nep-int New Economics Papers
on International Trade
Issue of 2022‒08‒15
68 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The Nexus between Inward Foreign Direct Investment and Global Value Chains in Developing Countries: A Case Study of Viet Nam By Huy Hoang Nguyen; Quang Hoan Truong
  2. Overview of Foreign Direct Investment, Trade, and Global Value Chains in East Asia By Ayako Obashi
  3. Technical Barriers to Trade, Product Quality and Trade Margins: Firm-level Evidence By Doan Thi Thanh Ha; Hongyong Zhang
  4. Gravity Channels in Trade By Yulin Hou; Yun Wang; Hakan Yilmazkuday
  5. Experiences Of Pakistani Exporters With Non Tariff Measures By Ghulam Nabi; Saba Farooqi
  6. Reviving the WTO and rules-based trading: The EU’s role By Schaus, Malorie
  7. The heterogeneous impact of tariff and non-tariff measures on total factor productivity on Indonesia firms By Krisna Gupta
  8. Effect of Aid for Trade flows on the Accession to the World Trade Organization By Gnangnon, Sèna Kimm
  9. COVID-19: Impacts of Indonesia's Trade By Lili Yan Ing; Yessi Vadila
  10. Trade, Labor Reallocation Across Firms and Wage Inequality By Mariano A. Somale
  11. Indonesia’s Local Content Requirements: An Assessment on Consistency with Free Trade Agreement Commitments By Oscar Fernando; Lili Yan Ing
  12. Propagation of Overseas Economic Shocks through Global Supply Chains: Firm-level evidence By INOUE Hiroyasu; TODO Yasuyuki
  13. Bilateral trade and conflict heterogeneity: The impact of conflict on trade revisited By Kamin, Katrin
  14. South Korea should prepare for its exposure to US-China technology tensions By Mary E. Lovely; Abigail Dahlman
  15. The impact of geopolitical conflicts on trade, growth, and innovation By Góes, Carlos; Bekkers, Eddy
  16. Heterogeneous Trade Effects of Pre-Shipment Inspections By Cosimo Beverelli; Martin T. Braml; Lionel Fontagné; Alexander Keck; Gianluca Orefice
  17. Trade Policy and Global Sourcing: An Efficiency Rationale for Tariff Escalation By Pol Antràs; Teresa C. Fort; Agustín Gutiérrez; Felix Tintelnot
  18. Mending the Gap: Apparel Export Prices and the Gender Wage Gap in Bangladesh By Robertson, Raymond; Kokas, Deeksha; Cardozo Medeiros, Diego; Lopez-Acevedo, Gladys
  19. Granular Linkages, Supplier Cost Shocks & Export Performance By Santiago Camara
  20. Manufacturing exports and institutional qualities: The case of central Asian countries By Taguchi, Hiroyuki
  21. Trade Flows, Carbon Leakage, and the EU Emissions Trading System By Kuusi, Tero; Wang, Maria
  22. Distance to destination and export price variation within agri-food firms By Fiankor, Dela-Dem Doe
  23. Protectionism, Competitiveness and Inequality: Cross-Country Evidence from Soccer By Hakan Yilmazkuday
  24. Intra-bloc tariffs and preferential margins in trade agreements By Ornelas, Emanuel; Tovar, Patricia
  25. Tie formation in global production chains By Hempfing, Alexander; Mundt, Philipp
  26. Incorporating environmental provisions in regional trade agreements in chapters and articles dealing with trade in services By Christophe Bellmann; Alena Bulatnikova
  27. Global Supply Chain Pressures, International Trade, and Inflation By Julian di Giovanni; Sebnem Kalemli-Ozcan; Alvaro Silva; Muhammed A. Yildirim
  28. Export Market Survival of Pioneers and Followers By Chin Hee Hahn,; Ju Hyun Pyun
  29. Global Supply Chain Pressures, International Trade, and Inflation By Julian di Giovanni; Ṣebnem Kalemli-Özcan; Alvaro Silva; Muhammed A. Yildirim
  30. Indonesia’s Local Content Requirements: Assessment with WTO Rules By Michelle Limenta; Lili Yan Ing
  31. Risk of premature deindustrialization: the case of the latecomer’s developing countries in Asia By Taguchi, Hiroyuki
  32. Sino-US Economic and Trade Relations in Trump Era By Zhang, Jian
  33. Pakistan’S Trade Potential And The Regional Comprehensive Economic Partnership By Misbah Bashir
  34. Political Conflict and Angry Consumers: Evaluating the Regional Impacts of a Consumer Boycott on Travel Services Trade By JaeBin Ahn; Theresa M. Greaney; Kozo Kiyota
  35. Why the Ukraine crisis should push the UK and EU into a tighter embrace on security policy By Blockmans, Steven
  36. The African Continental Free Trade Area and Financial Development for Women Economic Participation in Africa By Vanessa S. Tchamyou; Juste Some; Simplice A. Asongu
  38. Local value chains in European MNEs By Thomas, Catherine
  39. Foundation of the Small Open Economy Model with Product Differentiation By Lorenzo Caliendo; Robert C. Feenstra
  40. Manufacturing productivity and firm ownership in a transition economy: Analytical issues and evidence from Vietnam By Prema-chandra Athukorala; Hai Thanh Nguyen
  41. The ASEAN Economic Integration Principles: Open, Convergence, Inclusive, and Green By Kiki Verico
  42. Participation in Global Value Chains and Rent Sharing by Small Firms in Viet Nam By Nobuaki Yamashita; Doan Thi Thanh Ha
  43. Carbon pricing, border adjustment and climate clubs: An assessment with EMuSe By Ernst, Anne; Hinterlang, Natascha; Mahle, Alexander; Stähler, Nikolai
  44. Drivers of productivity change in global value chains: Reallocation vs. innovation By Mundt, Philipp; Savin, Ivan
  45. Trade in agricultural and food products By Carl Gaigne; Christophe C. Gouel
  46. Antidumping on Tax-induced Dumping By MUKUNOKI Hiroshi; OKOSHI Hirofumi
  47. Understanding SME Trade Finance in ASEAN: An Overview By Tony Cavoli; David Christian; Rashesh Shrestha
  48. Comparative advantage and equilibrium unemployment By Carrère, Céline; Fugazza, Marco; Olarreaga, Marcelo; Robert-Nicoud, Frédéric
  49. The BRI: Trade integration and stock market synchronization. A review of empirical findings By Heß, Alexander; Hindermann, Christoph Michael
  50. Seller versus Producer concentration: incorporating the impact of foreign trade By Joeseph Carr; Stephen Davies
  51. Harmonization of product classifications: A consistent time series of economic trade activities By Christoph Baumgartner; Stjepan Srhoj; Janette F. Walde
  52. Facilitating Pakistan’S Trade: TFA & National Trade Facilitation Bodies The Pakistan Nttfc By Uzma Zia
  53. Trade, Leakage, and the Design of a Carbon Tax By David A. Weisbach; Samuel Kortum; Michael Wang; Yujia Yao
  54. Senegal: Impacts of the Ukraine and global crises on poverty and food security By Diao, Xinshen; Dorosh, Paul A.; Randriamamonjy, Josée; Smart, Jenny; Thurlow, James
  55. Persecution and Migrant Self-Selection: Evidence from the Collapse of the Communist Bloc By Ran Abramitzky; Travis Baseler; Isabelle Sin
  56. Trade policies and fiscal devaluations By Christopher J. Erceg; Andrea Prestipino; Andrea Raffo
  57. Comparing different approaches to tackle the challenges of global carbon pricing By Bekkers, Eddy; Cariola, Gianmarco
  58. Emigration and Tax Revenue By Yuanyuan Gu; Jhorland Ayala-García
  59. Innovation and Competitiveness in the Copper Mining GVC: Developing Local Suppliers in Peru By Penny Bamber; Karina Fernandez-Stark; Oswaldo Molina
  60. The Chinese belt and road initiative between economics and geopolitics: Consequences for Armenia By Wrobel, Ralph
  61. Analysis of the impacts of agricultural incentives on the performance of agricultural value chains By Kassie, Girma T.; Martin, Will; Tokgoz, Simla
  62. Organisational structure as a driver of mergers and acquisitions in the European banking sector By Lebastard, Laura
  63. DOMESTIC OR IMPORTED? AN ANALYSIS OF RICE DEMAND IN SENEGAL By Faye, Ndèye Fatou; Faye, Amy; Sy, Mouhamed Rassoul; Lee, Seungmin; McPeak, John
  64. Global shocks and international policy coordination By Ashima Goyal; Rupayan Pal
  65. A cross-border market model with limited transmission capacities By Cassandra Milbradt
  66. Implementing the AfCFTA: A Simple, Scalable, and Fast Computational Approach for Algorithmic Governance By Atkinson, Craig
  67. Sustainable food systems for food security. Need for combination of local and global approaches By Alban Thomas; Arlène Alpha; Aleksandra Barczak; Nadine Zakhia-Rozis
  68. Globalized economy and national policies: Issues in comparing carbon emissions mitigation efforts under demographic and institutional asymmetry By Tsendsuren Batsuuri

  1. By: Huy Hoang Nguyen; Quang Hoan Truong (Institute for Southeast Asian Studies, Vietnam Academy of Social Sciences (VASS))
    Abstract: In recent decades, Viet Nam, a developing economy, has significantly improved its export structure and, to some extent, its participation in global value chains (GVCs), which along with foreign direct investment (FDI) is considered amongst the main driving factors for Viet Nam’s impressive economic growth. By employing the AJC-UNCTAD-Eora database on Association of Southeast Asian Nations GVCs, this current study aims to empirically explore the nexus between FDI and other factors for GVC participation in Viet Nam during the 2000–2019 period. The estimation shows that the economic size and market development of Viet Nam and its trading partners are the main determinants of Viet Nam’s GVC participation. We find that inward FDI flows into Viet Nam have a positive impact on the country’s GVC participation in both the forward and backward linkages. The estimation demonstrates that geographical distance is an impediment for Viet Nam’s backward GVC participation, whilst engagement in free trade agreements is found to advantageously affect Viet Nam’s GVC participation in both backward and forward linkages. We find a positive influence of Viet Nam and its and trading partners’ logistics performance on Viet Nam’s GVC participation. The paper also provides policy implications for Viet Nam to better use FDI and other sources to enhance and deepen its GVC participation in the future.
    Keywords: Viet Nam; GVC participation; FDI; determinants; backward; forward
    JEL: F1 F14
    Date: 2022–01–26
  2. By: Ayako Obashi (Aoyama Gakuin University)
    Abstract: This paper provides an overview of the patterns and trends of foreign direct investment (FDI) and trade as well as the formation and development of international production networks or global value chains in East Asia, with a special focus on Association of Southeast Asian Nations Member States. To conduct data observations and analyses, we rely on trade data disaggregated by stage in the production process, FDI inflows data by sector, and international input–output tables. East Asian countries trade manufactured parts and components intensively with each other whilst exporting capital goods and consumption goods to countries outside the region. Considering a complementary relationship between trade and FDI in evolving production fragmentation and offshoring, we investigate how and to what extent East Asian countries have been integrated into regional and global value chains, focusing on the machinery sectors.
    Keywords: Developing East Asia; FDI; Trade; Production networks
    JEL: F23 O53
    Date: 2022–01–25
  3. By: Doan Thi Thanh Ha (Economic Research Institute for ASEAN and East Asia (ERIA)); Hongyong Zhang (Research Institute of Economy, Trade and Industry (RIETI), Japan)
    Abstract: As tariffs have declined to a low level, the trade literature has paid increasing attention to the impact of non-tariff measures. Unlike tariffs, non-tariff measures could act as both a barrier to trade and a catalyst for quality upgrading. This study examines the effect of technical barriers to trade (TBTs) on trade margins and quality upgrading at the firm level. To do so, we utilise rich Chinese Customs data recording the universe of export transactions from 2000 to 2012, matched with the Annual Survey of Industrial Firms and the World Trade Organization’s Specific Trade Concerns database. We find that TBTs are associated with higher probability to exit. Surviving exporters enjoy larger sales and charge higher export prices. We also find robust evidence for the quality upgrading effects of TBTs. Firms upgrade their product quality by expanding their research and development and investment and importing more intermediate inputs and capital goods. The positive impact of TBTs on quality upgrading offsets that on price increases, resulting in lower quality-adjusted export prices. This suggests the net welfare-enhancing effect of TBTs for the consumers of imported products. The results hold after controlling for potential endogeneity and across various specifications.
    Keywords: Non-tariff Measures, Technical Barrier to Trade, Trade Margins, Quality upgrading, Firm Heterogeneity, China
    JEL: F13 F14 D22
    Date: 2022–02–07
  4. By: Yulin Hou (Zhongnan University of Economics and Law, Wuhan, P.R. China); Yun Wang (Barry University, Miami Shores, FL); Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: Gravity variables such as distance, adjacency, colony, free trade agreements or language are used to capture the effects of trade costs in empirical studies. By using actual data on trade costs, this paper decomposes the overall effects of such variables on trade into those through three gravity channels: duties/tariffs (DC), transportation-costs (TC), and dyadic-preferences (PC). As opposed to the existing literature where gravity variables act like supply shifters (through DC and TC), this paper empirically shows that they act like demand shifters (through PC). Regarding policy, it is implied that welfare-improving globalization cannot be achieved only through reductions in direct costs such as duties/tariffs or transportation costs; it is rather the globalization itself that should be promoted in order to shift the preferences of destination countries toward international products and thus reduce indirect trade costs. The results are further connected to several existing discussions in the literature, such as welfare gains from trade and the distance puzzle.
    Keywords: Gravity Variables, Dyadic Preferences, U.S. Imports
    JEL: F12 F14
    Date: 2022–05
  5. By: Ghulam Nabi (Alumni, PIDE); Saba Farooqi (PhD Scholar, PIDE)
    Abstract: This webinar focused on the role that NTMs have in facilitating or disrupting trade in Pakistan. Dr. Samidh Shrestha (Market Analyst, International Trade Centre) was the keynote speaker for the webinar. Any government regulation that is mandatory related to export or import of goods besides custom tariffs is considered as Non-Tariff Measures (NTMs). It influences the quantity and price of goods being traded. However, it is not easy to determine the exact impact of NTMs on trade. The NTMs are also called invisible trade barriers.
    Keywords: Experiences, Exporters, Non Tarrif,
    Date: 2021
  6. By: Schaus, Malorie
    Abstract: The rules-based multilateral trading system has proven essential in restraining protectionist tendencies and in helping to expand international trade and maintain world peace. The challenges it faces, related to weakening global governance structures, geopolitical tensions and changing global realities, should not be allowed to break such a robust system. They should rather be seized as opportunities for reviving the WTO. If appropriately grasped, they would contribute to the modernisation and multilateralisation of trade disciplines, to enhanced benefits in terms of economic performance, non-trade objectives, transparency and predictability, as well as to the limitation of any protectionist policies currently on the rise. In this respect, the EU, based on its extensive experience with trade and cooperation, has a global leadership role to play. The WTO reform process should start with the improvement of the WTO dispute settlement system and integration of a plurilateral negotiating approach. This would open the window to opportunities offered by modernising WTO substantive disciplines, i.e. their alignment with the changing nature of trade (global value chains, foreign direct investments, services and e-commerce) and sustainability objectives, and limitation of trade-distortive practices linked to state involvement in the economy. These actions should furthermore be accompanied by the WTO’s institutional reinforcement regarding transparency, regulatory cooperation and negotiations. With its postponement, the 12th WTO Ministerial Conference can possibly lead to more mature results in accomplishing its crucial mission, which is crystallising the negotiating efforts by WTO members – the pursuance of which is highly recommended – and providing a roadmap for achieving an ambitious and realistic WTO agenda. A positive outlook is supported by its coinciding, in 2022, with the 75th anniversary of the GATT 1947, at the origin and foundation of everything.
    Date: 2022–01
  7. By: Krisna Gupta
    Abstract: Indonesian government has been working hard in engaging with the world market as average tariff keeps on decreasing. However, it seems to rely on Non-Tariff Measures (NTM) rather than tariffs to protect its industries. This paper inspects whether these measures hurt firms by limiting their access to better quality and cheaper foreign inputs. This paper builds on Amiti and Konings (2007) to inspect the impact of trade policy shocks to firm’s Total Factor Productivity (TFP). The results suggest unintended consequences of protectionism: tariff and NTMs hurt firms’ TFP and labour absorption significantly. The impact is less severe for bigger firms, confirming heterogeneous effect of trade policy. As the country is looking to boost foreign investment, the paper makes a strong case for reducing protection to keep mark-up in domestic manufacturing high as an incentive.
    Keywords: Total factor productivity, Tariff, Non-tariff Measures, manufacturing, trade liberalization.
    JEL: O14 O53 F14 F15
    Date: 2021
  8. By: Gnangnon, Sèna Kimm
    Abstract: Existing studies on the determinants of countries' accession to the World Trade Organization (WTO) have neglected the role that Aid for Trade (AfT) flows might have played in states' accession process to the WTO. The present study aims to fill this void in the literature by investigating the effect of AfT flows on the probability of acceding to the WTO. The analysis has used 29 countries (the so-called Article XII Members), with data spanning the period 2002-2019. We postulate that by promoting countries' participation in international trade and hence increasing the contribution of international trade to economic growth and development prospects, AfT flows would increase applicants' probability of joining the WTO. The empirical analysis has provided supported for this hypothesis and shown a positive effect of AfT flows on applicants' probability of joining the WTO. This finding applies to total AfT flows as well as to the three components of the latter, namely AfT interventions for economic infrastructure, AfT interventions for productive capacities, and AfT interventions related to trade policy and regulation.
    Keywords: Aid for Trade,Article XII Members,Accession to the WTO
    JEL: F13 F14
    Date: 2022
  9. By: Lili Yan Ing (Economic Research Institute for ASEAN and East Asia (ERIA)); Yessi Vadila (Ministry of Trade of the Republic of Indonesia)
    Abstract: This paper analyses how the coronavirus (COVID-19) has affected Indonesia’s exports and imports, both in terms of volume and value. We use monthly trade data at the Harmonized System (HS) 8-digit level from January 2017 to December 2020. We use fixed effects and difference-in-differences (DID) approaches. The findings show that COVID-19 lowers the export volume by 10.7% (export value by 13.4%). At the same time, COVID-19 reduces import volume by 16.42% (import value by 25.9%). Analysing the causes of decreases in Indonesia’s trade will shed light on the causes of the drop in such trade figures. It will help design appropriate policy responses to enhance trade for the Indonesian economy’s swift recovery.
    Keywords: Indonesia, Covid-19, Trade, Empirical studies, Southeast Asia
    JEL: F1 F13 F15
    Date: 2022–01–07
  10. By: Mariano A. Somale
    Abstract: This paper develops a framework for studying the effects of higher trade openness on the wage distribution that emphasizes within-industry labor reallocation across firms, strong skill-productivity complementarities in production and heterogenous fixed export costs across firms. Assuming no entry in the industry, an autarkic economy that opens to trade experiences a pervasive rise in wage inequality; a trade liberalization in a trading economy increases inequality at the lower end of the distribution, but may reduce it elsewhere. Assuming free entry, opening to trade could result in pervasively higher inequality or wage polarization. The analysis highlights the importance of new exporters (extensive margin) in shaping the aggregate relative demand for skills, a channel controlled by the distribution of fixed export costs in the model.
    Keywords: Trade; Firms; Supermodularity; Wage inequality; Workers
    JEL: F10 F12 F16
    Date: 2022–06–22
  11. By: Oscar Fernando (World Trade Organization); Lili Yan Ing (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: Local content requirements (LCRs) are one of several economic instruments used by governments to protect infant domestic industries or to generate employment. Indonesia has LCR policies in several sectors. However, LCRs are often inconsistent with a country’s World Trade Organization commitments. Additionally, free trade agreements could also have provisions that regulate LCRs. This paper assesses whether Indonesia’s free trade agreements have provisions on LCRs, and whether its regulations are consistent with them.
    Keywords: Local Content Requirements, WTO, FTA, East Asia, Indonesia
    JEL: F1 F13 F15
    Date: 2022–02–04
  12. By: INOUE Hiroyasu; TODO Yasuyuki
    Abstract: Recently, global supply chains are often disrupted because of trade policies and natural disasters. This study simulates the effect of disruption of imports from and exports to various regions on the total production of Japanese firms, incorporating propagation of the economic effect through domestic supply chains at the firm level. We find that the negative effect of disruption of intermediate imports grows exponentially as its duration and level increase because of downstream propagation. In particular, disruption of imports of electrical parts and components from Asia including China largely affects the manufacturing production of Japanese firms. In addition, the negative effect of disruption of imports from a specific region is more closely related to how importers are linked with other domestic firms than the import value from the region. Furthermore, the negative effect of import disruption can be largely mitigated by reorganization of domestic supply chains, even if the newly connected suppliers are limited to suppliers of competitors, i.e., firms sharing a supplier with the focal firm. Our findings suggest that when trade restrictions are imposed, the economic losses can vary substantially depending on their target industries, duration, and level, and the available substitutions.
    Date: 2022–07
  13. By: Kamin, Katrin
    Abstract: Although the number of interstate disputes has fallen in the past 30 years, rising geopolitical competition is challenging the foundation of the absence of great power war. Additionally, the number of internal conflicts is surging. At the same time, globalisation has spun a net of global trade connections and has thus created dependencies, making everyone more vulnerable to the repercussions of conflict. In this context, this paper analyses the relationship between trade and conflict from a trade perspective: Using data from UCDP and COMTRADE this paper studies the effects of five different conflict types on international trade flows in the period 1992 - 2011, including interstate and internal conflicts as well as other types of violence.Applying the gravity equation of international trade and the ppml high-dimensional fixed effects estimator, this paper finds that the heterogeneity of conflict types and their distinct characteristics matter for the magnitude and direction of their influence on trade.
    Keywords: Gravity,Trade,Conflict
    JEL: F14 F51
    Date: 2022
  14. By: Mary E. Lovely (Peterson Institute for International Economics); Abigail Dahlman (Peterson Institute for International Economics)
    Abstract: The stated goal of the US-led Indo-Pacific Economic Framework for Prosperity (IPEF) is to create standards that enhance and elevate regional trade and investment flows, but it is clearly aimed at reducing the role of China in global supply chains. As China is Korea's largest trading partner, US policy discouraging Chinese participation in supply chains has immediate detrimental implications for Korean manufacturers. The United States is the second-most important destination for Korean exports. Given the values of these triangular trade flows, Lovely and Dahlman assess South Korea's exposure to US demands to remove or reduce Chinese participation in the manufacture of exports destined for the US market. The reliance of the proposed framework on certain standards will likely reduce Chinese participation in IPEF trade networks. Korea may benefit from this trend, but IPEF could also increase production costs for Korean companies, especially in the electronics sector, a problem that would worsen if China retaliates against these companies. To reduce these risks, Korea might find it prudent to reduce its reliance on intermediate goods from China for products it produces for export to the United States. The Korean government should also seek to better understand its exposure to US-China trade tensions and diversify its trade relations. Korean firms should start preparing for supply chain disruptions, perhaps by making investments at home. Korea could also help other IPEF members reduce supply chain disruptions while addressing security concerns over China.
    Date: 2022–07
  15. By: Góes, Carlos; Bekkers, Eddy
    Abstract: Geopolitical conflicts have increasingly been a driver of trade policy. We study the potential effects of global and persistent geopolitical conflicts on trade, technological innovation, and economic growth. In conventional trade models the welfare costs of such conflicts are modest. We build a multi-sector multi-region general equilibrium model with dynamic sector-specific knowledge diffusion, which magnifies welfare losses of trade conflicts. Idea diffusion is mediated by the input-output structure of production, such that both sector cost shares and import trade shares characterize the source distribution of ideas. Using this framework, we explore the potential impact of a "decoupling of the global economy," a hypothetical scenario under which technology systems would diverge in the global economy. We divide the global economy into two geopolitical blocs -East and West -based on foreign policy similarity and model decoupling through an increase in iceberg trade costs (full decoupling) or tariffs (tariff decoupling). Results yield three main insights. First, the projected welfare losses for the global economy of a decoupling scenario can be drastic, as large as 12% in some regions and are largest in the lower income regions as they would benefit less from technology spillovers from richer areas. Second, the described size and pattern of welfare effects are specific to the model with diffusion of ideas. Without diffusion of ideas the size and variation across regions of the welfare losses would be substantially smaller. Third, a multi-sector framework exacerbates diffusion inefficiencies induced by trade costs relative to a single-sector one.
    Keywords: Innovation,International trade,international relations
    JEL: F12 F13 O33
    Date: 2022
  16. By: Cosimo Beverelli (World Trade Organization & Robert Schuman Center for Advanced Studies, EUI); Martin T. Braml (World Trade Organization & Ifo Institute for Economic Research); Lionel Fontagné (Banque de France, CEPII & Paris School of Economics); Alexander Keck (World Trade Organization); Gianluca Orefice (University of Paris-Dauphine, PSL and CESifo)
    Abstract: Global imports subject to pre-shipment inspections (PSI) – a practice under which imports need to undergo a third party review process before shipment – shrank from 700 bn USD in 2010 to 87 bn in 2018. However, only little is known about the trade impact of such procedures, which on the one hand involve administrative costs, but on the other hand provide information. This paper – the first PSI analysis consistent with a structural gravity framework – shows that PSI requirements reduce bilateral trade and are most harmful for trade in differentiated manufacturing products. In contrast, PSI facilitate trade in food products. Trade in products subject to sanitary and phytosanitary measures even doubles when these measures are combined with PSI. Overall, counterfactual analysis suggests that the removal of PSI requirements between 2010 and 2018 implied a 2.6% increase in total imports across the 32 developing countries covered by our data.
    Keywords: Pre-Shipment Inspections, Structural Gravity, Trade Facilitation
    JEL: F13 F14 F17
    Date: 2022–07
  17. By: Pol Antràs; Teresa C. Fort; Agustín Gutiérrez; Felix Tintelnot
    Abstract: Import tariffs tend to be higher for final goods than for inputs, a phenomenon commonly referred to as tariff escalation. Yet neoclassical trade theory – and modern Ricardian trade models, in particular – predict that welfare-maximizing tariffs are uniform across sectors. We show that tariff escalation can be rationalized on efficiency grounds in the presence of scale economies. When both downstream and upstream sectors produce under increasing returns to scale, a unilateral tariff in either sector boosts the size and productivity of that sector, raising welfare. While these forces are reinforced up the chain for final-good tariffs, input tariffs may drive final-good producers to relocate abroad, mitigating their potential productivity benefits. The welfare benefits of final-good tariffs thus tend to be larger, with the optimal degree of tariff escalation increasing in the extent of downstream returns to scale. A quantitative evaluation of the US-China trade war demonstrates that any welfare gains from the increase in US tariffs are overwhelmingly driven by final-good tariffs.
    JEL: F1 F12 F13
    Date: 2022–07
  18. By: Robertson, Raymond (Texas A&M University); Kokas, Deeksha (World Bank); Cardozo Medeiros, Diego (University of Chicago); Lopez-Acevedo, Gladys (World Bank)
    Abstract: Are the wage gains from exports specific to exporting industries, or do they dissipate throughout the economy? In the language of trade theory, are the benefits from exporting industry specific or factor specific? To analyze this question, we study the case of Bangladesh. Bangladesh was the 4th largest apparel supplier to the United States market in 2020. Recent studies show the positive impact of apparel exports on female labor force participation in the formal labor market and a range of household decisions. We extend this literature by estimating the relationship between apparel exports and the male-female wage gap surrounding an exogenous policy change in the European Union that corresponded to a discrete increase in apparel-export unit values. We find that the increase in prices is associated with increases in women's wages that go beyond the apparel sector. The economy-wide male-female wage gap for less-educated workers in Bangladesh dropped by more than half with the increase in apparel export prices, consistent with trade theory, and that the change estimated with a cross-section IV approach matches simulation results of a simple heterogenous firm comparative advantage (HFCA) model. Our findings are not driven by either changing minimum wage levels (that are not binding for apparel in Bangladesh) or other changes through time, and are robust to incorporating input-output table data to account for the contributions of non-traded industries to export markets.
    Keywords: Bangladesh, apparel, exports, male-female wage inequality, rules of origin
    JEL: F13 F14 F15 F16 J23 J31 O15 O19
    Date: 2022–07
  19. By: Santiago Camara (Northwestern University)
    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 domesticfirms’ 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 valueon 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 inthe 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.
    Keywords: Export Dynamics, International trade, Search and matching, Heterogeneous firms, Granularity, Firm-to-firm linkages.
    Date: 2022–06
  20. By: Taguchi, Hiroyuki
    Abstract: This paper evaluates the export values of manufactured goods for the Central Asian countries by using a gravity trade model, and investigates the roles of institutional qualities in manufacturing exports based on the World Governance Indicators. The findings of this study are summarized as follows. With Kazakhstan being a benchmark country, the remaining four Central Asian countries have downward deviations in manufacturing exports and institutional qualities. Then the institutional qualities such as control of corruption, government effectiveness and rule of law are identified to be the major factors to explain the differences in the manufacturing exports’ performances.
    Keywords: Central Asia; manufacturing exports; institutional qualities; World Governance Indicators; gravity trade model
    JEL: F14
    Date: 2022
  21. By: Kuusi, Tero; Wang, Maria
    Abstract: Abstract The EU’s Emission Trading Scheme (EU ETS) has been shown to have reduced emissions in the participating countries and industries since its adoption in 2005. However, there is less evidence on the shifting of production outside EU to avoid emission controls. We study this so-called carbon leakage with gravity analysis of international trade flows and carbon intensities of trade. We provide a simple theoretical framework and study its implications empirically. Our findings with the new OECD data indicate that carbon leakage has in fact occurred due to the EU ETS, resulting in higher CO2 intensity of imports to the EU, and lower CO2 intensity of exports from the EU. The evidence on the value of imports also shows some increases from nonparticipating countries due to the ETS. We find that our results are broadly consistent with the theory.
    Keywords: Carbon leakage, EU ETS, Gravity model
    JEL: J23 J24 O33
    Date: 2022–08–02
  22. By: Fiankor, Dela-Dem Doe
    Abstract: This paper assesses how bilateral distance affects observed spatial variation in free-on-board (FOB) export prices across destinations. I estimate linear models that regress firm-product- destination-time FOB unit values on distance, firm-product-time fixed effects, and destination country controls. I find that if distance doubles the average Swiss agri-food firm increases its FOB export price by 2.3%. My findings show that consumers in distant countries pay higher prices partly because firms charge higher prices net cost-insurance-freight costs. I explain my findings using trade models where firms endogenously choose destination-specific quality for their products.
    Keywords: Agribusiness, Demand and Price Analysis, International Relations/Trade
    Date: 2022–04
  23. By: Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: Using club-level data on domestic-league and international points from 73 countries, this paper achieves a policy evaluation of country-specific regulations regarding soccer success. The results show that restrictions on foreign direct investment reduce international competitiveness of clubs, whereas restrictions on international migration policies have no significant impact on it. Domestic inequality across clubs increases with restrictions on minimum number of home-grown players, while it goes down with restrictions on foreign direct investment or restrictions on maximum number of foreign players. The results are robust to the consideration of other domestic regulations, market value of clubs or number of matches played.
    Keywords: Protectionism, Soccer Success, Competitiveness, Migration, Cross-Country
    JEL: F21 F22 Z28
    Date: 2022–05
  24. By: Ornelas, Emanuel; Tovar, Patricia
    Abstract: We study how countries choose intra-bloc tariffs and preferential margins in Preferential Trade Agreements (PTAs). Our model indicates that countries should set systematically lower prefer-ential margins when the bloc takes the form of a free trade area, relative to a customs union. 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, re-spectively, 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, we find empirical support for each of those predic-tions. These findings rationalize why governments often keep intra-bloc duties strictly positive. We show that this tends to worsen the welfare consequences of PTAs, and that requiring the elimination of internal tariffs would be socially desirable.
    Keywords: Aduanas, Comercio internacional, Economía, Investigación socioeconómica, Políticas públicas, Sector público,
    Date: 2022
  25. By: Hempfing, Alexander; Mundt, Philipp
    Abstract: Using a statistical model of an evolving multiplex network, we study tie formation in global production chains within and across developed countries, their trade activities with developing economies in the intermediate goods market, and the mutual dependencies between these relationships. Our model approaches these dynamics from the perspective of individual nodes and thus identifies the driving forces behind the tie formation process. The empirical value of our approach is demonstrated by fitting the model to a panel data set from the OECD Inter-Country Input-Output Tables between 2005 and 2015. Based on these data, we find that (i) geography, two-sided heterogeneity of buyers and sellers, trade costs, as well as structural characteristics of the production network determine the formation of trade linkages between OECD country-sectors, (ii) some of these determinants have an asymmetric effect on import and export ties between OECD and non-OECD countries, and (iii) intra-OECD trade and import and export ties with non-OECD economies are mutually dependent.
    Keywords: trade network,network formation,stochastic actor-oriented model,multiplex dynamics,input-output analysis
    JEL: E23 F14 D57 R15
    Date: 2022
  26. By: Christophe Bellmann; Alena Bulatnikova
    Abstract: This report explores ways in which regional trade agreements (RTAs) can incorporate environmental objectives in chapters and articles related to trade in services. In particular, the analysis builds on a review of existing provisions in recent RTAs aiming at fostering deep economic integration. The report identifies a range of possible options as a way forward, from general commitments to co-operate on environmental goods and services, through horizontal provisions guaranteeing the right to regulate or to protect the environment, to specific commitments on market access and national treatment, or disciplines designed to promote regulatory cooperation and good regulatory practices. These different avenues point to the need for a holistic approach in incorporating environmental considerations in services related provisions. Parties interested in promoting and facilitating trade in environmental services through RTAs would not only need to look at environment and sustainability chapters, but may also wish to do it through specific commitments on market access and national treatment as well as sectoral provisions or annexes on regulatory co-operation.
    Keywords: environmental provisions, international regulatory co-operation, non-tariff measures, regional trade agreements, technical barriers to trade, trade and environment, trade in services, trade policy
    JEL: F13 F18 Q56 R11
    Date: 2022–07–27
  27. By: Julian di Giovanni; Sebnem Kalemli-Ozcan; Alvaro Silva; Muhammed A. Yildirim (Center for International Development at Harvard University)
    Abstract: We study the impact of the Covid-19 pandemic on Euro Area inflation and how it compares to the experiences of other countries, such as the United States, over the two-year period 2020-21. Our model-based calibration exercises deliver four key results: 1) Compositional effects – the switch from services to goods consumption – are amplified through global input-output linkages, affecting both trade and inflation. 2) Inflation can be higher under sector-specific labor shortages relative to a scenario with no such supply shocks. 3) Foreign shocks and global supply chain bottlenecks played an outsized role relative to domestic aggregate demand shocks in explaining Euro Area inflation over 2020-21. 4) International trade did not respond to changes in GDP as strongly as it did during the 2008-09 crisis despite strong demand for goods. These lower trade elasticities in part reflect supply chain bottlenecks. These four results imply that policies aimed at stimulating aggregate demand would not have produced as high an inflation as the one observed in the data without the negative sectoral supply shocks.
    Keywords: Macroeconomics, International Economics, Trade, COVID-19
    JEL: E00 F10
    Date: 2022–07
  28. By: Chin Hee Hahn, (Gachon University, Republic of Korea); Ju Hyun Pyun (Korea University Business School, Republic of Korea)
    Abstract: This study investigates empirically whether export pioneers and followers are different in terms of export market survival, utilising a rich plant-product-level dataset on Korean manufacturing industries for 1991–1997. We find that export pioneers that bring new products to the export market are less likely to survive than export followers of the existing export products. We also find that there is some heterogeneity in the export survival probability after new export entry, even amongst export pioneers and followers. Amongst export followers, the followers of the existing products show higher survival rates than those of the export-pioneered products. Amongst export pioneers, those that introduce a new product to both domestic and export markets simultaneously for the first time in the economy exhibit higher survival than export pioneers that take an existing domestic product to the export market.
    Keywords: Plant-product-level data; export pioneers; export followers; survival
    JEL: F23
    Date: 2021–12–20
  29. By: Julian di Giovanni; Ṣebnem Kalemli-Özcan; Alvaro Silva; Muhammed A. Yildirim
    Abstract: We study the impact of the Covid-19 pandemic on Euro Area inflation and how it compares to the experiences of other countries, such as the United States, over the two-year period 2020-21. Our model-based calibration exercises deliver four key results: 1) Compositional effects – the switch from services to goods consumption – are amplified through global input-output linkages, affecting both trade and inflation. 2) Inflation can be higher under sector-specific labor shortages relative to a scenario with no such supply shocks. 3) Foreign shocks and global supply chain bottlenecks played an outsized role relative to domestic aggregate demand shocks in explaining Euro Area inflation over 2020-21. 4) International trade did not respond to changes in GDP as strongly as it did during the 2008-09 crisis despite strong demand for goods. These lower trade elasticities in part reflect supply chain bottlenecks. These four results imply that policies aimed at stimulating aggregate demand would not have produced as high an inflation as the one observed in the data without the negative sectoral supply shocks.
    JEL: E00 F10
    Date: 2022–07
  30. By: Michelle Limenta (Universitas Pelita Harapan); Lili Yan Ing (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: Local content requirement is one of the policy measures used by many countries around the globe, including Indonesia, to protect and support their strategic sectors. This paper assesses Indonesia’s local content regulations in the energy, telecommunication devices, pharmaceutical, and modern retail sectors that are deemed problematic by certain Word Trade Organization (WTO) Members in light of Indonesia’s obligations under the multilateral trade rules.
    Keywords: WTO, Indonesia, LCRs, Protection
    JEL: F1 F13
    Date: 2022–01–07
  31. By: Taguchi, Hiroyuki
    Abstract: This paper aims to examine the risk of premature deindustrialization in the latecomer’s developing countries in Asia with a focus on manufacturing output ratio by using the latecomer’s index. This study’s contributions are to target Asian economies that were treated as a group with comparative advantages in manufacturing by previous studies, and to adopt the latecomer’s index to show downward shifts of the latecomer’s manufacturing-income relationship that implies the existence of premature deindustrialization risk. The empirical analysis identified the downward shifts of manufacturing-income relationship in globalization processes, i.e., premature deindustrialization risk in the latecomer’s developing countries in Asia, and also showed that the risk was higher in the manufacturing trade-deficit countries than the trade-surplus ones, and in South Asian countries than in Southeast countries. The strategic policy direction in the latecomers who have faced premature deindustrialization risk is to facilitate their participations in global value chains to mitigate and avoid the risk.
    Keywords: Premature deindustrialization, Latecomers, Developing countries in Asia, Manufacturing output, Global value chains
    JEL: F10 O14 O53
    Date: 2022–06
  32. By: Zhang, Jian
    Abstract: Trumpism not only retains the tradition of the Republican Party, but also has the factors of the times. It is character- ized by populism, emphasis on political identity, anti-globalization and neglect of alliances. The Sino-US trade war in 2018 and 2019 seriously affected the economic and trade relations between the two sides, which suffered the strongest impact since the establishment of diplomatic relations. After Biden succeeds, Trumpism will continue to have an im- pact on American society, politics and economy. Sino-US economic and trade relations will continue the status quo when Trump was in office. There is limited room for improvement, but there is no possibility of extreme deteriora- tion. There will be fierce competition in manufacturing and high-tech fields, while there will be a trend of decoupling between economic growth and high-tech industries in China and the United States.
    Keywords: Trumpism, Sino-US economic and trade relations, Relational reconstruction
    JEL: F1 F14
    Date: 2022–03–26
  33. By: Misbah Bashir (Ph.D. Scholar PIDE)
    Abstract: For years now, we have built up Hitchcockian suspense over the trade, we worship trade and have spent a fantastical amount of time and efforts to increase it. But over thirty years, it might not change even the percentage to GDP. Constantly, our eye-rolls have left us with a perpetual squint. Small countries like Costa Rica have a free trade agreement with over 50 countries and 80 to 90 percent of the consumption material comes from trade but in the case of Pakistan, trade has trapped into papers that are only “fake leaves”.
    Keywords: Trade, Regional, Comprehensive Economic, Partnership,
    Date: 2021
  34. By: JaeBin Ahn (Seoul National University); Theresa M. Greaney (University of Hawaii); Kozo Kiyota (Keio Economic Observatory, Keio University)
    Abstract: Political conflict between nations sometimes leads to consumer boycotts. We examine the regional impacts of bilateral boycott activity by investigating the 2019 Korean consumer boycott of travel to Japan. Employing triple- and double-differences designs, we find that the impact of the boycott is large and regionally heterogeneous. Japanese prefectures with high (i.e., 75th percentile) pre-boycott dependency on visitors from Korea suffer bilateral export losses of 56.9 to 60.9 percent and aggregate export losses of 10.5 to 13.3 percent. Prefectures with low (i.e., 25th percentile) Korea dependency experience bilateral losses of 47.8 to 49.7 percent and aggregate losses of 3.3 to 4.2 percent.
    Keywords: Political conflict;Consumer boycott;Travel services trade; Local market;Regional impact
    JEL: F14 F51 F52
    Date: 2022–06–16
  35. By: Blockmans, Steven
    Abstract: One of the costs of Brexit is the weakened ability of both the UK and the EU to shape a strong joint response to Russia’s threats to pan-European security. In the standoff over Ukraine, the need for close cross-Channel cooperation is particularly acute for any effective sanctions package negotiated with the US. Yet, post-Brexit relations between the UK and the EU are currently governed by a narrow Trade and Cooperation Agreement (TCA) which does not include a designated chapter on political dialogue and that, barring a handful of exceptions, does not contain any provisions on cooperation on foreign and security matters. Fortunately, the preparatory work undertaken to reach the bilateral accord contains the answer to the question on how trust between the parties can be regained through procedural means. This policy brief highlights the embers of the Brexit bonfire that might be raked up to rekindle the flame of dialogue and cooperation between the UK and the EU in foreign affairs and security policy.
    Date: 2022–02
  36. By: Vanessa S. Tchamyou (Yaounde, Cameroon); Juste Some (Université Norbert Zongo, Koudougou, Burkina Faso); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: The study has contributed to the extant literature on the relevance of the African Continental Free Trade Agreement (AfCFTA) by assessing how financial development dynamics can moderate the incidence of African trade integration on female labour force participation. The focus is on 47 African countries for the period 1995 to 2019 and the empirical evidence is based on Fixed Effects regressions. The findings show that financial development moderates African trade integration to engender an overall positive effect on female labour force participation. Moreover, financial depth proxied by liquid liabilities should reach a threshold of approximately 15.47 (% of GDP) in order to completely dampen an initial negative incidence of intra-African trade integration on female labor force participation. It follows that financial development becomes a necessary and sufficient condition to moderate intra-African trade integration in order to positively affect female labor force participation only when the established threshold of financial depth is attained. Other policy implications are discussed.
    Keywords: Trade; Financial development; Inclusion; Gender; Africa
    JEL: G20 I10 I32 O40 O55
    Date: 2022–01
  37. By: BIANCARDI Daniele (European Commission - JRC); GREGORI Wildmer (European Commission - JRC); MARTINEZ CILLERO Maria (European Commission - JRC); NARDO Michela (European Commission - JRC)
    Abstract: This note presents the latest trends of cross-border investment flows made in Europe by EU (domestic) and non-EU (foreign) companies. It looks at merger and acquisition (M&A) deals and other equity investments of at least 10% of capital of the target company, as well as at greenfield projects.
    Keywords: FDI investments, Cross-border investments, Greenfields, Mergers and Acquisitions
    Date: 2022–06
  38. By: Thomas, Catherine
    Abstract: Ghemawat’s work in international business strategy demonstrates that Multinational Enterprises (MNEs) create value both by overcoming and by exploiting the price differences that exist at country borders. This paper evaluates the investment strategies of MNEs with subsidiaries in the 10 Central and Eastern Europe countries (CEEs) that had joined the European Union by 2007 through the lens of this insight. The data show that subsidiaries’ activities vary with the parent MNE’s home location. The CEE subsidiaries of Western European MNEs are more likely to be producing output that can be traded across country borders, particularly when their output differs from the main product of their parent company. The findings suggest Western European MNEs tend to invest in CEE countries to fragment value chains across the region, exploiting factor cost arbitrage opportunity in a semiglobalized world.
    Keywords: multinational firms; global value chains; EU enlargement
    JEL: J50
    Date: 2022–06–24
  39. By: Lorenzo Caliendo; Robert C. Feenstra
    Abstract: We derive a small open economy (SOE) as the limit of an economy as the number or size of its trading partners goes to infinity and trade costs also go to infinity. We obtain this limit in the Armington, Eaton-Kortum, Krugman, and Melitz models. In all cases, the trade of the SOE with the foreign countries approaches a finite limit, and the domestic expenditure share for the SOE approaches a limit that is not zero or unity. The foreign countries can be either infinitely many SOEs, or alternatively, one or many large countries with domestic expenditure shares that approach unity. We illustrate the usefulness of this framework by obtaining a formula for the optimal tariff in the SOE -- depending on the elasticity of domestic wages with respect to the tariff -- that is consistent with all models.
    JEL: F12 F13
    Date: 2022–07
  40. By: Prema-chandra Athukorala; Hai Thanh Nguyen
    Abstract: This paper contributes to the fledgling literature on firm ownership and manufacturing productivity in transition economies by drawing on the experience of Vietnam. The empirical analysis uses a new a new establishment-level panel dataset over the period 2006-2017. The findings indicate that the transformation of the ownership structure under trade and investment policy reforms has contributed significantly to improving the productivity of the manufacturing sector, with both fully owned subsidiaries of multinational enterprises (MNEs) and MNE joint ventures with domestic private sector firms playing a pivotal role. Productivity of fully-owned MNE subsidiaries is significantly higher than that of MNE joint ventures, supporting the view that relaxing ownership restrictions on foreign direct investment have been instrumental in improving manufacturing productivity. Both state-owned enterprises (SOEs) and MNE-SOE joint ventures are at the bottom of the productivity ranking, suggesting that the MNE-SOE joint ventures are not immune to productivity-retarding factors affecting SOEs.
    Keywords: transition economies, Vietnam, manufacturing, multinational enterprises (MNEs), State owned enterprises (SOEs)
    JEL: F23 O14 P24 P23
    Date: 2022
  41. By: Kiki Verico (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))
    Abstract: ASEAN is in the process of structural economic and digital transformation. ASEAN needs to adopt related principles to support it. This paper found that structural economic transformation requires the open economy as the necessary principle and economic convergence as the sufficient condition. The open regionalism principle is needed because ASEAN needs Foreign Direct Investment (FDI) from member and non-member states. Furthermore, open regionalism must decrease the economic gap within member states. Therefore, ASEAN needs a sufficient condition of economic convergence within member states. This paper took the implementation of Bali Concord III on FDI inflows as a proxy for open and the GDP per capita gap to the highest member state’s GDP per capita within member states as a proxy for economic convergence. This paper confirmed that economic convergence comes after the open principle. As for the digital economic transformation, this paper showed ASEAN needs the inclusive principle. Lastly, it described ASEAN’s commitment to the green economy. This paper adopted the quantitative method in assessing open and convergence and the qualitative approach in analysing inclusive and green principles.
    Keywords: international economy — open economy — economic integration — digital economy — sustainable economy — ASEAN
    JEL: F02 F15 F41 O36 Q01
    Date: 2022
  42. By: Nobuaki Yamashita (Swinburne University of Technology, Keio University, ANU); Doan Thi Thanh Ha (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: It is well documented that firms that participate in global value chains (GVCs) are larger and more productive, maintaining higher profitability compared to those without such connections. This paper asks the novel question of whether higher profits being connected to GVCs are shared with employees in the form of better pay. We investigated this rent sharing, using a matched employer–employee dataset of Vietnamese small firms surveyed between 2013 and 2015. We found that positive profits would feed into individual wages after accounting for the firm and employee attributes, as well as firm and employee fixed effects, but this is only found for those small firms without any involvement with GVCs. Rent sharing, on the other hand, is completely absent in GVC firms. We take this as evidence that GVC firms provide both higher wages and insurance against demand fluctuations.
    Keywords: Global value chains (GVCs), rent sharing, profits, outsourcing, multinational enterprises, Viet Nam, microenterprises, small and medium enterprises (SMEs)
    Date: 2022–01–27
  43. By: Ernst, Anne; Hinterlang, Natascha; Mahle, Alexander; Stähler, Nikolai
    Abstract: In a dynamic, three-region environmental multi-sector general equilibrium model (called EMuSe), we find that carbon pricing generates a recession initially as production costs rise. Benefits from lower emissions damage materialize only in the medium to long run. A border adjustment mechanism mitigates but does not prevent carbon leakage, but it 'protects' dirty domestic production sectors in particular. From the perspective of a region that introduces carbon pricing, the downturn is shorter and long-run benefits are larger if more regions levy a price on emissions. However, for non-participating regions, there is no incremental incentive to participate as they forego trade spillovers from carbon leakage and face higher production costs along the transition. In the end, they may be better off not participating. Because of the costly transition, average world welfare may fall as a result of global carbon pricing unless 'the rich' assist 'the poor'.
    Keywords: Carbon Pricing,Border Adjustment,Climate Clubs,International Dynamic General Equilibrium Model,Sectoral Heterogeneity,Input-Output Matrix
    JEL: E32 E50 E62 H32 Q58
    Date: 2022
  44. By: Mundt, Philipp; Savin, Ivan
    Abstract: We revisit the debate on the role of technological improvement and market share reallocation in determining aggregate productivity gains. Contrary to previous work that neglects dependencies between suppliers in global value chains, we explicitly account for input linkages that impact both channels of productivity improvement. Using sector-level data from the World Input-Output Database, we show that market share reallocation has a markedly larger effect on productivity change than innovation.
    Keywords: input-output analysis,market share reallocation,productivity decomposition,production network,technological improvement
    JEL: C67 E24 L14 L16 O47
    Date: 2022
  45. By: Carl Gaigne (INRAE, Économie, UMR Smart, Rennes, Centre de Recherche, CREATE - ULaval - Université Laval [Québec]); Christophe C. Gouel (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: This chapter reviews how the literature on trade in agricultural and food products has developed over the last 20 years. Its evolution has been heavily influenced by several developments in the international trade literature. The first relates to trade theories that connect closely with observables: new Ricardian models and firm-level analysis. The second relates to a shift toward applied work involving estimated gravity models and counterfactual simulations. Within a unifying framework, we provide a bird-eye overview of recent developments in trade literature that improves the predictive capability of empirical and theoretical studies for agricultural and food sectors. We highlight how land heterogeneity, technology, vertical relationships in the food chain, quality of food products, and taste affect agri-food trade and its welfare consequences. We also discuss the emergence of new policy issues such as climate change, quality standards, food security, market volatility, and nutrition transition, where although trade may not be at the center of the issues it mediates most of the effects. Last, this chapter identifies possible future developments to make agricultural trade a very active research field, with specific focus on the consumer preferences, hidden costs, production technologies, and market structures.
    Abstract: Ce chapitre présente comment la littérature sur le commerce de produits agricoles et agro-alimentaires s'est développée au cours des 20 dernières années. Son évolution a été fortement influencée par plusieurs développements de la littérature de commerce international. Tout d'abord, les théories du commerce qui connectent étroitement avec les données : les modèles néo-ricardiens et les modèles au niveau firme. Ensuite, la réorientation vers des travaux appliqués impliquant l'estimation de modèles de gravité et des simulations contrefactuelles. Dans un cadre unifié, nous proposons un résumé des développements récents de la littérature de commerce permettant de meilleures capacités de prévisions empiriques et théoriques pour les secteurs agricoles et agro-alimentaires.
    Keywords: Agriculture,Food industry,Heterogeneity,Comparative advantage,Quality,Trade,Volatility,Input-output relationships
    Date: 2022–06–22
  46. By: MUKUNOKI Hiroshi; OKOSHI Hirofumi
    Abstract: This study theoretically investigates the effects of antidumping protection on tax-induced dumping. When the goods are exported from a high-tax to a low-tax country, the exporters have an incentive to set a lower internal price to their distribution affiliates in the destination country. By doing so, they are able to avoid high taxes and also gain a stronger position in the product market. The politically-motivated importing country can implement antidumping protection to protect domestic firms. It is shown that a more stringent regulation on transfer pricing can trigger the antidumping protection, which benefits the exporting country due to larger tax revenues and larger consumer surplus. It also improves the world welfare. However, when the antidumping protection is implemented, a further tightening of the transfer-price regulations may worsen the exporting country’s welfare and the world welfare. These results suggest an important link between tax policies and trade policies.
    Date: 2022–07
  47. By: Tony Cavoli (University of South Australia); David Christian (Economic Research Institute for ASEAN and East Asia (ERIA)); Rashesh Shrestha
    Abstract: SMEs are the most important source of employment in all ASEAN countries, but a lack of access to external sources of finance may limit their expansion and growth. In particular, the existence of a trade finance gap can curtail their participation in international trade. Countries in ASEAN and East Asia need to address this issue to include SMEs in their export-oriented growth strategy. This paper provides a framework for understanding the trade finance gap by examining the nature and strength of relationships between different actors in the trade finance ecosystem. We present an overview of the literature that studied the relationship between financial development and trade, the availability and use of various trade finance instruments in international trade, and some stylised facts about trade finance in ASEAN.
    Keywords: Trade Finance; International Financial Institutions; trade; financial crisis
    JEL: F19 F34 G21
    Date: 2022–02–22
  48. By: Carrère, Céline; Fugazza, Marco; Olarreaga, Marcelo; Robert-Nicoud, Frédéric
    Abstract: We embed a model of the labour market with sector-specific search-and-matching frictions into a Ricardian model with a continuum of goods to show that trade reduces unemployment in countries with comparative advantage in sectors with more efficient labour markets and leads to higher unemployment in countries with comparative advantage in sectors with less efficient labour markets. We test this prediction in a panel dataset of 107 countries covering the period 1995–2009 and find that the data support this theoretical prediction. Our results also help reconcile the apparently contradicting evidence in the empirical literature on the impact of trade on unemployment.
    Keywords: comparative advantage; search unemployment; trade
    JEL: L81 N0
    Date: 2020–08–01
  49. By: Heß, Alexander; Hindermann, Christoph Michael
    Abstract: In the context of the Belt and Road Initiative (BRI), we review selected studies that explicitly or implicitly address the question of whether there occurs synchronization of stock markets between China and the BRI economies. Following this, we examine the extent to which this synchronization of stock markets may be driven by bilateral trade. This question is of particular interest to investors who wish to profit from the BRI while minimizing their risk through portfolio diversification. Our results show that there is plenty of supporting evidence that the stock markets of China and the BRI economies are synchronized, and that synchronization appears to be increasing since the launch of the BRI. We also find that bilateral trade is an important determinant for explaining stock market integration between China and the BRI countries. Based on these results, interregional diversification appears to be less efficient. Further research is needed to determine whether other forms of diversification, such as inter-industry diversification, would be more beneficial.
    Keywords: BRI,Belt and Road Initiative,Belt and Road Countries,China,Stock Market Synchronization,Stock Market Co-Movement,Stock Market Integration,Trade Integration,Trade Volume,Bilateral Trade,Portfolio Diversification,Investing
    Date: 2022
  50. By: Joeseph Carr (Centre for Competition Policy and School of Economics, University of East Anglia); Stephen Davies (Centre for Competition Policy and School of Economicsl, University of East Anglia)
    Abstract: The last decade has witnessed many studies pointing to increasing concentration of industries in the USA and beyond. Some have interpreted this as evidence of a pervasive decline in the intensity of competition. We are more cautious - in not necessarily equating high concentration with soft competition - but we do not deny that concentration remains a potentially valuable metric when tracking the evolution of markets over time. Our concern in this paper is with a particularly important measurement issue which has been overlooked in most previous studies: typically, concentration is measured, with data from business registers or censuses, on the size distribution of producers in a given industry rather than the concentration of sellers in its associated market. No account is taken of importers while exports are not subtracted from domestic turnover/production, even though, for domestic consumer choice, the former may count for a lot but the latter for nothing. The major reason for this seeming neglect is the absence of harmonised production and trade data observed at the firm level for most countries. This is certainly true for the UK, and the purpose of this paper is to present a second-best bounds approach for adjusting estimates of producer concentration into seller concentration which requires only industry-level data on imports and exports and their geographical dispersion over partner trading countries. As an illustration this is applied with striking results for a sample of 119 UK manufacturing 4-digit level, 1998-2018. We show that the main result found in most previous UK studies – a distinct upward trend in typical producer concentration – does not apply for trade-adjusted seller concentration, and the incidence of industries which would be defined as “concentrated†or “highly concentrated†using conventional anti-trust policy definitions is much reduced.
    Keywords: Concentration
    Date: 2022–07–08
  51. By: Christoph Baumgartner; Stjepan Srhoj; Janette F. Walde
    Abstract: Firm-product data provide information for various research questions in international trade or innovation economics. However, working with this data requires harmonizing product classifications consistently over time to avoid internal validity issues. The researcher must consider product code changes in the classification systems over the observation period. Harmonization is required because classification systems like the EU classifications Combined Nomenclature (CN) for goods or the Prodcom for the production of manufactured goods undergo several changes. We have addressed this problem and developed an approach to harmonize product codes. This approach tracks product codes from 1995 to 2022 for CN and 2001 to 2021 for Prodcom. Additional years can be conveniently updated. We provide the harmonized product codes for CN and Prodcom in the selected period's first (or last) year. Our approach is summarized in an easy-to-use R package so that researchers can consistently track product codes for their period. We demonstrate the importance of harmonization using the micro-level trade data for Croatia as a case study. Our approach facilitates working with firm-product data, allowing the analysis of important research questions.
    Keywords: concordance, CN, HS, Prodcom, BEC
    JEL: C81 F14 O12 C55
    Date: 2022–11
  52. By: Uzma Zia (Senior Research Economist, PIDE)
    Abstract: Realizing the gaps and importance of the Trade sector, Pakistan initiated its national trade and transport facilitation program. National Trade & Transport Facilitation Committee (NTTFC), a public -private joint venture was established in 2001. The committee works in close coordination of Federal ministries Public sector organizations, chamber of commerce & industry and trade association. NTTFC is responsible to carry on efforts for enhanced trade competitiveness through improved trade and transport facilitation.TF Committee is currently reinvigorated by secretary planning, Pakistan.
    Keywords: Facilitating, Trade, TFA, Bodies, NTTFC,
    Date: 2021
  53. By: David A. Weisbach (The University of Chicago Law School); Samuel Kortum (Cowles Foundation, Yale University); Michael Wang (Northwestern University Feinberg School of Medicine); Yujia Yao (International Monetary Fund)
    Abstract: Climate policies vary widely across countries, with some countries imposing stringent emissions policies and others doing very little. When climate policies vary across countries, energy-intensive industries have an incentive to relocate to places with few or no emissions restrictions, an effect known as leakage. Relocated industries would continue to pollute but would be operating in a less desirable location. We consider solutions to the leakage problem in a simple setting where one region of the world imposes a climate policy and the rest of the world is passive. We solve the model analytically and also calibrate and simulate the model. Our model and analysis imply: (1) optimal climate policies tax both the supply of fossil fuels and the demand for fossil fuels; (2) on the demand side, absent administrative costs, optimal policies would tax both the use of fossil fuels in domestic production and the domestic consumption of goods created with fossil fuels, but with the tax rate on production lower due to leakage; (3) taxing only production (on the demand side), however, would be substantially simpler, and almost as effective as taxing both production and consumption, because it would avoid the need for border adjustments on imports of goods; (4) the effectiveness of the latter strategy depends on a low foreign elasticity of energy supply, which means that forming a taxing coalition to ensure a low foreign elasticity of energy supply can act as a substitute for border adjustments on goods.
    Keywords: climate change, carbon taxes, leakage, border adjustments
    JEL: F18 H23 Q54
    Date: 2022–07
  54. By: Diao, Xinshen; Dorosh, Paul A.; Randriamamonjy, Josée; Smart, Jenny; Thurlow, James
    Abstract: Global food, fuel, and fertilizer prices have risen rapidly in recent months, driven in large part by the fallout from the ongoing war in Ukraine and the sanctions imposed on Russia. Other factors, such as export bans, have also contributed to rising prices. Palm oil and wheat prices increased by 56 and 100 percent in real terms, respectively, between June 2021 and April 2022, with most of the in-crease occurring since February (Figure 1).
    Keywords: SENEGAL, WEST AFRICA, AFRICA SOUTH OF SAHARA, AFRICA, Ukraine, poverty, food security, armed conflicts, crises, prices, shock, agrifood systems, equality, diet
    Date: 2022
  55. By: Ran Abramitzky; Travis Baseler; Isabelle Sin
    Abstract: How does persecution affect who migrates? We analyze migrants’ self-selection out of the USSR and its satellite states before and after the collapse of Communism using census microdata from the three largest destination countries: Germany, Israel, and the United States. We find that migrants arriving before and around the time of the collapse (who were more likely to have moved because of persecution) were more educated and had better labor market outcomes in the destination than those arriving later. This change is not fully explained by the removal of emigration restrictions in the Communist Bloc. Instead, we show that this pattern is consistent with more positive self-selection of migrants who are motivated by persecution. When the highly educated disproportionately forgo migrating to enjoy the amenities of their home country, persecution can induce them to leave.
    JEL: F22 J6 N30 N32 N34
    Date: 2022–07
  56. By: Christopher J. Erceg; Andrea Prestipino; Andrea Raffo
    Abstract: Fiscal devaluations—an increase in import tariffs and export subsidies (IX) or an increase in value-added taxes and payroll subsidies (VP)—have been shown to provide as much stimulus under fixed exchange rates as a currency devaluation. We find that if agents expect policies to be reversed and the tax pass-through is large, VP is contractionary and IX provides a modest boost. In our medium-scale DSGE model, both features are crucial in accounting for Germany’s underperformance in response to VP in 2007. These findings cast doubt on fiscal devaluations as a cyclical stabilization tool when monetary policy is constrained.
    Keywords: Trade Policy; Fiscal Policy; Exchange Rates; Fiscal Devaluation
    JEL: E32 F30 H22
    Date: 2022–06–22
  57. By: Bekkers, Eddy; Cariola, Gianmarco
    Abstract: Climate change mitigation faces two main policy challenges: the need for global cooperation to tackle the collective action problem and the need to share the burden of global carbon pricing fair way following the principle of common but differentiated responsibility (CBRD). In this paper we explore the best ways to incentivize regions to reduce their CO2 emissions while minimizing the welfare losses for low-income countries using simulations with a recursive dynamic computable general equilibrium (CGE) model. We first present the necessity, efficiency and urgency of global carbon pricing policies climate change mitigation policies. Global carbon pricing is necessary to tackle climate change, is more efficient than regional carbon pricing, and is urgent to prevent a patchwork of carbon pricing policies leading to calls for border carbon adjustment (BCA). However, because the impact of global carbon pricing on most regions is negative, complementary policies are needed to provide sufficient incentives to join a global carbon pricing coalition and at the same time share the burden fairly. We examine four potential complementary policies: BCA, Nordhaus's climate club, a global incentive scheme, and emission trading with progressive emission reduction targets. We evaluate these proposals based on their projected effects on average income and income inequality among countries, as well as their effectiveness as an incentive to introduce carbon pricing. BCA scores poorly along the three dimensions; Nordhaus's carbon club performs well as an incentive tool but has a negative impact on income and income inequality; the global carbon incentive has a positive impact on income and income inequality but performs poorly as an incentive tool; and emission trading with progressive reduction targets scores well across all dimensions. We conclude with a discussion of the feasibility of emission trading.
    Keywords: structural change,international trade,globalization
    JEL: F15 F62 F63
    Date: 2022
  58. By: Yuanyuan Gu; Jhorland Ayala-García
    Abstract: According to the World Migration Report 2020, the number of international migrants increased from 84 million in 1970 to 272 million in 2019, accounting for 3.5% of the world’s population. This paper investigates the aggregated effect of emigration on the tax revenue of sending countries with a focus on developing nations. Using a gravity approach, we construct a time-varying exogenous instrument out of geographic time-invariant dyadic characteristics that allow us to estimate the predicted emigration rate for every country. Then, we follow an instrumental variable approach where we use our predicted emigration rate as an instrument of the observed migration rate. The results show that the predicted emigration rate is a good instrument of the current emigration rate for developing countries, and that there is a positive aggregated effect of emigration on tax revenue of sending countries. The results vary depending on the type of tax: emigration increases goods and services tax revenue, but it decreases income, profit, and capital gains tax revenue. **** RESUMEN: Según el World Migration Report de 2020, el número de migrantes internacionales aumentó de 84 millones en 1970 a 272 millones en 2019, lo que representa el 3,5 % de la población mundial. Este documento investiga el efecto agregado de la emigración en los ingresos fiscales de los países de origen haciendo énfasis en países en vía de desarrollo. Usando un modelo de gravedad, construimos un instrumento exógeno que varía en el tiempo a partir de características diádicas geográficas invariantes en el tiempo, los cuales nos permiten estimar la tasa de emigración predicha para cada país. Luego utilizamos la tasa de emigración predicha como un instrumento de la tasa de migración observada. Los resultados muestran que la tasa de emigración pronosticada es un buen instrumento de la tasa de emigración de los países en desarrollo, y que existe un efecto agregado positivo de la emigración sobre los ingresos fiscales de los países de origen. Los resultados varían según el tipo de impuesto: la emigración aumenta los ingresos fiscales por impuestos sobre bienes y servicios, pero disminuye los ingresos por impuestos sobre la renta, las ganancias y las ganancias de capital.
    Keywords: Emigration, Tax Revenue, Developing Countries, Gravity, emigración, ingresos fiscales, países en desarrollo, gravedad
    JEL: H24 H25 F22 C26
    Date: 2022–07
  59. By: Penny Bamber (Duke Global Value Chains Center); Karina Fernandez-Stark (Duke Global Value Chains Center); Oswaldo Molina (Universidad del Pacifico)
    Abstract: Although Peru is one of the main producers of copper worldwide, the domestic industry has not yet taken fully advantage of the potential that the exploitation of this commodity offers. This paper explores the opportunities and challenges that Peruvian supplier face in their insertion into the mining global value chain. Our analysis is based on a mixed-methods approach, combining both quantitative and qualitative primary and secondary sources, including semi-structured interviews with key actors of the Peruvian mining sector. Our findings suggest that the weak presence of Peruvian suppliers in a sector dominated by few foreign firms is due to global industry dynamics as well as the underdeveloped capabilities of local firms operating in a fragile local institutional setting. However, opportunities for their insertion are primarily in areas where new solutions are required, which places a demand on the supplier’s innovative capacity.
    Keywords: Mining; Peru; Copper; Global Value Chain, Innovation, Local Suppliers
    Date: 2022–07
  60. By: Wrobel, Ralph
    Abstract: Armenia has already signed some agreements with China to participate in the BRI project while no concrete measures are financed by the initiative. But what are the economic advantages and disadvantages of the BRI? While funding of some for Western financiers unattractive projects by China is a good chance for some participating countries a resulting "debt trap" is dangerous for them. Additionally, it can be shown easily that China's investments have mostly some geopolitical aspects which make the projects more advantageous for China than for the participating countries themselves. Especially, when in the BRI participating countries cannot pay back their debts a transfer of natural resources respective of infrastructure like ports ore pipelines to China may be the consequence. Therefore, Armenia is in a dilemma between strengthening cooperation with China and benefitting from that, on the one hand, and the risk of losing economic as well as political independence, on the other hand.
    Keywords: Belt and Road Initiative,Armenia,Geopolitics,Debt-Trap
    Date: 2022
  61. By: Kassie, Girma T.; Martin, Will; Tokgoz, Simla
    Abstract: Agricultural value chains are enormously important for development and poverty reduction in developing countries. Unfortunately, the wide array of forms of intervention used creates serious difficulties in understanding its impacts on agricultural value chains and on the economy in general. This paper reviews recent work to increase transparency of agricultural support measures and to assess their impacts on key outcomes. To do this, it draws lessons from various studies on agricultural incentives, including the global Ag-Incentives database, studies exploring the link between agricultural incentives and value chain development, and studies exploring the links between agricultural incentives and environmental outcomes. Studies highlighted in the Report will allow future researchers to use the described methodologies and tools and apply them to different countries, different contexts, and different commodities. This research portfolio has created a foundation for future work relevant to the five Impact Areas of One CGIAR; namely, nutrition, health, and food security; poverty reduction, livelihoods, and jobs; gender equality, youth, and inclusion; climate adaptation and mitigation; and environmental health and biodiversity.
    Keywords: WORLD; agriculture; incentives; greenhouse gases; value chains; agricultural value chains; nominal rate of assistance; nominal rate of protection
    Date: 2022
  62. By: Lebastard, Laura
    Abstract: This paper studies the bilateral drivers of mergers and acquisitions (M&As) between European banks. Two findings document that banks use M&A as a device to leverage their expertise rather than to diversify. (i) Following the literature on matrimonial matching by using a binary logit model, the paper examines how the structure of acquiring banks in terms of geographical location (headquarters and subsidiaries) influences the choice of targeted banks for an M&A transaction. It finds that banks favour domestic expansion over international diversification. (ii) The paper investigates how the business model of acquiring banks determines their selection of targeted banks. Very often, banks tend to target counterparts with the same business model or, to a lesser extent, those with the same business model as one of their subsidiaries. JEL Classification: G21, G34, L22
    Keywords: Banks, domestic footprint, economies of scale, internal organisation, mergers and acquisitions
    Date: 2022–06
  63. By: Faye, Ndèye Fatou; Faye, Amy; Sy, Mouhamed Rassoul; Lee, Seungmin; McPeak, John
    Abstract: Rice is among the most important cereals for African countries which absorb more than half of worldwide exports. West African countries depend particularly on rice imports in order to achieve food security. For this reason, many policy measures are implemented by governments to regulate the market and reduce the import dependency. This paper contributes to the rice policy debate by analyzing the demand side using the case study of Senegal in West Africa. We analyzed detailed data on rice consumption using a large primary survey of 6,328 rural and urban households in Senegal, with the QUAIDS model. Qualitative data were also collected and analyzed to better interpret results. We found that rural households consume far less local rice than their urban counterparts, meaning that location is a determinant of local rice consumption. We also show that types of rice consumed differ between rural and urban consumers. Urban households consume relatively more whole grain local rice while rural households consume more broken imported rice. Thus, to increase consumption of local rice, efforts should thus be made on the availability of broken local rice for both urban and rural consumers. Our results indicate no substitutability between domestic rice and imported rice in urban households and weak substitutability in rural households. In addition, results show that rice demand is price inelastic. Thus, price policies like subsidies or taxes may not be good shifters of domestic rice consumption.
    Keywords: Agricultural and Food Policy
    Date: 2022–01–01
  64. By: Ashima Goyal (Indira Gandhi Institute of Development Research); Rupayan Pal (Indira Gandhi Institute of Development Research)
    Abstract: We argue emerging markets (EMs) have become large enough to make it in advanced economies (AEs) own interest to reduce negative spillovers to EMs. It follows the potential for international cooperation in macroeconomic and prudential policy increases. But entrenched perceptions and historical advantages are obstacles. These blocks are explored as well as possibilities in macroeconomic policies and in prudential regulation. Export of capital is a major way AEs earn a share in EM income. AE macroeconomic policy and volatile capital outflows from AEs are a source of negative spillovers for EMs, but preventive prudential regulation is not adequate in AEs. More regulation is likely to reduce short-term returns to capital flows but not long-term, since with fewer crises both AE and EM income streams would rise. Moreover, there is some evidence excess capital flow volatility has adverse effects on AEs themselves. It follows universal macro-prudential polices would benefit both country groups. International conventions should be refocused on reducing the probability of crises, instead of protecting creditors by ensuring they do not suffer a loss in case a crisis occurs. Major source countries should develop prudential regulation of their non-bank financial sectors, including commodity futures markets. The IMF should remove restrictions on pre-emptive implementation of capital flow management and its use before other measures.
    Keywords: International policy coordination, Covid-19, Quantitative easing, Capital flows, advanced economies, Emerging markets
    JEL: F42 F59 F36
    Date: 2022–06
  65. By: Cassandra Milbradt
    Abstract: We develop a cross-border market model between two countries in which the transmission capacities that enable transactions between market participants of different countries are limited. Starting from two so-called reduced-form representations of national limit order book dynamics, we allow incoming market orders to be matched with standing volumes of the foreign market, resulting in cross-border trades. We introduce a microscopic model that consists of two bid and ask price processes, four queue length processes that describe the number of unexecuted limit orders at the best bid and ask prices, and a capacity process. The latter counts the net number of executed cross-border trades over time. Since the transmission capacities in our model are limited, our model alternates between regimes in which cross-border trades are possible and regimes in which incoming market orders can only be matched against limit orders of the same origin. If the size of an individual order converges to zero while the order arrival rate tends to infinity, we derive a continuous-time limit approximation of our microscopic market dynamics. In the limit the volume dynamics is approximated by a four-dimensional, non-negative semimartingale with a non-trivial martingale part and reflections to the interior of $\mathbb{R}^4_+$ on hits of the (cumulative) queue length process of the axes. The approximation of the capacity dynamics turns out to be a bounded continuous process of finite variation. Since the tick size in our model is constant, the approximation of the bid (resp. ask) price dynamics is a two-dimensional pure jump process with jump times equal to those of the volume approximation. The usefulness of the ability to transact across borders is illustrated through a simulation study of price evolution.
    Date: 2022–07
  66. By: Atkinson, Craig
    Abstract: Book chapter by Craig Atkinson and Joseph Potvin in Fred Olayele (Former WTI Visiting Research Fellow) and Yiagadeesen Samy (Eds.), Sustainable Development in Post-Pandemic Africa: Effective Strategies for Resource Mobilization, published by Routledge (2023). Foreword by Dr. Akinwumi Adesina, President, African Development Bank Group. About the publication: With both domestic and external financing expected to dry up in the wake of the Covid-19 pandemic, this book argues that there is a need for fresh ideas and new strategies for achieving sustainable development in Africa. In addition to triggering the most severe recession in nearly a century, the Covid-19 pandemic has disrupted global value chains, causing unprecedented damage to health care systems, economies, and well-being, while also hitting the world’s most vulnerable people the hardest. Even before the pandemic, low commodity prices, high debt levels, low levels of domestic savings, and weak private capital constituted a major drag on GDP growth across several African economies. This book argues that now, as the continent emerges from the current crisis, it will be important to reconfigure current financing sources under a forward-looking framework that incorporates other non-traditional financing tools and mechanisms such as public-private partnerships, sovereign wealth funds, gender lens investing, new growth drivers, and emerging and disruptive technologies. The book concludes by adopting a sectoral approach and examining the real economy impacts of new growth drivers such as agriculture value chains, industrialization, tourism, and the blue economy. Drawing on a range of original research as well as insights from practice, the book is a useful guide for Global Development and African Studies researchers, as well as for policy makers, investors, finance specialists, global business practitioners, and entrepreneurs. About the chapter: In Chapter 9 by Craig Atkinson and Joseph Potvin, the authors describe a computational approach for simple, scalable and fast implementation of trade policy in the context of the AfCFTA rules. They suggest an approach that can improve trade governance and resource mobilization by diverse actors. The chapter begins by identifying various constraints to intra-African trade such as the patchwork of rules resulting from Regional Economic Communities (RECs), administrative hurdles to cross-border e-commerce, the existence of multiple ‘digital divides’ and the impact of complex health and safety management regulations, such as what arose throughout 2020-2022. To overcome these constraints and assist with the implementation of the AfCFTA, they outline the relevance of the recently launched “Data With Direction Specification” (DWDS) to facilitate the discovery and transmission of information about rules among all types of rule-makers and rule-takers. The resulting ‘Internet of Rules’ (IoR) is intended to ensure access and enable computer-assisted rules-based coordination for human-centred algorithmic governance. This proposal is particularly relevant for the concept of “Trade Policy 3.0” discussed by the authors, whereby digitally executable versions of commercial regulations are published on the Internet in a platform-agnostic open standard format.
    Date: 2022–07–26
  67. By: Alban Thomas (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Arlène Alpha (UMR MoISA - Montpellier Interdisciplinary center on Sustainable Agri-food systems (Social and nutritional sciences) - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement, Cirad-ES - Département Environnements et Sociétés - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement); Aleksandra Barczak (SAE2 - Département Sciences Sociales, Agriculture et Alimentation, Espace et Environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Nadine Zakhia-Rozis (Cirad-Dgdrs - Direction Générale Déléguée à la Recherche et à la Stratégie - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)
    Abstract: Food and nutritional security refers to the challenge of providing sustainable, healthy and accessible food to all people. It has four interconnected dimensions: availability, access, utilization and stability. Tackling this tremendous challenge means transforming our food systems and mobilizing key stakeholders and decision-makers to leverage intersectoral knowledge and scientific evidence. From 2014 to 2020, CIRAD and INRAE led an ambitious interdisciplinary flagship programme on the transitions for global food security called GloFoodS. Authored by principal investigators and contributors to research projects funded by GloFoodS, this book is representative of the programme's interdisciplinary research but does not claim to provide exhaustive coverage of topics and approaches of food security. It presents recent research findings from many disciplines, including the life, engineering and social sciences. The findings were drawn from different analysis scales as well as from the combination of local and global food security approaches. The various chapters explore issues such as food system governance, balance and discrepancies between agricultural supply and food needs, the role of innovations in providing high-quality foods and promoting resilient value chains, and the role of local resource management in achieving food security. This book will be of interest to a broad scientific audience of researchers, academics, food systems professionals and decision-makers, as well as readers interested in food and nutritional security issues.
    Date: 2022–06–30
  68. By: Tsendsuren Batsuuri
    Abstract: The success of the 2015 Paris Agreement in achieving its main temperature goal depends on its ability to increase the ambitions of individual countries to reduce their carbon emissions through effort comparison and peer pressure. Despite the empirical relevance of demographic changes in affecting factor prices, economic growth, and capital flows across countries, most comparisons of countries’carbon emissions reduction efforts are based on models that cannot capture demographic effects. Overlooking future demographic changes is problematic given the profound yet asymmetric demographic changes that countries are undergoing. This paper uses a two-country life-cycle model to show that comparing carbon emissions mitigation efforts can be misleading if countries’baseline emissions trajectories do not account for demographic dividends and spillovers from one country to another from unsynchronized demographic changes and asymmetric institutions. Through capital flows, differences in the timing, speed, and magnitude of demographic changes can reduce the emissions baseline in one country while increasing it in another country relative to the baseline with no spillovers — an effect which is amplified by differences in institutions such as pension and social security systems. Models that do not consider the effect of demographic changes and the institutions on the economy and emissions may underestimate one country’s carbon emissions reduction effort while overestimating that of another. Consequently, neglecting demographic changes when comparing countries’carbon emissions mitigation efforts can undermine the successful implementation of the Paris Agreement.
    Keywords: Global imbalances, Demographic transition, Carbon emissions, Lifecycle model, Energy dependent production function.
    JEL: E2 F32 F41 J11 J13 J14 O13 Q43 C6
    Date: 2022–07

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