nep-int New Economics Papers
on International Trade
Issue of 2022‒10‒03
23 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Participation in Global Value Chains and M&A flows By Ciani, Andrea; Gregori, Wildmer Daniel
  2. Trade Networks in Main Czech Export Categories By Jiri Teichman
  3. Bargaining for Trade: When Exporting Becomes Detrimental for Female Wages By Halvarsson, Daniel; Lark, Olga; Tingvall, Patrik; Videnord, Josefin
  4. An Anatomy of Nepal's Remarkable Export Decline By Sharma, Rishi
  5. International Trade and the Environment: Three Remaining Empirical Challenges* By Jevan Cherniwchan; M.Scott Taylor
  6. The Impact of Natural resources, CO2 Emission, Energy use, Domestic Investment, Innovation, Trade and Digitalization on Economic growth: Evidence from 52 African Countries By Bakari, Sayef
  7. Foreign Competition, Skill Premium, and Product Quality: Impact of Chinese Competition on Mexican Plants By Thi Hang Bahn; Mauro Caselli
  8. Resilient and Innovative Supply Chains: Evidence-based policy and managerial implications By TODO Yasuyuki
  9. The Nexus between Domestic Investment and Economic Growth in Developed Countries: Do Exports matter? By Bakari, Sayef
  10. Trade Secret Protection and R&D Investment of Family Firms By Katrin Hussinger; Wunnam Basit Issah
  11. A new geopolitics of supply chains: The rise of friend-shoring By Maihold, Günther
  12. Relationship among Domestic Investment, Exports and Economic Growth: Evidence form the Case of Greece By Bakari, Sayef
  13. Refugee Migration and the Labor Market: Lessons from 40 Years of Post-arrival Policies in Denmark By Arendt, Jacob Nielsen; Dustmann, Christian; Ku, Hyejin
  14. Do Target-Country Legal Institutions Affect Cross-Border Mergers and Acquisitions? : A Quantitative Literature Survey By Brada, Josef C.; Iwasaki, Ichiro
  15. Inland cities, maritime gateways and international trade By César Ducruet; David Guerrero
  16. Do gender norms travel within corporations? The impact of foreign subsidiaries on the home country gender wage gap. By Halvarsson, Daniel; Lark, Olga; Tingvall, Patrik; Vather, Priit; Videnord, Josefin
  17. Factors of foreign direct investment inwards: The case of Saudi Arabia By Majed Alharthi
  18. Deciphering Turkey's geopolitical balancing and Anti-Westernism in its relations with Russia By Dalay, Galip
  19. Diversification perspectives of Guyana’s agrifood sector By Weber, Regine; Bubbico, Antonio; Morales Opazo, Cristian
  20. Promoting extensive cattle production in the European Union has major implications for global agricultural trade and climate change By Haddad, Salwa; Escobar, Neus; Bruckner, Martin; Britz, Wolfgang
  21. The EU's next Eastward enlargement will be complicated and expensive: Accession negotiations, association and new formats should be coordinated By Lippert, Barbara
  22. Multilateral cooperation in times of multiple crises: The G7 should focus on inclusive, selective and anticipatory policy approaches By Brozus, Lars; Shulman, Naomi

  1. By: Ciani, Andrea (European Commission); Gregori, Wildmer Daniel (European Commission)
    Abstract: This study investigates to which extent firms operating in sectors more integrated into Global Value Chains (GVC) are more likely to be involved in cross-border Mergers and Acquisitions (M&A) flows. We focus on firms acquired in the EU27 during the period 2008-2020 employing a gravity model. Results show that cross-border investments are indeed associated with sectoral GVC participation, in particular the dependence on intermediate products supplied by other countries (i.e. backward GVC participation) of the target country-sector is positively correlated with M&A flows. This evidence is confirmed when the acquired firm operates in manufacturing or high-tech sectors, and when the investor originates from OECD countries. In addition, results show that companies from countries suppling inputs to other countries are more likely to pursue a cross-border acquisition.
    Keywords: Global Value Chains, Mergers and Acquisitions, Global Economy, Gravity model, EU firms
    JEL: F21 F23 G34
    Date: 2022–08
  2. By: Jiri Teichman (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: The study uses network measures and visualisation to show alternative ways of exploring international trade and its structure. We specifically focus on trade networks in the largest export categories of the Czech Republic. Our results show the rising importance of the Czech Republic in the selected categories as measured by the trade weighted degree centrality. However, in several categories, this is not complemented by a similar increase in the number of trade partners. This lack of diversification could be a possible risk for Czech trade. While the results in categories related to electronics and information technologies showed increasing importance of China, categories connected to car manufacturing remain dominated by Germany and the United States.
    Keywords: Czech trade, international trade, network theory, trade networks
    JEL: F13 F14
    Date: 2022–09
  3. By: Halvarsson, Daniel (The Ratio Institute); Lark, Olga (Lund University); Tingvall, Patrik (Stockholm School of Economics); Videnord, Josefin (Uppsala University)
    Abstract: In this paper we study the link between globalization of firms and gender inequality. Specifically, we examine how the need for interpersonal contacts in trade and gender-specific differences in negotiations are related to the gender wage gap. Our key finding is that export of goods that are intensive in interpersonal contacts widens the gender wage gap. The effect is robust across various specifications and is most pronounced for domestic exporting firms, which do not trade within multinational corporations but with external foreign partners, where the contracting problem is most distinct. We ascribe this result to a male comparative advantage in bargaining.
    Keywords: Export; Gender wage gap; Gender inequality; Contract intensity; Interpersonal contacts; International trade
    JEL: F16 F66 J16 J31
    Date: 2022–08–31
  4. By: Sharma, Rishi (Department of Economics, Colgate University)
    Abstract: This paper documents and breaks down a remarkable decline in Nepal's exports over the 2000-2019 period. This decline is due to a collapse in the country's top export products and is largely uniform across destinations and products. Furthermore, it is not on account of the poor global performance of the sectors Nepal was specialized in but is something more specific to Nepal. Industry-level statistics show that gross output increased in major exporting industries while value-added grew slower or declined. The increase in gross output together with the decline in exports implies a movement towards producing for domestic consumption using more imported inputs. These patterns are consistent with the expected effects of the surge in remittances Nepal experienced over this time period. Remittances would cause the economy to transition towards domestic consumption and re-orient domestic production accordingly.
    JEL: F13 F14 F24 O24 O25 O53
    Date: 2022–07–05
  5. By: Jevan Cherniwchan (Department of Economics, Carleton University); M.Scott Taylor (Department of Economics, University of Calgary)
    Abstract: Considerable progress that has been made in our understanding of the relationship between international trade and the environment since Gene Grossman and Alan Krueger published their now seminal working paper examining the potential environmental effects of the North American Free Trade Agreement in 1991. This review uses their original paper as a guide to highlight key developments along three main branches of research that all stem from their analysis: (i) the interaction between international trade, economic growth, and environmental outcomes, (ii) the role of environmental regulation in determining trade and investment flows, and (iii) estimating the relative magnitudes of the scale, composition, and technique effects induced by trade. It discusses key developments along each branch, with a particular focus on the empirical challenges that have impeded progress. It also highlights an area along each branch that is ripe for further study. These areas are termed the Three Remaining Challenges.
    Keywords: International Trade and the Environment; Environmental Kuznets Curve; Pollution Haven Hypothesis
    JEL: F18 F64 O44 Q56
    Date: 2022–05–09
  6. By: Bakari, Sayef
    Abstract: The aim of this paper is to examine the impact of natural resources, CO2 emission, energy use, domestic investment, innovation, trade, and digitalization on economic growth in the case of 52 African Countries. To attempt our goal, we used annual data of 52 African countries for the period 1996 to 2021 which was estimated by using random effect model, fixed effect model and Hausman test. Empirical results indicate that domestic investment, exports, natural resources and final consumption expenditure have a positive impact on economic growth. Also, we found that labor force, imports and energy use have a negative effect on economic growth. However, we found that CO2 emission, innovation and internet use don’t have any effect on economic growth. The study recommends vital policies that should focus on promoting domestic investment, exports, natural resources, and final consumption to stimulate economic growth in African countries. Similarly, it recommends creating new strategies to manage the role of the active population, imports, energy consumption, CO2 emissions, innovation, and digitalization to make their effects influential in improving the economic growth.
    Keywords: Natural Resources, CO2 Emission, Energy Use, Domestic Investment, Innovation, Trade, Digitalization, Economic Growth, African Countries.
    JEL: C10 C22 C23 E22 F11 F14 J60 O31 O32 O34 O40 O44 O47 O49 O55 Q43 Q47 Q48 Q50
    Date: 2022
  7. By: Thi Hang Bahn; Mauro Caselli
    Abstract: This paper analyses the effect of rising competition from Chinese exports on the skill premium of Mexican plants. Using detailed product-plant-level production data from Mexico and bilateral product-level trade data for 1994-2007, we provide evidence that Mexican plants reduce their skill premium in response to increasing competition from Chinese exports, and the effect is more pronounced among non-exporting plants. Thus, we develop a model linking competition and wage inequality between skilled and unskilled workers by introducing these two types of labour to a model with heterogeneous firms and quality differentiation. Our model predicts that tougher competition leads plants to downgrade quality, which induces a decline in the wage difference between skilled and unskilled workers. We investigate this hypothesis empirically by analysing the effect of Chinese competition on the product quality of Mexican plants. Consistent with the fall in the skill premium, we document a downgrading impact of China’s rise on Mexican plants’ product quality and this quality downgrading is less intense for products sold in the foreign market. These findings provide empirical support for the predictions of our model.
    Date: 2022
  8. By: TODO Yasuyuki
    Abstract: The aims of this paper are threefold. First, we discuss how resilient and innovative supply chains and knowledge networks can be constructed, mostly based on papers from current and previous projects at RIETI. The role of geographic diversity across partner countries in supply chains and knowledge networks is particularly emphasized. Second, we overview the recent policies affecting global supply chains and trends in the supply chains of major countries from the viewpoint of diversity. It is particularly observed that the reliance on China in imports of intermediate products to many countries in Asia has increased substantially. Although the reliance of Japan on China recently declined to some extent, it is still high compared with that of the United States and European countries. Finally, policy and managerial suggestions are provided based on the academic evidence in the first part and the current observations in the second part. It is suggested that Japan should lower its reliance on China in supply chains and diversify supply chains internationally to countries without national security concerns (i.e., “friend-shoring†) for resilience, and it should also expand knowledge networks among such countries to increase innovation.
    Date: 2022–09
  9. By: Bakari, Sayef
    Abstract: We examine the effect of the exports on the relationship between domestic investment and economic growth. Data for 28 Developed Countries over the period 1998–2021 are used for panel data analysis. The effect of domestic investment on economic growth proves to be affected positively by exports and the effect of exports on the economic growth is positively strengthened by an increase in domestic investment.
    Keywords: Domestic Investment, Exports, Economic Growth, Developed Countries.
    JEL: F14 O16 O47
    Date: 2022–07–18
  10. By: Katrin Hussinger (Université du Luxembourg); Wunnam Basit Issah (University of Leicester)
    Abstract: Family firms are known for their reluctance to invest in research and development. We show that strengthened trade secret protection is associated with higher R&D investment by family firms. More specifically, we show that the association between the strength of trade secret protection through the U.S. Uniform Trade Secrets Act and R&D investment is positively moderated by family control. Our results further show that the positive moderation of family control on the association between the strength of trade secret protection and R&D investment varies with the industry context, being stronger in high tech industries and weaker in discrete product industries.
    Keywords: Family firms; intellectual property protection; trade secret protection; UTSA; R&D investments; socioemotional wealth.
    Date: 2022
  11. By: Maihold, Günther
    Abstract: A succession of disruptions to world trade have put the reorganisation of inter­national supply chains high on the political agenda. The difficulties began with the trade war between the United States and China, deepened with the Covid-19 pan­demic and culminated in the sanctions and export controls imposed by Western countries after Russia's invasion of Ukraine. The increased risk of interruption of supplies forces businesses today to price in political factors and respond to political demands. However, realistic timeframes for reconfiguring supply chains are largely incompatible with the rapid responses expected by political decision-makers, especially where chains are long and complex. A process needs to be developed for dealing more effectively with political supply chains risks. It should be transparent for all involved.
    Date: 2022
  12. By: Bakari, Sayef
    Abstract: The aim of this paper is to investigate the relationship among domestic investment, exports and economic growth in the case of Greece. To attempt our goal, we used annual data over the period 1970 – 2020 and Vector Error Correction Model. Empirical results indicate that in the long run there is no causality relationship between exports, domestic investment, and economic growth. In the short run, we found that only exports cause domestic investment. These results proved as evidence that domestic investment and exports are not seen as a source of economic growth in the case of Greece which also explain the catastrophe situation of economic activity in Greece
    Keywords: Domestic Investment, Exports, Economic Growth, VECM, Greece.
    JEL: C13 E22 F14 O47 O52
    Date: 2022
  13. By: Arendt, Jacob Nielsen (Rockwool Foundation Research Unit); Dustmann, Christian (University College London); Ku, Hyejin (University College London)
    Abstract: Denmark has accepted refugees from a large variety of countries and for more than four decades. Denmark has also frequently changed policies and regulations concerning integration programs, transfer payments, and conditions for permanent residency. Such policy variation in conjunction with excellent administrative data provides an ideal laboratory to evaluate the effects of different immigration and integration policies on the outcomes of refugee immigrants. In this article, we first describe the Danish experience with refugee immigration over the past four decades. We then review different post-arrival refugee policies and summarize studies that evaluate their effects on the labor market performance of refugees. Lastly, we discuss and contrast these findings in the context of international studies of similar policies and draw conclusions for policy.
    Keywords: refugee integration, immigration policies, labor supply, employment, language
    JEL: J22 J24 J61
    Date: 2022–08
  14. By: Brada, Josef C.; Iwasaki, Ichiro
    Abstract: We undertake a meta-analysis of 1296 estimates of the effect of target country legal environments on cross-border mergers and acquisitions (CBMAs) compiled from 60 published studies. Although these studies provide effect estimates that are statistically significant, none of the legal variables considered, save civil law, has an effect on either CBMA intensity or the CBMA premium that is large enough to be meaningful. Thus, the studies fail to provide support for legal origins theory or for theories based on cultural distance as explanations for CBMA activity. Studies of the CBMA premium are plagued by inadequate statistical power, by unexplained interstudy differences in effect and by publication-selection bias. Based on our meta-analysis, we suggest reasons why the empirical evidence fails to support theories that have wide acceptance.
    Keywords: foreign direct investment, mergers and acquisitions, legal environment, meta-analysis, capital flows
    JEL: F21 F23 G32 G34 K22
    Date: 2022–09
  15. By: César Ducruet (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); David Guerrero (AME-SPLOTT - Systèmes Productifs, Logistique, Organisation des Transports et Travail - Université Gustave Eiffel)
    Abstract: This research focuses on the relationships between inland cities and port gateways. A quantitative analysis of 64 inland capital cities situated in coastal countries is proposed based on indicators that relate to ports, transport, trade and urban factors. The identified trends suggest that there is a trade-off between remoteness and openness to trade which leads us to postulate the existence of three typologies of inland cities: major logistics hubs, constrained metropolises and underdeveloped corridors. We conduct a more quantitative review of y intermodalism and port choice issues with reference to via a selection of six case studies. The observed spatial configurations have implications for logistics and governance.
    Date: 2022
  16. By: Halvarsson, Daniel (The Ratio Institute); Lark, Olga (Lund University); Tingvall, Patrik (Stockholm School of Economics); Vather, Priit (Estonian Research Information System); Videnord, Josefin (Uppsala University)
    Abstract: In this note, we provide evidence that gender norms can be transferred within firms and across borders by means of foreign direct investment. Using microdata from both Sweden and Estonia, two countries with vastly different levels of gender inequality, we find that firms in Sweden with strong intra-firm linkages to Estonia display a relatively large gender wage gap at home.
    Keywords: Gender wage gap; FDI; Subsidiary firms; Internationalization; Wages
    JEL: C23 F21 F23 F66 J16 J31
    Date: 2022–08–31
  17. By: Majed Alharthi (College of Business, King Abdulaziz University)
    Abstract: According to the gross domestic production, the Saudi Arabia?s economy is listed in one of the top twenty economies in the world and Saudi Arabia is a member of G20 group. Using panel data from 1990 to 2020, this study tries to identify the key factors of foreign direct investment (FDI) inwards in Saudi Arabia. Saudi Arabia is facing many economic challenges which would affect the whole world as Saudi Arabia is consider being one of the leaders in the oil sector. The economy of Saudi Arabia depended extensively on oil exporting for a long period. In 2015, the oil prices dropped sharply which force the Saudi government to find some policies to diversify Saudi economy. The Saudi Vision 2030 is one of the most important strategies to enhance the economy through a bundle of programs and economic reforms. The Saudi vision is based on three main pillars as: 1) A Vibrant Society, 2) A Thriving Economy, 3) An Ambitious Nation. In this study, the focus is on the second pillar A Thriving Economy. However, FDI is one of the most important markers of an economy's efficiency. As a result, this research identifies the positive and negative elements that have a substantial impact on FDI in Saudi Arabia. The data of this study was collected from the database of the World Bank. The ordinary least squares statistical model was utilized in this investigation (OLS). The main findings proposed that GDP has affected the economic growth positively while, unemployment impacted the economy of Saudi Arabia negatively. These results of this study help policymakers to focus on the positive drivers of Saudi economic growth and avoiding negative factors. In addition, foreign investors who would like to invest in Saudi Arabia can explore the determinants of FDI in Saudi. Finally, academics in the field of economics can benefit from this study.
    Keywords: Foreign direct investment, Saudi Arabia; Economic growth, Saudi Vision 2030
    Date: 2022–07
  18. By: Dalay, Galip
    Abstract: The war in Ukraine is set to increase the pressure on Turkey's balancing policy, shed light on the role of anti-Westernism in Ankara-Moscow relations, and reshape Turkey's relations with Russia and the West. The balancing policy will face a less permissive environment. However, a rupture in Turkey-Russia relations is not to be expected. Given the prohibitive cost of a breakdown, Ankara will strive to maintain functional bilateral relations with Moscow. More broadly, despite the changed con­text, Turkey will continue to seek autonomy in its foreign and security policy. This quest precedes the balancing policy and was not driven solely by discontent with the West. It was also informed by Turkey's reading of the global order becoming more multipolar and less Western-centric. In spite of similarities in their narratives, the Turkish and Russian anti-Westernisms manifest themselves differently in policy terms. Finally, Russia's geopolitical revisionism is set to drive Turkey and the West relatively closer together in matters geopolitical and strategic, provided that Turkey's current blockage of Sweden and Finland's NATO membership bid is resolved in the not too distant future.
    Date: 2022
  19. By: Weber, Regine; Bubbico, Antonio; Morales Opazo, Cristian
    Abstract: Guyana’s agrifood systems are facing an increasing level of risk: rising sea-levels are eroding its coastal area, where much of the agricultural activity is located; recent off-shore oil discoveries threaten to crowd-out non-oil sectors; and a dependency on a limited number of agricultural export commodities exposes the agricultural sector to price and market volatility. The diversification of agricultural production and exports has the potential to generate growth and increase the resilience of the agricultural sector. This study identifies Guyana’s diversification potential using comparative-advantage and export-sophistication metrics, which are combined for a proximity analysis based on Guyana’s production space. The objective is to identify a set of commodities with high export potential, which is in relative proximity to the current agrifood export basket. We find oil seeds, bovine meat, sunflower seed oil, fish flours (for animal feed), palm oil, fowl, cocoa beans, cocoa paste and sunflower seeds to be commodities with high export potential. These commodities share characteristics with the current agrifood export basket. This implies that expanding the exports of these goods will not be costly and is likely to promote economic development, agricultural sector growth and reduce risks associated with market concentration.
    Keywords: Agricultural and Food Policy
    Date: 2022–08–04
  20. By: Haddad, Salwa; Escobar, Neus; Bruckner, Martin; Britz, Wolfgang
    Abstract: This paper assesses the potential market-mediated impacts, including global Land Use Change (LUC) and GHG emissions, from increased subsidies to pastureland-based livestock sectors in the EU, through a “tax recycling strategy” simulated against a baseline under SSP2 up to 2030. The budget neutral increase in the level of pastureland subsidy rates in different Member States is achieved by a decrease in land subsidies to other cropping activities. We employ an integrated CGE-MRIO approach, in which we link a recursive dynamic version of the well-known GTAP-CGE model, called GTAP-RDEM to the FABIO MRIO. This approach allows to take advantages from both methods. FABIO offers better resolution with regards to agricultural sectors than in the GTAP database, while the combined use of this MRIO with a CGE model allows to consider price and income dependent feedbacks, required for policy analyses and long run assessments of changes in the global economy. Results show that the redistribution of land-based subsidies provokes significant changes in agricultural markets across the EU. Pastureland areas and cattle production increases in almost all EU Member States, whereas crop land and crop production decreases. The resulting increase in crop prices translates into reduced output of intensive animal production sector, mainly pig and poultry, which rely on concentrate feed to a larger extent compared to cattle. As a result of the decrease in cropland area and overall crop production in the EU, most EU countries increase imports of grain, oilseeds, and cakes from major agricultural producers, essentially soybean cake from Brazil and North America. This generates significant LUC and related GHG emissions that spill outside the EU, mainly in major feed exporters while some emission saving is observed at global level.
    Keywords: Agricultural and Food Policy, Environmental Economics and Policy, Land Economics/Use
    Date: 2022–09–19
  21. By: Lippert, Barbara
    Abstract: Russia's war against Ukraine has led the EU-27 to grant Kyiv EU-candidate status quickly - even hastily, in the view of critics. For now, however, the preparation of accession negotiations can only be a secondary concern. The war, with its uncertain outcome, takes centre stage. For the EU this means supporting Ukraine militarily as well as financially and helping to organise international aid for reconstruction. Given this context, we should expect the EU not simply to adhere to the usual enlargement script in shaping its relations with Ukraine. Instead, it should coordinate three frame­works for action: the future accession negotiations, the current process of association, and potential new formats, such as a European Political Community or a Euro­pean Political and Economic Area.
    Date: 2022
  22. By: Brozus, Lars; Shulman, Naomi
    Abstract: "Progress towards an equitable world" - this is the German government's ambitious goal since taking over the G7 presidency in 2022. Since the 1970s, this club of seven major industrialised democracies has played an important role in discussing global affairs and developing policies to address major challenges facing the international order. Germany's presidency was supposed to be characterised by a triad of ecological transformation, social cohesion and fiscal sustainability, but instead the agenda has been dominated by a triple crisis of geopolitical escalation in the wake of Russia's invasion of Ukraine, democratic regression in several G7 member states and geo-eco­nomic disentanglement due to Covid-19. In order to deal with the multiple crises that pose grave dangers to the global community, the G7 should focus on inclusive societies, selective international cooperation and anticipatory governance.
    Date: 2022
  23. By: Pratik Kute (Phd candidate)
    Abstract: The relationship between India and Qatar has reached its jubilee celebrations. The year 2022 marks the completion of glorious 50 years of ties between the two countries. The relation is stronger than ever before and has deepened and strengthened over the years. Although the ties begun in the form of diplomatic and political engagements it slowly expanded in the realm of socio-economic aspects of its relations. India has one of the largest diaspora in Qatar and it plays an important role in the countries development and growth. Qatar has invested heavily in India looking at a promising future in the years to come. The gas trade between the two is pivotal to its energy ties. There are some points of contestations between two but both the countries are trying to overcome such issues of disagreement and move forward. As both the countries have reached about half a century of relationship, it is the right time to reflect on their past accomplishments, upcoming opportunities and some of the challenges they face to their ties. Key words: Counter-terrorism, Diaspora, Diplomacy, Energy, Tourism
    Date: 2022–03

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