our empirical results to calibrate the strength of scale economies in a quantitative trade model. Counterfactual analysis implies that while PNTR increased aggregate US exports relative to GDP, exports declined in the most exposed industries because of the export destruction effect. On aggregate, the US and China both gain from PNTR, but the gains are larger for China.
    Keywords: trade policy; import liberalization; comparative advantage; scale economies; China shock
    JEL: F12 F13 F15
    Date: 2021–06–30
  3. By: Albornoz, Facundo; Brambilla, Irene; Ornelas, Emanuel
    Abstract: We study how firms react to unexpected increases in import tariffs. We identify our results from a sudden removal of American preferential tariffs applied on Argentine imports under the Generalized System of Preferences, which reflected American retaliation to a dispute over intellectual property between the two countries. Critical for identification, the tariff hike affected a third of Argentine exports enjoying preferential access in the American market, but did nothing to the other two thirds. We find that the higher tariffs reduced export participation of affected Argentine firms in the U.S. market, whereas resilient exporters dealt with the cost increase by reshuffling their export baskets away from the products whose tariffs increased. In fact, affected firms were more likely both to drop suspended products from their export basket and to start exporting new (non-suspended) products to the U.S. Interestingly, the extensive margin effects carry over to third markets, where policy did not change: after the policy shock, affected firms selling to the U.S. were less likely to export to other markets. This happened, however, only for firms that also exited the American market. We develop a framework that rationalizes the observed export interdependencies: while the extensive margin and third-country effects require country and product specific fixed costs, the effect on the sub-extensive and sub-intensive margins require diseconomies of scope, where exporting a product increases the marginal cost of exporting the rest of products in the export mix.
    Keywords: tariffs; export interdependence; GSP; exporting firms; multi-product firms; third-market effects
    JEL: F10 F14 O19 O24
    Date: 2021–07–28
  4. By: Alan Wm. Wolff (Peterson Institute for International Economics)
    Abstract: Binding dispute settlement—the ability to obtain a final judgment of whether a member of the World Trade Organization (WTO) has acted inconsistently with its obligations—was the defining attribute of the WTO as created in 1995. Global commerce thrived on having the certainty provided by its taking place within this system. For well over a decade, the United States had complained that the dispute settlement system was undermining the trade remedies—antidumping, countervailing duties against subsidies, and safeguard actions against injurious imports—that were allowed under the WTO’s rules. When a populist US administration assumed office in 2017, it blocked appointments to the WTO’s Appellate Body. Today, the WTO dispute settlement system has become balkanized. The European Union and a number of other countries have banded together to put into place an alternative mechanism. Outside this system are the other two-thirds of the WTO members, including the United States. For most WTO members, no definitive result can be reached as to whether WTO obligations have been violated, as there is no assurance that WTO dispute settlement will be binding for them. This paper addresses how to reconstruct a system that the United States could join that would be broadly acceptable to others. It sets out a wide range of elements for negotiators to consider to rebuild the WTO dispute settlement system and make WTO agreements enforceable again.
    Keywords: international trade, international trade agreements, dispute settlement, enforcement of agreements, United States trade policy, World Trade Organization
    JEL: F13 F51 F53 F55 K33 K41 N40
    Date: 2022–04
  5. By: Sierž Naurodski
    Abstract: This policy paper aims at offering a complementary solution to the European Union (EU) EUR 24 million assistance package to support good faith small and medium enterprises in Belarus by suggesting the introduction of unilateral trade liberalisation measures for the country’s services sector for 12 months, with prolongation conditional on the political and economic situation in Belarus. In consideration of the identified drawbacks of direct monetary assistance to Belarus, the author builds this paper on the EU’s experience in the Western Balkans to suggest potential political and economic rationales for the EU to unilaterally liberalise trade in services with Belarus. The paper identifies construction, transport, maintenance and repair, and ICT services as sectors with the highest untapped export potential for Belarusian services in the EU. The author did not find any legal limitations or negative implications under the legal frameworks of the EU, the Eurasian Economic Union, or the World Trade Organization.
    Keywords: Exports, Imports, Export of services, Import of services, Free Trade, Trade in services, Belarus, EU, European Single Market, WTO, Eurasian Economic Union
    JEL: F15
    Date: 2021
  6. By: De Lyon, Joshua; Pessoa, João Paulo
    Abstract: We exploit the recent surge in Chinese export growth to study the effects of a trade shock on workers and firms in a foreign market, the UK, in the period 2000-2007. We find that individuals initially employed in sectors highly exposed to growth in imports from China experienced lower income growth and remained out of employment longer than workers in sectors that were less exposed to import competition. The effects are heterogeneous, with initially lower-paid workers suffering more in terms of employment and earnings than those initially better-paid, and female workers experiencing a greater relative fall in total earnings than males, mostly through reduced years of employment. Plants in industries more exposed to Chinese products displayed lower employment growth and higher probability of going out of business than plants in sectors more insulated from competition with China, with stronger effects for larger plants.
    Keywords: globalisation; employment; wages; UK economy
    JEL: F14 F16 J30 J60
    Date: 2021–01–08
  7. By: Konstantins Benkovskis; Peter Jarrett; Zeev Krill; Olegs Tkacevs; Naomitsu Yashiro
    Abstract: This paper investigates factors that contribute to the survival of export relationships at the firm and product levels using a large anonymised firm-level database for Latvia. It finds that some characteristics of exporting firms, such as a higher productivity level, larger size, lower indebtedness and higher profitability are associated with longer duration of export relationships. Firms that innovated prior to exporting are also likely to enjoy longer export spells, while participation in an EU-fund support programme did not alter duration. Younger staff and management of the firm are associated with a better survival of a new export product. Furthermore, this paper reveals novel roles of export product characteristics in survival, in particular an interesting tension between the complexity of new export products and their “distance” from the existing export bundle. While aiming high, that is, exporting products that are more complex, pays off as such products are associated with longer-lasting trade relationships, aiming too high, that is exporting new products that are far more complex than the exporter’s existing product bundle, tends to lower their survival probability.
    Keywords: economic complexity, Exports, innovation, productivity, trade
    JEL: F10 F14 P45 H81
    Date: 2022–04–22
  8. By: Rickard, Stephanie
    Abstract: AAlthough globalization and the world trade regime have reduced the significance of distance between countries, within countries, geography matters now more than ever. Inside countries’ borders, economic activities, such as production and employment, occur unevenly across space. As a result, international trade impacts parts of a country differently. Some areas benefit from rising trade, while others experience reductions in local wages and employment as a result of increased import competition. Because regions’ experience of globalization varies, public opinion about trade differs across geographic areas within countries. Voters living in regions advantaged by trade are likely to support economic openness, while voters living in regions negatively impacted by trade grow increasingly skeptical of the benefits of globalization. The geographic disparities in public attitudes towards trade often align with salient political cleavages. As a result, debates over trade have become increasingly polarized in many countries, which may threaten states’ continued economic openness and their engagement with, and even support for, the world trade regime.
    Keywords: CUP deal
    JEL: N0
    Date: 2022–01–26
  9. By: Kaitila, Ville; Kuusela, Olli-Pekka; Kuusi, Tero; Pohjola, Johanna; Soimakallio, Sampo
    Abstract: Abstract We assess the potential impact of the EU carbon border adjustment mechanism (CBAM) based on the European Commission’s proposal presented in 2021. The CBAM products are divided into four categories: cement, fertilizers, iron and steel products, and aluminium products. In terms of production and the value of foreign trade, iron and steel products are by far the largest category, followed by aluminum products. Based on econometric gravity modelling of trade, the impact on EU imports of products covered by the CBAM would be significant. In normal economic conditions, Finland’s extra-EU imports of the products would decrease by a total of around a quarter with the proposed CBAM specifications and current carbon pricing. Based on general equilibrium modelling, the effects of the CBAM would be very small for the Finnish aggregate economy. In Finland and other EU countries, the CBAM would benefit directly or indirectly sectors that manufacture products subject to the mechanism. Other industrial sectors, on the other hand, would suffer slightly from the CBAM. The report assesses implications of different ways to implement the CBAM.
    Keywords: Carbon leakage, Carbon border adjustment mechanism, Gravity model, Computable general equilibrium
    JEL: Q38
    Date: 2022–04–25
  10. By: Janos Ferencz; Javier López González; Irene Oliván García
    Abstract: Artificial intelligence (AI) has strong potential to spur innovation, help firms create new value from data, and reduce trade costs. Growing interest in the economic and societal impacts of AI has also prompted interest in the trade implications of this new technology. While AI technologies have the potential to fundamentally change trade and international business models, trade itself can also be an important mechanism through which countries and firms access the inputs needed to build AI systems, whether goods, services, people or data, and through which they can deploy AI solutions globally. This paper explores the interlinkages between AI technologies and international trade and outlines key trade policy considerations for policy makers seeking to harness the full potential of AI technologies.
    Keywords: Data flows, Digital trade, Innovations, Regional Trade Agreements, Trade policy
    JEL: F13 F14 O33
    Date: 2022–04–22
  11. By: Molina Ogeda, Pedro; Ornelas, Emanuel; Soares, Rodrigo R.
    Abstract: We show that the Brazilian trade liberalization in the early 1990s led to a permanent relative decline in the vote share of left-wing presidential candidates in the regions more affected by the tariff cuts. This happened even though the shock, implemented by a right-wing party, induced a contraction in manufacturing and formal employment in the more affected regions, and despite the left's identification with protectionist policies. To rationalize this response, we consider a new institutional channel for the political effects of trade shocks: the weakening of labor unions. We provide support for this mechanism in two steps. First, we show that union presence-proxied by the number of workers directly employed by unions, by union density, and by the number of union establishments-declined in regions that became more exposed to foreign competition. Second, we show that the negative effect of tariff reductions on the votes for the left was driven exclusively by political parties with historical links to unions. Furthermore, the impact of the trade liberalization on the vote share of these parties was significant only in regions that had unions operating before the reform. These findings are consistent with the hypothesis that tariff cuts reduced the vote share of the left partly through the weakening of labor unions. This institutional channel is fundamentally different from the individual-level responses, motivated by economic or identity concerns, that have been considered in the literature.
    Keywords: trade shocks; elections; unions; Brazil
    JEL: F13 D72 J51 F16 F14
    Date: 2021–11–17
  12. By: Ornelas, Emanuel; Tovar, Patricia
    Abstract: We study, theoretically and empirically, how countries choose intra-bloc tariffs and preferential margins when they form Preferential Trade Agreements (PTAs). Our model indicates that countries should set systematically lower preferential margins when the bloc takes the form of a free trade area (where members set external trade policies independently), relative to a customs union (where members coordinate external tariffs). Moreover, in customs unions (but not necessarily in free trade areas) preferential margins should increase with the supply of partner countries and decrease with the level of preferential imports. These relationships reflect, respectively, the internalization of political-economy goals within the bloc and the desire to curb trade diversion. Using a sample that covers most PTAs formed by Latin American countries in the 1990s, when their popularity in the region shot up, we find empirical support for each of those predictions. These findings make clear that the type of PTA matters significantly for the bloc's tariff structure. Our results carry out important implications for the welfare consequences and the social desirability of different types of PTAs.
    Keywords: regionalism; free trade agreements; customs unions; tariff complementarity; Latin America
    JEL: N0 F3 G3 L81
    Date: 2021–09–01
  13. By: Balma, Lacina; Heidland, Tobias; Jävervall, Sebastian; Mahlkow, Hendrik; Mukasa, Adamon N.; Woldemichael, Andinet
    Abstract: Many African countries heavily rely on imports of agricultural commodities and agricultural inputs from Ukraine and Russia, for example wheat, other grains, and fertilizer. Russia's invasion of Ukraine has disrupted global access to grains due to reduced production, exports, and increased trade costs. This policy brief investigates the possible long-term consequences of the conflict on food security in Africa. We use a long-run general equilibrium trade model and study three scenarios that may evolve as a consequence of the conflict: 1) Ending exports of Ukrainian wheat and other cereals for food production, such as corn or sorghum. 2) Russia's potential ban on exports of grains and fertilizers, and 3) The impact of increased trade costs due to disrupted trade routes in the Black Sea. The model simulations show the conflict will severely compromise food security in Africa. We document important cross-country heterogeneity in the severity of impacts.
    Keywords: Food security,Grains,Fertilizers,Africa,Ukraine conflict,General equilibrium trade model,Ernährungssicherheit,Getreide,Dünger,Afrika,Ukraine-Konflikt,Allgemeines Gleichgewichtsmodell
    Date: 2022
  14. By: Bown, Chad P.; Conconi, Paola; Erbahar, Aksel; Trimarchi, Lorenzo
    Abstract: During the last decades, the United States has applied increasingly high trade protection against China. We combine detailed information on US antidumping (AD) duties— the most widely used trade barrier — with US input-output data to study the effects of trade protection along supply chains. To deal with endogeneity concerns, we propose a new instrument for AD protection, which combines exogenous variation in the political importance of industries with their historical experience in AD proceedings. We find that tariffs have large negative effects on downstream industries, decreasing employment, wages, sales, and investment. Our baseline estimates for 1988-2016 indicate that, due to AD protection against China, around 1.8 million US jobs were lost in downstream industries, with no significant job gains in protected sectors. When we extend the analysis to measures introduced under President Trump, we find that around 500,000 jobs were lost during the first two years of his term. We also provide evidence of the mechanisms behind the negative effects of protection along supply chains: AD duties decrease imports and raise production costs for downstream industries.
    Keywords: trade protection; supply chains; input-output linkages; employment
    JEL: F13 D57
    Date: 2021–01–06
  15. By: Kalaitzi, Athanasia Stylianou; Chamberlain, Trevor William
    Abstract: This study investigates the validity of the export-led growth hypothesis (ELG) in five GCC countries, namely, Bahrain, Kuwait, Oman, Saudi Arabia and the United Arab Emirates. The study uses an augmented production function and annual time series data over the period 1975-2016. For the estimation of the models, the Johansen cointegration test is employed to test the existence of a long-run relationship between growth and exports. In addition, the multivariate Granger causality test in a vector autoregressive model framework and a modified version of the Wald test are applied to examine the direction of the short-run and long-run causality respectively. The empirical results provide evidence to support the validity of the ELG hypothesis in the short-run for the UAE, while the converse is true for Bahrain. In addition, a bi-directional causality exists between exports and growth in the case of Kuwait. In the long-run, the validity of the ELG is confirmed in the case of Bahrain, while economic growth causes exports in the case of Kuwait and Saudi Arabia.
    Keywords: causality; economic growth; exports; GCC
    JEL: C32 F43 O47
    Date: 2021–02–17
  16. By: Melitz, Marc J.; Redding, Stephen J.
    Abstract: Two central insights from the Schumpeterian approach to innovation and growth are that the pace of innovation is endogenously determined by the expectation of future profits and that growth is inherently a process of creative destruction. As international trade is a key determinant of firm profitability and survival, it is natural to expect it to play a key role in shaping both incentives to innovate and the rate of creative destruction. In this paper, we review the theoretical and empirical literature on trade and innovation. We highlight four key mechanisms through which international trade affects endogenous innovation and growth:(i) market size; (ii) competition; (iii) comparative advantage; (iv) knowledge spillovers. Each of these mechanisms offers a potential source of dynamic welfare gains in addition to the static welfare gains from trade from conventional trade theory. Recent research has suggested that these dynamic welfare gains from trade can be substantial relative to their static counterparts. Discriminating between alternative mechanisms for these dynamic welfare gains and strengthening the evidence on their quantitative magnitude remain exciting areas of ongoing research.
    Keywords: innovation; growth; international trade
    JEL: F10 F43 O30 O40
    Date: 2021–06–17
  17. By: Breinlich, Holger; Novy, Dennis; Santos Silva, J. M. C.
    Abstract: Gravity regressions are a common tool in the empirical international trade literature and serve an important function for many policy purposes. We study to what extent micro-level parameters can be recovered from gravity regressions estimated with aggregate data. We show that estimation of gravity equations in their original multiplicative form via Poisson pseudo maximum likelihood (PPML) is more robust to aggregation than estimation of log-linearized gravity equations via ordinary least squares (OLS). In the leading case where regressors do not vary at the micro level, PPML estimates obtained with aggregate data have a clear interpretation as trade-weighted averages of micro-level parameters that is not shared by OLS estimates. However, when regressors vary at the micro level, using disaggregated data is essential because in this case not even PPML can recover parameters of interest. We illustrate our results with an application to Baier and Bergstrand's (2007) influential study of the effects of trade agreements on trade flows. We examine how their findings change when estimation is performed at different levels of aggregation, and explore the consequences of aggregation for predicting the effects of trade agreements.
    Keywords: free trade agreements; gravity equation; OLS; PPML; trade costs; ES/P00766X/1
    JEL: C23 C43 F14 F15 F17
    Date: 2021–09–22
  18. By: Li, Xinmeng (Asian Development Bank Institute); Wang, Kailai (Asian Development Bank Institute); Chen, Zhenhua (Asian Development Bank Institute)
    Abstract: With the implementation of the Belt and Road Initiative (BRI) in the People’s Republic of China (PRC), the Trans-Caspian International Transport Route (TITR) has received increasing attention. The corridor connects the PRC and Europe via Central Asian countries. Hence, it plays an important role in facilitating international trade through its transportation infrastructure network systems. As the corridor is opening up substantial economic opportunities for transit countries, it is becoming essential to have a proper understanding of the economic impact of potential transportation infrastructure investment on these countries along the TITR corridor. We conduct a regional economic impact assessment of transportation infrastructure investment to fill this research gap, using a computable general equilibrium analysis. To capture the uncertainty of infrastructure investment given the influence of COVID-19, we evaluated different impacts of the shocks, such as different modes of freight transportation (including rail, road, sea, and air), types of trade (exporting and importing), and levels of investor confidence. The results show that infrastructure investment has heterogeneous multiplier effects on the regional economy (due to the differences in infrastructure quality and country endowment). The impacts of infrastructure investment primarily result from the promotion of exports, and the impacts vary substantially by mode. Overall, we suggest that, although TITR countries are facing investment uncertainty due to the influence of COVID-19, strengthening infrastructure investment can be a useful tool to stimulate the economy while reducing the negative impact of the epidemic.
    Keywords: Trans-Caspian International Transport Route; transportation infrastructure; trade cost; computable general equilibrium
    JEL: F16 H54 J60
    Date: 2021–07
  19. By: Knez, Klemen
    Abstract: The article extends existing sectoral analyses of the internationalisation process in the EU by complementing qualitative studies of supplier linkages with a novel aggregate input-output approach to measuring the structure of supplier linkages. Examining changes in the structure of domestic and global supplier linkages over the period 2000 to 2014, we find that the new Central and Eastern European EU Member States exhibit a specific pattern that differs from that of the old EU countries. Above-average decreases in purely domestic value chains and a decrease in the share of global integration with complex domestic supplier linkages combined with an above-average increase in global integration with no domestic supplier linkages show the uneven pattern of the internationalisation process in the European Union and reveal the structural position of the European Eastern integrated peripheries.
    Keywords: European integration, integrated periphery, supplier linkages, input-output analysis, middle income trap
    JEL: F1 F4 F6 R1
    Date: 2022–03–15
  20. By: Ahmad, Khalil; Ali, Amjad; Yang, Michael
    Abstract: Demand-side public policy paly a risk-reducing role for imperfect sectors of the developing economies through public investment during liberalization. Public sector investment, composition, and structure play an important role to determine the comparative advantage for the productive sector. This study explores the effect of trade liberalization and trade tax revenue on the expenditure structure of Pakistan from 1975 to 2019. The Autoregressive Distributed Lag approach has been used for examining the long-run co-integration among the expenditure structure and trade liberalization and the Error-Correction model is used for short-run dynamics of the concerned variables. The empirical result shows that trade tax revenue has a positive impact on expenditure structure in long run but not in the short run. Trade liberalization, budget deficit, and defence expenditure have a negative association with expenditure structure. The underground economy has also a negative impact on expenditure structure but the most surprising result of political stability shows negative relation with expenditure structure. With more political stability in Pakistan, the share of non-development expenditure is higher as compared to development expenditure during trade liberalization.
    Keywords: Average Tariff rate, Trade Tax Revenue, Expenditure Structure
    JEL: F10 F13 H71
    Date: 2022–02
  21. By: Valeria Gattai; Piergiovanna Natale; Francesca Rossi
    Abstract: Employing firm-level panel data from 2011 to 2015, we investigate the relationship between board diversity and outward foreign direct investment (OFDI) among firms headquartered in Europe. Previous studies suggest that best-performing firms self-select into OFDI and that board diversity affects firm performance and strategic decisions. Our focus is on board diversity in terms of gender and nationality as determinants of OFDI. After controlling for endogeneity using instrumental variables and control function methods, we find that board diversity positively affects OFDI by increasing firm performance; however, firms with more diverse boards are less likely to open foreign subsidiaries. Our findings also reveal that the negative effect of board diversity on OFDI is stronger in more productive firms.
    Keywords: Board diversity, Outward Foreign Direct Investment (OFDI), Foreign Direct Investment (FDI), Firm performance, Europe
    JEL: F23 G30 J16
    Date: 2022–03
  22. By: Edward J. Balistreri
    Abstract: Balistreri investigates the World Trade Organization's dispute-settlement mission, which is now under significant threat. The United States has chosen to block the appointment of new members to the WTO's Appellate Body-without an operating Appellate Body the technical process for resolving disputes hits a dead end. Could this be a US strategy to avoid losses at the WTO?
    Date: 2022–03
  23. By: Sébastien Houde (Grenoble Ecole de Management, 38000 Grenoble, France. Research affiliate at CEPE, ETH Zurich and Research Fellow at E4S); Wenjun Wang (Agricultural Bank of China)
    Abstract: This paper investigates the distributional welfare effects of the recent trade war in the solar manufacturing sector resulting from the U.S. government-initiated trade tariffs against Chinese solar manufacturers. Our structural econometric model incorporates the vertical structure between upstream solar manufacturers and downstream solar installers. Counter-factual simulations show the tariffs had a small positive impact on U.S. manufacturers but a large negative impact on U.S. consumers and installers. Chinese manufacturers were also negatively economically affected. Overall, our results suggest the solar trade war led to large welfare losses in both countries and substantially slowed the adoption of solar photovoltaic technology.
    Keywords: Trade War; Solar Industry; Structural Econometric Model; Pass-Through
    JEL: F14 L10 Q50
    Date: 2022–04
  24. By: Colantone, Italo; Ottaviano, Gianmarco; Stanig, Piero
    Abstract: We review the literature on the globalization backlash, seen as the political shift of voters and parties in a protectionist and isolationist direction, with substantive implications on governments' leaning and enacted policies. Using newly assembled data for 23 advanced democracies, we document a protectionist and isolationist shift in electorates, legislatures, and executives from the mid-1990s onwards. This is associated with a noticeable protectionist shift in trade policy - although with some notable nuances - especially since the financial crisis of 2008. We discuss the economics of the backlash. From a theoretical perspective, we highlight how the backlash may arise within standard trade models when taking into ac-count the 'social footprint' of globalization. Then, we review the empirical literature on the drivers of the backlash. Two main messages emerge from our analysis: (1) globalization is a significant driver of the backlash, by means of the distributional consequences entailed by rising trade exposure; yet (2) the backlash is only partly determined by trade. Technological change, crisis-driven fiscal austerity, immigration, and cultural concerns are found to play an important role in creating politically consequential cleavages. Looking ahead, we discuss possible future developments, with specific focus on the issue of social mobility.
    Keywords: globalization; protectionist and isolationist direction; 789049-MIMAT-ERC-2017-ADG
    JEL: J1
    Date: 2021–09–13
  25. By: Kalyuzhnova, Yelena (Asian Development Bank Institute); Holzhacker, Hans (Asian Development Bank Institute)
    Abstract: Transportation corridors and reduced trade costs are essential to develop Central Asia Regional Economic Cooperation (CAREC) countries’ foreign trade. However, to intensify intra-CAREC trade as well as the region’s global exports, the product portfolio of CAREC countries’ industry and agriculture has to be broadened. Otherwise CAREC countries will just face strong import competition or become pure transit territories. The need and opportunities of change brought about by global decarbonization efforts and green transition, widely discussed now in connection with efforts to revive the global economy after the slump caused by the COVID-19 pandemic, make this even more urgent, especially for hydro-carbon exporters. At the same time, the green transition and the general move to more science-intense production provides opportunities for new products and employment. Broadening and expansion of the export range of products and services require a robust set of measures in areas such as trade policy, coordination of sectoral policies, diversification, and business reforms. In particular, the countries that are in the center of the CAREC region’s trade flows such as Uzbekistan and Kazakhstan should step up their initiatives for industrial change and closer cooperation among the CAREC countries. We analyze the importance of such initiatives by CAREC countries and discuss the need for further steps in developing production that is based on countries’ natural or historically accumulated comparative advantages. We suggest that initiatives can be clustered into economic corridors that provide economies of scale and scope and good connectivity, and therefore the impact can be scaled up. However, corridor development must be well aligned with the overall economic policies and development plans of the countries involved. We conclude that progress will require redesigning schemes both for local and foreign investments, along with the development of capital markets. Trade facilitation remains an overarching objective. Better coordination of sectoral policies and priorities by measures for collaborative policy formulation and implementation, alignment of national and regional planning, and regulatory convergence in the region are required. Recommendations include suggestions to revise development plans in the light of accelerated technological change, not least due to COVID-19, and to facilitate the social change brought about by the technological change by active requalification and labor market policies.
    Keywords: transportation corridors; trade; CAREC countries; COVID-19; connectivity
    JEL: F13 O19 P25 P28 Q35
    Date: 2021–06
  26. By: Ibrahim Mohamed Ibrahim Eldeeb (Universiti sains Islam Malaysia (USIM), 71800, Bandar BaruNilai, Malaysia Author-2-Name: Prof. Madya. Dr.Asmaddy Bin Haris Author-2-Workplace-Name: Universiti sains Islam Malaysia (USIM), 71800, Bandar BaruNilai, Malaysia Author-3-Name: Prof. Dato. Dr.Muhamad BinMuda Author-3-Workplace-Name: Universiti sains Islam Malaysia (USIM), 71800, Bandar BaruNilai, Malaysia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: " Objective - This study aims to illustrate the conceptual framework of economic cooperation and integration between OIC countries. It also highlighted on Economic cooperation and integration theory. Methodology - This paper follows descriptive analysis approach to describe the conceptual framework of cooperation and integration between OIC countries. This paper describes the conceptual framework of economic cooperation and integration between OIC. Itexplores the channels through which trade can contribute to cooperation and integration. This study highlighted the cooperation between OIC in the light of economic integration theory. Findings - The results of this study discover the dynamic relationship between trade balance and macroeconomic elements. Novelty - This study also explains the empirical evidence on effects of trade on cooperation and integration. The study recommended to compare the results with European Union to understand the effects of trade on cooperation and integration between OIC countries. Type of Paper - Literature."
    Keywords: Economic Cooperation, Economic integration theory, Trade Balance and Macroeconomic Elements
    JEL: F15 F16 F19
    Date: 2021–12–31
  27. By: UMEJIMA Osamu
    Abstract: This paper examines the legitimacy of the criticism in the February 2020 report by the United States against the WTO Appellate Body’s findings on WTO trade remedy rules. The United States legitimately objects to the Appellate Body’s findings on the scope of the “public body†and on evidence showing the market distortion to find an appropriate benchmark. These findings were made outside of the context of the SCM Agreement . Its finding that double remedies through the simultaneous application of antidumping and countervailing duties are prohibited has created Members’ obligations under Article 19.3 of the SCM Agreement . It, however, correctly stated that GATT Article VI:3 prohibits double remedies. It is also correct to find that no other interpretations can be made than that the zeroing methodology is prohibited under the Antidumping Agreement, and that importing Members must examine “unforeseen developments†and separate and distinguish injury caused by other factors under GATT and the Agreement on Safeguards .
    Date: 2021–04
  28. By: Heath Milsom, Luke; Roland, Isabelle
    Abstract: Exposure to Chinese import competition led to significant manufacturing job losses in the United States. Local labor markets, however, differ significantly in how they fared with respect to manufacturing employment. An important question is whether labor market institutions have an impact on the dynamic response of manufacturing employment to rising import penetration. We contribute to this debate by showing that minimum wages amplified the negative effect of Chinese import penetration on manufacturing employment in US local labor markets between 2000 and 2007. We develop a rigorous double-edged identification strategy. First, we construct shift-share instrumental variables to address the endogeneity of import penetration. Second, we use a border identification strategy to distinguish the effects of minimum wage policies from the effects of other local labor market characteristics that are unrelated to policy. Specifically, we rely on comparing commuting zones that are contiguous to each other but located in different states with different minimum wage policies. The approach essentially considers what happens to the response of manufacturing employment to import penetration when one crosses a policy border.
    Keywords: import penetration; labor market institutions; minimum wages; manufacturing employment
    JEL: E24 F14 F16 J23 L60 R12
    Date: 2021–10–28
  29. By: Aghion, Philippe; Bergeaud, Antonin; Lequien, Matthieu; Melitz, Marc J.; Zuber, Thomas
    Abstract: We decompose the "China shock" into two components that induce different adjustments for firms exposed to Chinese exports: a horizontal shock affecting firms selling goods that compete with similar imported Chinese goods, and a vertical shock affecting firms using inputs similar to the imported Chinese goods. Combining French accounting, customs, and patent information at the firm-level, we show that the horizontal shock is detrimental to firms' sales, employment and innovation. Moreover, this negative impact is concentrated on low-productivity firms. By contrast, we find a positive effect - although often not significant - of the vertical shock on firms' sales, employment and innovation.
    Keywords: competition shock; patent; firms; import
    JEL: F14 O19 O31 O33 O34
    Date: 2021–08–09
  30. By: Rachidi Kotchoni (African Development Bank); Franck M. Adoho (World Bank)
    Abstract: We use disaggregated trade data for the years 2014–2018 to identify the areas of revealed and latent comparative advantage of the Democratic Republic of Congo (DRC). We find that the DRC’s export basket is highly concentrated and dominated by products with low value-added and potential income that are derived from copper, cobalt, tin, diamonds, and oils. We identify a number of products that the DRC could easily develop given its areas of revealed comparative advantage, including machinery for filtering or purifying water, traffic control equipment, electrical apparatus, photographic laboratory equipment, and printing machinery. The development of such products can help the DRC achieve the dual goals of diversifying its exports and accelerating the structural transformation of its economy. Policymakers can use these products as a starting point to conceive adequate industrial and trade policies that pursue this dual goal.
    Keywords: Economic Complexity, Export Sophistication, Latent Comparative Advantage, Product Space, Revealed Comparative Advantage, Trade JEL classification: F10, F14
    Date: 2021–11–22
  31. By: Sudo Yi; Deok-Sun Lee
    Abstract: We study the structure of the international trade hypergraph consisting of triangular hyperedges representing the exporter-importer-product relationship. Measuring the mean hyperdegree of the adjacent vertices, we first find its behaviors different from those in the pairwise networks and explain the origin by tracing the relation between the hyperdegree and the pairwise degree. To interpret the observed hyperdegree correlation properties in the context of trade strategies, we decompose the correlation into two components by identifying one with the background correlation remnant even in the exponential random hypergraphs preserving the given empirical hyperdegree sequence. The other component characterizes the net correlation and reveals the bias of the exporters of low hyperdegree towards the importers of high hyperdegree and the products of low hyperdegree, which information is not readily accessible in the pairwise networks. Our study demonstrates the power of the hypergraph approach in the study of real-world complex systems and offers a theoretical framework.
    Date: 2022–03
  32. By: Elsby, Michael W. L.; Smith, Jennifer; Wadsworth, Jonathan
    Abstract: This paper examines the role of population flows on labour market dynamics across immigrant and native-born populations in the United Kingdom. Population flows are large, and cyclical, driven first by the maturation of baby boom cohorts in the 1980s, and latterly by immigration in the 2000s. New measures of labour market flows by migrant status uncover both the flow origins of disparities in the levels and cyclicalities of immigrant and native labour market outcomes, as well as their more recent convergence. A novel dynamic accounting framework reveals that population flows have played a nontrivial role in the volatility of labour markets among both the UK-born and, especially, immigrants.
    Keywords: immigration; worker flows; labour market dynamics
    JEL: E24 J60
    Date: 2021–11–10
  33. By: Koumenta, Maria; Pagliero, Mario; Rostam-Afschar, Davud
    Abstract: We study how licensing, certification and unionisation affect the wages of natives and migrants and their representation among licensed, certified, and unionized workers. We provide evidence of a dual role of labor market institutions, which both screen workers based on unobservable characteristics and also provide them with wage setting power. Labor market institutions confer significant wage premia to native workers (3.9, 1.6, and 2.7 log points for licensing, certification, and unionization respectively), due to screening and wage setting power. Wage premia are significantly larger for licensed and certified migrants (10.2 and 6.6 log points), reflecting a more intense screening of migrant than native workers. The representation of migrants among licensed (but not certified or unionized) workers is 14% lower than that of natives. This implies a more intense screening of migrants by licensing institutions than by certification and unionization.
    Keywords: Arbeitsmarkt,Lohn,Zuwanderung,Occupational,regulation,Licensing,Certification,Unionization,Migration,Wages
    JEL: J61 J31 J44 J71 J16
    Date: 2022
  34. By: Santiago Camara
    Abstract: This paper presents evidence on the granular nature of firms' network of foreign suppliers and studies its implications for the impact of supplier shocks on domestic firms' performance. To demonstrate this, I use customs level information on transactions between Argentinean firms and foreign firms. I highlight two novel stylized facts: (i) the distribution of domestic firms' number of foreign suppliers is highly skewed with the median firm reporting linkages with only two, (ii) firms focus imported value on one top-supplier, even when controlling for firm size. Motivated by these facts I construct a theoretical framework of heterogeneous firms subject to search frictions in the market for foreign suppliers. Through a calibration exercise I study the framework's predictions and test them in the data using a shift-share identification strategy. Results present evidence of significant frictions in the market for foreign suppliers and strong import-export complementarities.
    Date: 2022–03
  35. By: Oskar Chmiel; Piotr KaŸmierkiewicz; Karalina Sauka; Agnieszka Kulesa
    Abstract: The paper consists of three parts. The first lists the most crucial solutions introduced at the European Union (EU) level and specific solutions implemented in Poland, as well as – in a nutshell – in Lithuania and Germany. The second part includes a description of pull and push factors as well as an overview of the migration dynamic from Belarus to Poland in the years 2016–2021. It also presents the results of a research survey conducted amongst migrants from Belarus concerning, amongst other aspects, reasons for leaving and the migrants’ situation in their countries of destination, especially in Poland. The document concludes with drafting possible scenarios of migration from Belarus to the EU and with description of Poland’s potential to attract Belarusian migrants.
    Keywords: Belarus, Poland, migration, migration policy, IT sector, EU
    JEL: J61 J68
    Date: 2021
  36. By: V. V. Chari; Juan Pablo Nicolini; Pedro Teles
    Abstract: This appendix accompanies Staff Report 581: Optimal Cooperative Taxation in the Global Economy.
    Keywords: Capital income tax; Border adjustment; Origin- and destination-based taxation; Value-added taxes; Production efficiency; Free trade
    JEL: E60 E61 E62
    Date: 2022–03–07
  37. By: Zuzanna Bazychowska (Gdansk University of Technology, Gdansk, Poland); Aleksandra Parteka (Gdansk University of Technology, Gdansk, Poland)
    Abstract: This paper compares two alternative growth paths, assessing the effects on productivity of specialisation in natural resources (NR) and in technologically advanced products. The empirical analysis exploits product-level export data for 109 developing and 51 developed economies over the period 1996-2018. We document two distinct types of specialisation, based on exports either of natural resources or of technological products, and compare their role in productivity growth by GMM estimation of a conditional convergence model. In general, reliance on natural resource exports slows growth, but we find that the type of resources exported is important: fuel exports hamper growth while specialisation in metals enhances the catch-up in productivity. Technological specialisation, especially in products typical of the Fourth Industrial Revolution, reinforces productivity growth but does not affect the relationship between resources and productivity growth.
    Keywords: natural resources, technological specialisation, productivity growth, convergence
    JEL: O13 O47 O3 Q32
    Date: 2022–04
  38. By: BRONDINO Gabriele
    Abstract: Since the end of the last century, there has been an increasing trend of production fragmentation. Although all manufacturing sectors have become globalised to some degree, the case of automotive and garment stand out. This report analyses the trends in employment, value added and functional income distribution of the automotive and garment supply chains of Germany, Spain, Romania, Indonesia and Mexico for 2000-2014. It also focuses on the spatial and sectoral distribution of these variables. The empirical framework for the analysis is the multiregional input-output model. The data employed comes from the World Input-Output Database, Release 2016. The heterogeneity of the selected producer countries selected allows to provide a rich picture of the alternative organisations of global supply chains across different regions.
    Keywords: automotive, garment, production fragmentation, automation, employment, value added
    Date: 2022–03
    Abstract: The European Innovation Scoreboard-EIS analyzes the value of exports of medium and high-tech products as a percentage of the total value of product exports. In the context of the European Innovation Scoreboard-EIS, the value of the export of medium and high technology products is considered as a function of the employment of human capital. That is, the companies that export more in terms of medium and high technology products are also companies that have a more qualified human capital and whose employability is more resistant to economic crises and recessions.
    Keywords: Keywords: Innovation, and Invention: Processes and Incentives; Management of Technological Innovation and R&D; Diffusion Processes; Open Innovation.
    JEL: O30 O31 O32 O33 O34
    Date: 2022–04–03
  40. By: Breinlich, Holger; Leromain, Elsa; Novy, Dennis; Sampson, Thomas
    Abstract: This article studies how voting for Brexit affected living standards in the United Kingdom. Using heterogeneity in exposure to import costs across product groups, we analyze how the depreciation of sterling caused by the referendum affected consumer prices. We find that the Brexit depreciation led to higher inflation in product groups with greater import shares in consumer expenditure. Our results are consistent with complete pass-through of import costs to consumer prices and imply aggregate exchange rate pass-through of 0.29. We estimate the Brexit depreciation increased consumer prices by 2.9%, costing the average household £870 per year.
    Keywords: United Kingdom in a Changing Europe initiative under Brexit Priority Grant ES/R001804/1 and by the EOS programme of the Flemish (FWO) and French‐speaking (FRS‐FNRS) communities of Belgium (convention 30784531 on “Winners and Losers from Globalization and Market Integration: Insights from Micro‐Data
    JEL: N0
    Date: 2022–02–01
  41. By: Patrick Alexander; Abeer Reza
    Abstract: Understanding and predicting the evolution of exports after a change in the nominal exchange rate is of central importance in international economics. Most of the literature focuses on estimating this relationship by reduced form, with the aim of uncovering a single structural parameter, but theory suggests it could differ depending on the shock that drives the movement in the exchange rate. Building on this insight, we develop a small-open-economy SVAR model to derive structural shocks that affect the exchange rate. We then estimate this model using Canadian data and construct the response of exports relative to the response of the exchange rate, conditional on each shock. Our findings suggest that this relationship differs greatly from one shock to another, where domestic shocks generate a much weaker relationship than global shocks. We show that these differences can be reconciled with theoretical results from a small-open-economy New Keynesian model where Canadian exports are largely invoiced in US dollars. Finally, we highlight how our results help to inform recent discussions on the evolution of the exchange rate elasticity over time, the benefits of a flexible exchange rate, and the impact of terms of trade movements on exports.
    Keywords: Balance of payments and components; Business fluctuations and cycles; Exchange rate regimes; Exchange rates; International topics; Monetary policy transmission; Trade integration
    JEL: F31 F32 F33 F41
    Date: 2022–04
  42. By: Gürel, Burak; Kozluca, Mina
    Abstract: Turkey's inclusion in the Belt and Road Initiative in 2015 has raised the expectations of Turkish businesses and government concerning growth-generating investment from China. Existing studies on Chinese investments in Turkey lack sufficient data on the volume of investment, types of firms, and sectoral composition. Based on a novel dataset of Chinese investments in Turkey, this article contributes to filling this gap. We show that although Chinese investment in Turkey has increased considerably in recent years, it remains quite modest compared with investments from the West. Moreover, despite the expanding activities of Chinese technology companies, more than half of Chinese investment in Turkey consists of low value-added manufacturing, extraction of raw materials, and marketing of Chinese products. Overall, the developmental potential of Chinese investment in Turkey has not been radically different from other countries' investments.
    JEL: N0
    Date: 2022–01–28
  43. By: Langella, Monica; Manning, Alan
    Abstract: We analyse the role of household and country-level personal income in explaining both the desire to emigrate and the desired destination country. We use data from the Gallup World Poll and applications to the US Diversity Visa Program. We find that higher GDP per capita at destination is strongly associated with a higher desire to move to that country. We do not find strong support for the selection hypothesis that people want to move to countries with a higher return to their level of education. On emigration, we find that both personal income and aggregate income matter. In poorer countries richer people are more likely to want to emigrate, while the opposite is true in richer countries. In looking at the impact of origin country income on the desire to emigrate, we find little evidence for the upward part of Zelinsky's 'hump-shape' migration transition hypothesis.
    Keywords: international migration; migration intentions; development; 834455 “LPIGMANN”
    JEL: N0
    Date: 2021–09–06
  44. By: Phan, Trang Hoai; Stachuletz, Rainer
    Abstract: Business bribery is a particularly serious problem in the integration era. First, this article investigates the effects of institutional obstacles on firms’ bribery in 131 countries classified by nation income groups. Through the appropriate proposal of fitting functions, the relationship between obstructions and the predicted margin effect of bribery is intuitively elucidated. Second, this paper sheds light on the relationship between bribery payment and exports. Then the analysis is upgraded when controlling for the moderation of a firm’s growth constraints. The results detected that not only institutional barriers, but also internal and external hindrances play an essential role in the interaction between bribe payments and export share. More interestingly, this study scrutinizes the role of obstacles in this relationship separately. Besides, SMEs and large enterprises are also adopted in further sensitivity analyses. To solve the endogeneity problem, the study uses the average amount of bribery in a firm’s location, sector, and the country as an instrumental variable (IV). The results obtained are not consistent across country groups classified by national income. Due to obstacles during a firm’s operation, the amplitude of the positive effect of bribery on exports is reduced.
    Date: 2022
  45. By: Kleinman, Benny; Liu, Ernest; Redding, Stephen J.
    Abstract: We develop a dynamic spatial general equilibrium model with forward-looking investment and migration decisions. We characterize analytically the transition path of the spatial distribution of economic activity in response to shocks. We apply our framework to the re-allocation of US economic activity from the Rust Belt to the Sun Belt from 1965-2015. We find slow convergence to steady-state, with US states closer to steady-state at the end of our sample period than at its beginning. We find substantial heterogeneity in the effects of local shocks, which depend on capital and labor dynamics, and the spatial and sectoral incidence of these shocks.
    Keywords: spatial dynamics; economic geography; trade; migration
    JEL: F14 F15 F50
    Date: 2021–07–28
  46. By: Schulz, Nicolai
    Abstract: This paper sets out to answer the question why African governments aiming to industrialize their economies introduce export bans on some processable commodities and not on others. It forwards the hypothesis that governments fear restricting the export of commodities produced by a larger share of the population, as their producers tend to possess significant potential to endanger the political survival of rulers. Importantly, the paper argues that large producer groups can unleash this potential because export bans have an extremely severe and visible imp act on them and that equally affected (yet wealthier and better-organized) traders have the incentives and means to inform producers about the government's responsibility and organize their protest against it. Yet, while the same holds for high export taxes, it does not for low export taxes. Low export taxes are less severe and visible in their impact, and traders are less agitated given that it is easier for them to pass on price distortions to producers. Producer mobilization is thus less likely and imposing low export taxes even on larger groups poses no significant risk to policy-makers. To test the argument against competing explanations, I conduct a large-N analysis based on an original dataset covering all export bans and taxes employed in 36 African states in the last three decades and find robust support for the core hypothesis: the larger the share of the population producing a commodity, the less likely governments will impose export bans on them. As expected, this also holds for high but not for low export taxes. Overall, these findings provide new insights into the critical role politics plays in industrial policy-making in Africa and shows that African mass producer groups can overcome usual Olsonian collective action problems to oppose policies adverse to their interests in certain circumstances.
    Keywords: Cross-group coalitions; Export bans and taxes; Group size and collective action; Policy attribution; Politics of industrial policy; Sub-Saharan Africa
    JEL: L81
    Date: 2020–06–01
  47. By: Anders Aslund; Jan Hagemejer
    Abstract: The situation of Belarus is currently quite clear. Lukashenka is hanging on to power because of his continued grasp on the security forces and Putin’s support. Russia controls as much as it wants to control. So far, no significant cracks have appeared in Lukashenka’s hold on the security forces. While the popular protests of 2020 were far stronger than any previous popular Belarusian protests, Lukashenka is a survivor. He has persisted during several political and financial crises. He hopes to also survive this time and he is playing for time. The Belarusian democratic movement understands, and it fears that its time is running out, so it calls for maximum pressure on Lukashenka. The EU should follow its lead. This runs contrary to the standard procedure of ratcheting sanctions up step by step. The aim of Western sanctions should be to maximize the cost to not only Belarus but also to Russia to ease Russian interest in controlling Belarus as early as possible. The targets of the sanctions should be multiple: Lukashenka, his family and cronies; culprits of human rights violations; Belarusian state financial institutions; the big Belarusian state companies; Russian state banks in Belarus; big Kremlin-related companies in Belarus; Russian businessmen assisting the Kremlin in Belarus; and the Belarusian arms trade. International financial institutions should not be allowed to assist the Belarusian state. Bona fide Belarusian private enterprises and their trade should not be sanctioned.
    Keywords: Belarus, EU, Russia, Economic Sanctions, Financial Sanctions, International Trade, Cronyism
    JEL: F15 F51
    Date: 2021
  48. By: Das, Sanchita Basu (Asian Development Bank Institute); Narayanan, Badri (Asian Development Bank Institute)
    Abstract: Quality education is a key determinant for ASEAN’s aspiration to be a single market and production base and to attract foreign investment. However, the region is characterized by an education divide in terms of quality and output, and this is likely to increase in the post-COVID-19 period. A simulation, modeling a productivity increase in the education sector through an increase in the HDI-Education Index for lagging ASEAN countries to the level of Singapore (benchmark country), shows that GDP, exports, and consumption are poised to go up much more for the countries that lag farther behind Singapore in their education quality. This provides an incentive to ASEAN countries to pay more attention to education cooperation, particularly in terms of setting regional targets for improved education quality and output at national level while linking education more intrinsically to ASEAN economic cooperation.
    Keywords: ASEAN; education; economic development
    JEL: I21 R11
    Date: 2022–01
  49. By: Pier Luigi Sacco; Alex Arenas; Manlio De Domenico
    Abstract: The governance of the political and economic world order builds on a complex architecture of international treaties at various geographical scales. In a historical phase of high institutional turbulence, assessing the stability of such architecture with respect to the unilateral defection of single countries and to the breakdown of single treaties is important. We carry out this analysis on the whole global architecture and find that the countries with the highest disruption potential are not major world powers (with the exception of Germany and France) but mostly medium-small and micro-countries. Political stability is highly dependent on many former colonial overseas territories that are today part of the global network of fiscal havens, as well as on emerging economies, mostly from South-East Asia. Economic stability depends on medium sized European and African countries. However, single global treaties have surprisingly less disruptive potential, with the major exception of the WTO. These apparently counter-intuitive results highlight the importance to a nonlinear approach to international relations where the complex multilayered architecture of global governance is analyzed using advanced network science techniques. Our results suggest that the potential fragility of the world order seem to be much more directly related to global inequality and fiscal injustice than it is commonly believed, and that the legacy of the colonial world order is still very strong in the current international relations scenario. In particular, vested interests related to tax avoidance seem to have a structural role in the political architecture of global governance
    Date: 2022–03
  50. By: Watanabe, Daisuke (Asian Development Bank Institute); Shibasaki, Ryuichi (Asian Development Bank Institute); Arai, Hirofumi (Asian Development Bank Institute)
    Abstract: The countries in Central Asia are landlocked and without coastlines. Therefore, the Trans-Caspian Transport Corridor (TCTC) will play an important role in facilitating cross-border logistics in Central Asia, particularly with land transport. To promote interregional collaborations between Central Asian countries for managing these handicaps, the Central Asia Regional Economic Cooperation Program was established through the leadership of the Asian Development Bank. We study the effectiveness of logistics policy and infrastructure development for cross-border transport along the TCTC using a simulation analysis based on a network equilibrium assignment model. The global logistics intermodal network simulation model, which we developed to cover intermodal freight transport networks (including roads, railways, ferries, and maritime shipping across the Eurasian continent) is used for policy simulation in Central Asia. In particular, the simulation incorporates the impact of the logistics policies related to cross-border transport in the TCTC, including the improvement of ferry services and rail networks along the corridor. The simulation results support the Kazakhstani approach, which emphasizes transit time reduction and transport tariffs while simultaneously enhancing cooperation within the Trans-Caspian International Transport Route Association.
    Keywords: logistics; network equilibrium model; Eurasian landbridge; Central Asia
    JEL: C63 R42
    Date: 2021–06
  51. By: Paolo Martellini; Todd Schoellman; Jason A. Sockin
    Abstract: We measure college graduate quality — the average human capital of a college’s graduates—using the average earnings of the college’s graduates adjusted to a common labor market. Our implementation uses the database of the website Glassdoor, which has the necessary information on earnings and education for non-migrants and migrants who graduate from roughly 3,300 colleges in 66 countries. Graduates of colleges in the richest countries have 50 percent more human capital than graduates of colleges in the poorest countries. Migration reinforces these differences. Poorer countries do not just lose a higher share of their skilled workers; their emigrants are highly positively selected on human capital. Finally, we show that these stocks and flows matter for growth and development by showing that college graduate quality predicts the share of a college’s students who become inventors, engage in entrepreneurship, and become top executives, both within and across countries.
    Keywords: Human capital; Entrepreneurship; Migration; Development; Innovation; College quality
    JEL: J30 O11 O15 J60
    Date: 2022–03–07
  52. By: Ranaldi, Marco
    Abstract: This article studies the global distributions of capital and labor incomes among individuals in 2000 and 2016. By constructing a novel database covering approximately the 80% of the global output and the 60% of the world population, two major findings stand out. First, the world underwent an important process of capitalization. The share of world individuals with positive capital income rose from 20% to 32%. Second, the global middle class benefited the most, in relative terms, from such capitalization process, and China is the main responsible of this global trend. The findings of this paper are robust to changes in the income definition, and top-income adjustments. The global composition of capital and labor incomes is, therefore, more equal today than it was twenty years ago.
    Keywords: global inequality; capital ad labor; compositional inequality
    JEL: D31
    Date: 2022–02
  53. By: Ciccone, Antonio (University of Mannheim); Nimczik, Jan Sebastian (European School of Management and Technology (ESMT))
    Abstract: After the end of World War II in 1945, millions of refugees arrived in what in 1949 became the Federal Republic of Germany. We examine their effect on today's productivity, wages, income, rents, education, and population density at the municipality level. Our identification strategy is based on a spatial discontinuity in refugee settlement at the border between the French and US occupation zones in the South-West of post-war Germany. These occupation zones were established in 1945 and dissolved in 1949. The spatial discontinuity arose because the US zone admitted refugees during the 1945-1949 occupation period whereas the French zone restricted access. By 1950, refugee settlement had raised population density on the former US side of the 1945-1949 border significantly above density on the former French side. Before the war, there never had been significant differences in population density. The higher density on the former US side persists entirely in 2020 and coincides with higher rents as well as higher productivity, wages, and education levels. We examine whether today's economic differences across the former border are the result of the difference in refugee admission; the legacy of other policy differences between the 1945-1949 occupation zones; or the consequence of socio-economic differences predating WWII. Taken together, our results indicate that today's economic differences are the result of agglomeration effects triggered by the arrival of refugees in the former US zone. We estimate that exposure to the arrival of refugees raised income per capita by around 13% and hourly wages by around 10%.
    Keywords: immigration, productivity, wages, refugees, long-run effects
    JEL: O4 O11 R11
    Date: 2022–03

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