nep-int New Economics Papers
on International Trade
Issue of 2022‒11‒21
38 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Gravity with History: On the Aggregate Implications of Incumbency Effects in International Trade By Föllmi, Reto; Schetter, Ulrich; Torun, David
  2. Deep Trade Agreements and FDI in Partial and General Equilibrium: A Structural Estimation Framework By Mario Larch; Yoto V. Yotov
  3. Reforming Market Access in Agricultural Trade: Tariff Removal and the Trade Facilitation Agreement By Beckman, Jayson
  4. Exposure to trade disruptions in case of the Russia-Ukraine conflict: a product network approach By Erik Braun; Emese Braun; András Gyimesi; Zita Iloskics; Tamás Sebestyén
  5. Do Free Trade Agreements Benefit Developing Countries? An Examination of U.S. Agreements By Ajewole, Kayode; Beckman, Jayson; Gerval, Adam; Johnson, William; Morgan, Stephen; Sabala, Ethan
  6. Two-Sided Market Power in Firm-to-Firm Trade By Michele Fioretti; Vanessa Alvariez; Ayumu Ken Kikkawa; Monica Morlacco
  7. Impact of Grain Trade Policies on Prices and Welfare : Evidence from Malawi By Fuje,Habtamu Neda; Pullabhotla,Hemant Kumar
  8. Trade in wood-based products in the EU27 - wood content and coverage by the current EUTR and the proposed regulation on deforestation-free value chains By Köthke, Margret; Weimar, Holger
  9. Search Frictions in International Goods Markets By Clémence Lenoir; Julien Martin; Isabelle Mejean
  10. Factor price divergence in Heckscher-Ohlin model when countries have different technologies: a simple numerical illustration By Spirin, Victor
  11. How Ready Are We? Measuring the Philippines' Readiness for Digital Trade Integration with the Asia-Pacific By Albert, Jose Ramon G.; Quimba, Francis Mark A.; Calizo, Sylwyn Jr. C.; Carlos, Jean Clarisse T.
  12. Formation of Climate Coalitions and Preferential Free Trade - The Case for Participation Linkage By Thomas Kuhn; Radomir Pestow; Anja Zenker
  13. Africa in Manufacturing Global Value Chains : Cross-Country Patterns in the Dynamics of Linkages By Abreha,Kaleb Girma; Lartey,Emmanuel Kwasi Koranteng; Mengistae,Taye Alemu; Owusu,Solomon; Zeufack,Albert G.
  14. Measuring structural resilience of economies: Globalization or deglobalization? By Tibor Kiss; Tamás Sebestyén; Erik Braun
  15. Tracing the Local Impacts of Exports on Poverty and Inequality in Mexico By Rodriguez Castelan,Carlos; Vazquez,Emmanuel Jose; Winkler-Seales,Hernan Jorge
  16. Risk Management in Border Inspection By Hillberry,Russell Henry; Karabay,Bilgehan; Tan,Shawn Weiming
  17. A Review of Philippine Participation in Trade in Services Agreements By Serafica, Ramonette B.; Oren, Queen Cel A.
  18. Potential Wheat Demand in China: Applicants for Import Quota By Gale, Fred
  19. Trade with Nominal Rigidities: Understanding the Unemployment and Welfare Effects of the China Shock By Andrés Rodríguez-Clare; Mauricio Ulate; Jose P. Vasquez
  20. Exporting and Female Labor Market Outcomes in Georgia By Hollweg,Claire Honore; Ong Lopez,Anne Beline Chua
  21. Heterogeneous Effects of Aid-for-Trade on Donor Exports: Why is Japan different? By NISHITATENO Shuhei; UMETANI Hayato
  22. NAFTA and Drug-Related Violence in Mexico By Eduardo Hidalgo; Erik Hornung; Pablo Selaya
  23. COVID-19 Working Paper: Single Commodity Export Dependence and the Impacts of COVID-19 in Sub-Saharan Africa By Gerval, Adam; Hansen, James
  24. The EU Proposal for a Carbon Border Adjustment Mechanism (CBAM): An Analysis under WTO and Climate Change Law By Espa, Ilaria; Francois, Joseph
  25. Country size, per-capita income, and comparative advantage: services versus manufacturing By Bradford, Scott C.; Das, Satya; Saha, Anuradha
  26. Measuring the effect of Foreign Exchange Reserves on Foreign Direct Investment in Algeria during the period 1990-2020 using the ARDL model By BOURENANE, Bouzid; REZIG, Kamel; DJORFI, Zakaria
  27. FDI AND ECONOMIC GROWTH IN SADC REGION By Gibogwe, Vincent; Nigo, Ayine; Kufuor, Karen
  28. Energy footprints and the international trade network: A new dataset. Is the European Union doing it better? By Fernández-Amador, Octavio; Francois, Joseph; Oberdabernig, Doris; Tomberger, Patrick
  29. Formation of the EU-Vietnam Free Trade Agreements Domestic Advisory Group: What it means for the civil society in Vietnam? By Chi, Do Quynh
  30. Economic Crises and U.S. Agricultural Exports By Liefert, William M; Mitchell, Lorraine; Seeley, Ralph
  31. Perspectives of Armenian: Iranian economic relations within Belt and Road Initiative By Grigoryan, Karen; Arpanahi, Ali
  32. China's Refusals of Food Imports By Gale, Fred
  33. Inequality as a Barrier to Economic Integration? An Experiment By Gabriele Camera; Lukas Hohl; Rolf Weder
  34. Is Domestic Uncertainty a Local Pull Factor Driving Foreign Capital Inflows? New Cross-Country Evidence By Sangyup Choi; Gabriele Ciminelli; Davide Furceri
  35. COVID-19 Working Paper: The COVID-19 Pandemic and Changes in Greenfield Foreign Direct Investment in Africa By Farris, Jarrad; Morgan, Stephen; Johnson, Michael E.
  36. Examining Pathogen-Based Import Refusals: Trends and Analysis From 2002 to 2019 By Ahn, Jae-Wan; Rhodes, M Taylor
  37. Spatial administration and legal aspects of the Belt and Road Initiative: Innovative solutions for Armenia By Khachikyan, Sos; Hongzhen, Jiang
  38. Spillover effects of immigration policies on children's human capital By Arenas-Arroyo, Esther; Schmidpeter, Bernhard

  1. By: Föllmi, Reto; Schetter, Ulrich; Torun, David
    JEL: F12 F14 F15
    Date: 2022
  2. By: Mario Larch; Yoto V. Yotov
    Abstract: We quantify the relationships between deep trade liberalization and foreign direct investment (FDI). To this end, we focus on the effects of Deep Trade Agreements (DTAs), and we rely on a structural framework that simultaneously enables us to (i) estimate the direct impact of DTAs on FDI, (ii) translate the partial DTA estimates into general equilibrium effects on FDI; and (iii) obtain partial DTA effects on trade and quantify the impact of DTAs on FDI through trade. We obtain sizable, positive, and statistically significant estimates of the effects of DTAs on both trade and FDI. A counterfactual analysis suggests that, in combination through direct and indirect channels, DTAs have contributed to a large but very asymmetric increase in inward vs. outward FDI.
    Keywords: foreign direct investment (FDI), trade liberalization, deep trade agreements
    JEL: F10 F43 O40
    Date: 2022
  3. By: Beckman, Jayson
    Abstract: ERS analyzes two potential scenarios for reforming global agricultural trade—removing all tariffs or eliminating trade costs through the Trade Facilitation Agreement—and compares their effects on trade, production, prices, and social welfare.
    Keywords: International Relations/Trade
    Date: 2021–04
    Abstract: The recent outbreak of the Russia-Ukraine military conflict is expected to affect the world economy through global value chains due to sanctions imposed on the Russian economy and a severe decline in Ukrainian production. This study provides a first-cut analysis of the possible economic impact of this war on third countries. Using product-level export data from international trade statistics, we first identify the most important products exported by Ukraine and Russia. Then, applying a comprehensive indicator of exposure, we measure the dependence of third countries on products imported from Ukraine or Russia, taking into consideration indirect trade connections and the substitutability of imports with domestic production. The results show that Ukraine is dominant in global trade through exporting iron products and agricultural products, while Russia is important through exporting energy sources, raw materials, and iron products. Analysing countries’ total exposures, we found that the post-Soviet and European countries have high exposure to Russian imports, confirming the energy dependence of these countries. The Middle East and African countries heavily depend on Ukraine, especially for grain imports, possibly causing food security problems. Finally, the results explain why some European countries hesitate to apply sanctions on Russia in the field of energy sources.
    Keywords: International trade, Global value chains, Russia-Ukraine war, Network analysis, Exposure.
    Date: 2022–05
  5. By: Ajewole, Kayode; Beckman, Jayson; Gerval, Adam; Johnson, William; Morgan, Stephen; Sabala, Ethan
    Abstract: This report uses trend analysis to see whether movements in trade, production, and Gross Domestic Product (GDP) data are consistent with the concept that free trade agreements (FTAs) produce beneficial effects for developing countries—focusing on FTA agreements between developing countries and the United States. Agricultural trade for U.S. imports and exports generally increased in the FTAs analyzed for this report.
    Keywords: International Relations/Trade
    Date: 2022–09
  6. By: Michele Fioretti (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Vanessa Alvariez (IDB - Inter-American Development Bank - Inter-American Development Bank); Ayumu Ken Kikkawa (UBC - University of British Columbia); Monica Morlacco (USC - University of Southern California)
    Abstract: Global value chains (GVCs) typically involve large firms exerting bargaining power over the terms of trade. We develop a novel theory of international prices accounting for these features of GVCs and illustrate their e↵ect on the pass-through of trade shocks into import prices. We build a new dataset merging transaction-level U.S. import data with balance sheet data for both importers and exporters to evaluate the model's performance. Our estimated model generates more accurate predictions of pair-level price changes following trade shocks than standard models, improving the estimated impact of the 2018 trade war on aggregate U.S. import prices by 40-60%.
    Date: 2022–04–04
  7. By: Fuje,Habtamu Neda; Pullabhotla,Hemant Kumar
    Abstract: Restricting cross-border trade through export bans in an attempt to stabilize domesticprices has been a particularly popular policy tool used by many sub-Saharan countries in recent years. However, littleis known about how the variability in harvests and seasonality -- two critical dimensions of smallholderagriculture in Africa -- mediate the effects of export bans on household welfare. This study assesses the short-termimpact of export bans on prices and welfare of households in Malawi, accounting for these heterogeneities. It usesmonthly panel data on maize prices from 152 markets in Malawi and neighboring countries. To identify the impacts ofthe bans, the study compares the change in price dispersion between a domestic market in Malawi and another market in aneighboring country, relative to the price dispersion between the domestic market and other markets within Malawithat are at a similar distance as the domestic-foreign market pair. The findings show that export bans, in theshort run, are associated with lower domestic prices, lower relative prices, and less seasonality in prices in Malawi.This is after accounting for harvest levels and the existence of trade restrictions in neighboring countries.The short-run effects of the export bans help explain why policymakers are likely to engage in the use of suchpolicies. However, the welfare analysis shows that the welfare gains and poverty reduction effects are small inmagnitude and likely to be offset by the long-run distortionary effects of restrictive trade policies.
    Keywords: International Trade and Trade Rules,Food Security,Rules of Origin,Trade Policy,Trade and Multilateral Issues,Inequality
    Date: 2020–10–13
  8. By: Köthke, Margret; Weimar, Holger
    Abstract: This working paper provides a detailed overview of the trade in wood-based or wood-containing products1 in the EU27 in 2020 and distinguishes products already under the scope of the EUTR and the proposed regulation of the European Commission on deforestation-free value chains, from products not in the scope of those two regulations. The study considers overall 769 products (according to the 8-digit product codes of the Combined Nomenclature) from the entire list of goods for international trade statistics, provided that some wood content can be assumed. Of these products, 348 are already in the scope of the EUTR. The remaining 421 products are considered, to assess their relevance in EU27 wood-based products trade. Therefore, trade values and quantities for each product are taken from EUROSTAT foreign trade data bases. To compare the wood content related to each product, trade quantities were converted into trade volumes of cubic meters of roundwood equivalents (RWE m³). The roundwood equivalent indicates how much raw wood is required to produce the respective wood-based product. Converting the trade volumes into this physical reference value also enables a raw material-related comparison of the traded products. The working paper presents three different trade flows, which all fall within the scope of the proposed new regulation for deforestation-free products: a) Imports of wood-based products from third countries into the EU27, b) exports to third countries from the EU27, and c) intra trade within the EU27 internal market (between EU Member States). Further, detailed information on data compilation, data gaps and uncertainties and conversion factors applied are given within this working paper [...].
    Keywords: European Timber Regulation,EUTR,timber trade,wood-based products,deforestation free value chains
    Date: 2022
  9. By: Clémence Lenoir (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique); Julien Martin (UQAM - Université du Québec à Montréal = University of Québec in Montréal, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Isabelle Mejean (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR)
    Abstract: This paper studies how frictions in the acquisition of new customers distort the allocation of activities across heterogeneous producers. We add bilateral search frictions in a Ricardian model of trade and use French firm-to-firm trade data to estimate search frictions faced by French exporters in foreign markets. Estimated coefficients display a strong degree of heterogeneity across countries and products, that correlates with various proxies for information frictions. A counterfactual reduction in the level of search frictions improves the efficiency of the selection process and increases the average productivity of exports, because the least productive exporters are pushed out of the market, whereas exports increase at the top of the productivity distribution.
    Keywords: Firm-to-firm trade,Search frictions,Ricardian trade model,Structural estimation
    Date: 2022–01–14
  10. By: Spirin, Victor
    Abstract: One of the main criticisms of the modern trade theories is that they are based on the assumption of equivalent technologies in the trading countries. These theories explicitly assume that the trading partners possess identical technologies, and the difference in the amount of goods produced is solely due to the differences in factor endowments. In effect, opening to trade between two countries with different factor endowments is an optimization problem that redistributes labor and capital between the types of goods produced to maximize the world output. In this optimization problem both trade participants benefit from free trade, and it is possible to make everybody win. But if the two countries possess different technologies, the result is quite opposite. The optimization problem leads to the destruction of capital in the country with less efficient technology. While the main conclusions of the theory – the owners of export-oriented factor of production win and capital-abundant country will export capital-intensive goods and vice versa – will hold, the country with less efficient pre-trade technology will lose the technology altogether, and the total output of that country will fall as a result of free trade.
    Keywords: Free trade, Heckscher-Ohlin model, Vanek-Reinert effect, International economics.
    JEL: F6 F62 F63
    Date: 2022–10–16
  11. By: Albert, Jose Ramon G.; Quimba, Francis Mark A.; Calizo, Sylwyn Jr. C.; Carlos, Jean Clarisse T.
    Abstract: This study assessed the Philippines' readiness for regional digital trade integration with the Asia-Pacific by using the Regional Digital Trade Integration Index (RDTII) framework to provide an analytical overview of the Philippines' digital trade policy and regulatory environment. Using the RDTII framework, the Philippines reported an overall RDTII score of 0.342 in 2020, which rates the country as having a slightly restrictive digital trade environment. In the same year, the Philippines performed best in three pillars: pillar 1 (tariffs and trade defense measures), pillar 6 (cross-border data policies), and pillar 8 (intermediary liability and content access). All of these three pillars scored less than 0.200, thus, indicating a nonrestrictive policy and regulatory environment. In contrast, the Philippines performed worst in three pillars: pillar 2 (public procurement), pillar 3 (foreign direct investment), and, pillar 5 (telecommunications infrastructure and competition). These three pillars reported a score of above 0.610, characterized by having a strongly restrictive policy and regulatory environment. Meanwhile, the Philippines was found to be slightly restrictive in intellectual property rights (pillar 4), domestic policies on the use of data (pillar 7), quantitative trade restrictions (pillar 9), standards (pillar 10), and online sales and transactions (pillar 11), which all received a score ranging from 0.210-0.400. This study finds that the Philippines generally has an open policy environment for digital trade, which suggests that it is ready for digital trade integration with the region. However, the proper implementation of some of these policies has not been fully achieved, and this could be a great obstacle or challenge to regional integration. Comments to this paper are welcome within 60 days from date of posting. Email
    Keywords: regional integration; Philippines;Digital Economy; digital trade; RDTII; regional digital trade integration index
    Date: 2021
  12. By: Thomas Kuhn (Faculty of Economics and Business Administration, Chemnitz University of Technology); Radomir Pestow; Anja Zenker
    Abstract: We study the endogenous formation of climate coalitions linked to a preferential free trade arrangement. In a multi-stage strategic trade and participation game, coalition and fringe countries dispose of a discriminatory tariff on dirty imports as well as emission permits imposed on domestic producers and traded on a common permit market inside the coalition, or respectively local markets outside. The participation game is solved by Monte-Carlo simulation, while the general equilibrium and the policy game are solved analytically. We find that preferential free trade can create effective climate coalitions in terms of depth and breadth.
    Keywords: Climate Change, International Environmental Agreements, Preferential Free Trade, Issue Linkage, Emission Permits
    JEL: Q54 Q56 F18 F15 Q58
    Date: 2022–11
  13. By: Abreha,Kaleb Girma; Lartey,Emmanuel Kwasi Koranteng; Mengistae,Taye Alemu; Owusu,Solomon; Zeufack,Albert G.
    Abstract: Africa's linkages in manufacturing global value chains are reasonably high compared with other developing regions. Still, linkage rates have declined steeply in recent years in non-resource rich countries in the region although they have increased sharply in countries that are rich in natural resources. Moreover, the level and dynamics of linkages to manufacturing global value chains vary significantly between countries within each group of natural resource endowments. The current levels, activity structure, and geographic configuration of linkage rates evolved over the past 20 years. In addition, these linkages cut across broad activity categories, including manufacturing textiles and apparel, metal products, transport equipment, and electrical goods. This paper analyzes the sources of the variation in linkage rates in the framework of an estimated gravity and linear probability model. It is shown that the domestic actors in these linkages are typically relatively large establishments (100 or more employees) and have been in operation for five years or longer. These manufacturers are also more likely to have foreign equity holders or foreign technology licenses. These findings should be seen in the light of policies that promote industrialization by facilitating integration into manufacturing global value chains at links that maximize job and productivity gains.
    Keywords: Common Carriers Industry,Food&Beverage Industry,Business Cycles and Stabilization Policies,Pulp&Paper Industry,Plastics&Rubber Industry,Construction Industry,General Manufacturing,Textiles, Apparel&Leather Industry,International Trade and Trade Rules,Industrial and Consumer Services and Products,Transport and Trade Logistics,Transport Services
    Date: 2020–10–15
    Abstract: The discussion about the role and effects of international trade has begun to inten- sify recently. On the one hand, we know that specialization and participation in the international division of labor results in more efficient production structures that bring welfare gains. On the other hand, the resulting strong interconnectedness of countries allows for rapid spread of shocks and a more volatile and vulnerable system. Overall, neither full self-sufficiency nor an extremely globalized produc- tion structure seems to be sustainable nowadays. However, the responsiveness of countries to shocks might depend on the resilience of the countries. A system’s (economy’s) level of resilience derives from two structural properties: redundancy and efficiency. An efficient system has only a few mutual relationships, which indicates strong specialized trade flows and corresponds to highly globalized pro- duction processes of a country. In contrast, a redundant system has many more similarly weak connections signaling a less specialized and embedded position of elements within the system, corresponding to a lower level of involvement within the international division of labor. While it is clear that extreme efficiency and ex- treme redundancy are not optimal arrangements, finding the optimal combination in between is challenging. Putting this framework of system resilience into interna- tional trade and production networks, may indicate the optimal trade-off between self-sufficiency (more redundant systems) and specialization within international trade (more efficient systems). In this paper we use methods from Ecological Net- work Analysis (ENA) to capture the countries’ structural resilience building on sector level input-output data. The cross-country analysis shows that countries are heterogeneous in terms of resilience, and the structure of the countries has become more effective and globalized between 2000 and 2014. Using econometrics tools, we find a strong and significant association between redundancy/efficiency and the level of international trade, confirming the use of the complex system perspective in international trade. Finally, we also examine the countries’ level of self-organization and the window of vitality in terms of resilience.
    Keywords: resilience, economicstructure, input-outputeconomies, globalization, deglobalization.
    Date: 2021–12
  15. By: Rodriguez Castelan,Carlos; Vazquez,Emmanuel Jose; Winkler-Seales,Hernan Jorge
    Abstract: Evidence on the effect of exports on welfare at the local level is scarce. Using a unique dataset of international trade and poverty maps for almost 2,000 Mexican municipalities between 2004 and 2014, the studypresented in this paper provides new evidence on the impact of a significant rise in exports on poverty and inequalityat the local level. The analysis implements an instrumental variable approach that combines the initial structure ofexports across municipalities with global trends in exports from developing to developed countries by sector. Theresults show that a 10 percent increase in the ratio of exports to workers reduces income inequality measured by theGini coefficient by 0.17 point (using a 0 to 100 scale), but no significant effects on poverty reduction or averagehousehold incomes are identified. The lack of impacts on average incomes is driven by a rise in the supply of laborat the local level because municipalities with higher export growth experienced an increase in labor force participationand attracted more net migration, particularly of unskilled workers. Therefore, while total labor incomes grew inresponse to an increase in exports, average labor income per worker did not change. Declining remittances also bluntedthe effect of growing exports on household incomes.
    Date: 2020–10–27
  16. By: Hillberry,Russell Henry; Karabay,Bilgehan; Tan,Shawn Weiming
    Abstract: As part of their commitments under the World Trade Organization's Agreement on Trade Facilitation, many developing countries are set to adopt risk management, a strategy for selecting import shipments for inspection. This paper formalizes key enforcement issues related to risk management. It argues that the complexities of international trade oversight mean that inspecting agencies lack certainty about the conditional probability that a given shipment will not comply with import regulations. Ambiguity of this sort is likely to be especially important in developing countries that lack the sophisticated information technology used in advanced risk management systems. This paper formalizes a role for ambiguity in a theoretical model of border inspection. It provides evidence suggesting that ambiguity affects inspection rates. Finally, the paper calibrates the model and shock the ambiguity parameters to illustrate the consequences of an information technology-driven improvement in risk management capabilities for equilibrium rates of search and compliance.
    Keywords: International Trade and Trade Rules,Information Technology,Trade Facilitation,Financial Sector Policy,Human Rights
    Date: 2020–10–14
  17. By: Serafica, Ramonette B.; Oren, Queen Cel A.
    Abstract: This paper reviews the Philippines’ participation in services trade agreements to date at the multilateral (WTO GATS), regional (ASEAN and dialogue partners), and bilateral levels (PJEPA and PH-EFTA FTA). It also discusses the government’s institutional arrangements for trade in services negotiations. To harness the benefits of FTA participation, the report suggests judicious exercise of policy space in binding commitments, involving private sectors earlier in the cycle of services negotiations, clarifying and delineating roles of government agencies, and capacitating private sectors and MSMEs to engage in trade in services more actively, increasing market opportunities for the country. The first step towards strengthening the governance structure would be to consolidate negotiations in one agency instead of the current setup where the lead coordination role is split between two agencies depending on the trade partner and scope of the agreement. Additionally, a network approach to services and a whole-of-economy approach can strengthen the private sector engagement to take full advantage of international trade. Comments to this paper are welcome within 60 days from the date of posting. Email
    Keywords: services; trade; free trade agreement;FTAs
    Date: 2021
  18. By: Gale, Fred
    Abstract: This report examines lists of applicants for wheat tariff-rate quota (TRQ) for the years 2015 to 2021 to characterize the potential demand for imported wheat in China. More than 900 companies in China applied for quota from 2015 to 2021, and 171 applied 7 years in a row.
    Keywords: International Relations/Trade
    Date: 2021–08
  19. By: Andrés Rodríguez-Clare; Mauricio Ulate; Jose P. Vasquez
    Abstract: We present a dynamic quantitative trade and migration model that incorporates downward nominal wage rigidities and show how this framework can generate changes in unemployment and labor participation that match those uncovered by the empirical literature studying the “China shock.” We find that the China shock leads to average welfare increases in most U.S. states, including many that experience unemployment during the transition. However, nominal rigidities reduce the overall U.S. gains by around one fourth. In addition, there are seven states that experience welfare losses in the presence of downward nominal wage rigidity that would have experienced gains without it.
    Keywords: trade, unemployment, China shock, downward nominal wage rigidity
    JEL: F10 J20
    Date: 2022
  20. By: Hollweg,Claire Honore; Ong Lopez,Anne Beline Chua
    Abstract: Using firm-level data for Georgia, the paper estimates the quasi-elasticity of employment and wages with respect to the share of exports in total sales, to explore whether changes in the structure of sales (exporting versus selling to the domestic market) matter for labor market outcomes. The methodology uses exogenous fluctuations in exchange rates combined with firms' initial exposure to various markets as instrumental variables to identify a causal effect. The results differentiate employment levels and average wages by gender and consider whether export destination or the competiveness of economies matters for the magnitude of this elasticity. The data are from the National Statistics Office of Georgia Statistics Survey of Enterprises merged with customs data for 2006-17. The instrumental variables regression results show that the act of exporting improves female employment but reduces overall average wages and female wages. Increasing exports to the European Union as well as high-income countries drives this positive result for female employment, whereas exporting to upper-middle-income countries is found to have a negative relationship with female employment.
    Keywords: Rural Labor Markets,International Trade and Trade Rules,Labor Markets,Plastics&Rubber Industry,Textiles, Apparel&Leather Industry,Pulp&Paper Industry,Food&Beverage Industry,Common Carriers Industry,Construction Industry,Business Cycles and Stabilization Policies,General Manufacturing
    Date: 2020–10–08
  21. By: NISHITATENO Shuhei; UMETANI Hayato
    Abstract: This study estimates the Aid-for-Trade (AfT)-export elasticity from the donor perspective, using panel data covering 45 donor and 140 recipient countries over the 2002–2019 period, focusing on the top-five donors: Japan, Germany, France, US, and UK. The method involves estimating a structural gravity equation with the Poisson pseudo-maximum likelihood (PPML) technique. We find that the AfT-export elasticity for Japan is positive and large. In particular, the findings suggest that Japanese AfT generates net export expansion from the recipient countries, in contrast to AfT from the other top donors, which expands net imports from these countries. We further examined the potential mechanism behind the export creation effect of the Japanese AfT using unique contract data on worldwide infrastructure-related projects in which Japanese AfT is heavily concentrated. The results suggest that the Japanese infrastructure-related AfT works as an informal tying arrangement that closely links aid to donor exports. The focus of Japanese AfT on economic infrastructure offers a model for achieving mutual benefits for both donor and recipient countries.
    Date: 2022–10
  22. By: Eduardo Hidalgo; Erik Hornung; Pablo Selaya
    Abstract: We study how NAFTA changed the geography of violence in Mexico. We propose that this open border policy increased trafficking profits of Mexican cartels, resulting in violent competition among them. We test this hypothesis by comparing changes in drug-related homicides after NAFTA’s introduction in 1994 across municipalities with and without drug-trafficking routes. Routes are predicted least cost paths connecting municipalities with a recent history of detected drug trafficking with U.S. land ports of entry. On these routes, homicides increase by 2.3 per 100,000 inhabitants, which is equivalent to 27% of the pre-NAFTA mean. These results cannot be explained by changes in worker’s opportunity costs of using violence resulting from the trade shock.
    Keywords: violence, NAFTA, free trade, Mexico, illegal drug trafficking, conflict
    JEL: K42 F14 D74 O54
    Date: 2022
  23. By: Gerval, Adam; Hansen, James
    Abstract: This working paper illuminates the impact that volatility in international commodity prices has on U.S. agricultural product export volumes to sub-Saharan Africa (SSA). The current Coronavirus (COVID-19) crisis has created such a period of intense price volatility, offering a unique opportunity for modeling potential effects of a global shock on trade with these nations. By simulating the effects of declining oil prices in 2020 and subsequent years through a shock to gross domestic product (GDP) in oil-dependent nations—i.e., Angola and Nigeria—we can evaluate the impacts of COVID-19 on agricultural trade for key U.S. export commodities to SSA.
    Keywords: International Relations/Trade
    Date: 2022–05
  24. By: Espa, Ilaria; Francois, Joseph
    Abstract: Abstract This paper scrutinizes the European Union’s proposal for a carbon border adjustment mechanism (CBAM) under the rules of the World Trade Organization (WTO) and climate change law. It first examines the logic behind the CBAM as a border carbon adjustment measure, having due regard to the complex interplay between its stated carbon leakage rationale and its fair competition mechanics. It then dissects the main anticipated features of the CBAM and discusses how they may fare under both WTO law and climate change law. Finally, it identifies the most critical proposed design elements from a legal perspective and discusses possible alternatives or variations that could better align the CBAM with its climate change purpose. Read the full Working Paper by clicking on the link below.
    Date: 2022–11–02
  25. By: Bradford, Scott C.; Das, Satya; Saha, Anuradha
    Abstract: The paper develops a trade model with novel implications that richer and larger nations have a comparative advantage in manufacturing, while poorer and smaller nations have comparative advantage in services. Two forces drive these results: non-homothetic tastes that cause demand to shift toward services as income increases; and services having a higher degree of product differentiation than manufacturing, which leads larger nations to shift their production more towards manufactures. Empirical analysis using data from 2005 through 2016 finds support for the theoretical predictions: per-capita income and nation size have positive relationships with manufacturing comparative advantage indices and negative relationships with services comparative advantage indices.
    Keywords: trade in services; trade in manufacturing; revealed comparative advantage; national product differentiation; non-homothetic tastes
    JEL: F1 F12 F19 L60 L80
    Date: 2022
  26. By: BOURENANE, Bouzid; REZIG, Kamel; DJORFI, Zakaria
    Abstract: This paper aims to examine the impact of foreign exchange reserves on foreign direct investment in Algeria during the period 1990-2020 by applying the Auto-Regressive Distributed Lag model (ARDL). The model showed that the current variables are co-integrated. Also, the results indicate that foreign exchange reserves have a positive impact on foreign direct investment in the long term only, at a rate of 44%.
    Keywords: Foreign exchange reserves, foreign direct investment, ARDL Model, Algeria
    JEL: C51 F21 F31 O55
    Date: 2022–06–04
  27. By: Gibogwe, Vincent; Nigo, Ayine; Kufuor, Karen
    Abstract: The Southern African Development Community (SADC) has continued to experience an unprecedented increase in foreign direct investment (FDI) inflows for the past three decades. Evidence on their quantitative impact on the economy is still quite mixed. We use panel data methods on data from the (SADC) for the 1980–2020 period where our results show that FDI has a positive and statistically significant effect on economic growth; thus agreeing with some work that has been done on the community and in Sub-Saharan Africa. Our study calls for the development of human capital, promotion of market liberlisation, the improvement of financial sector and the need for policy measures that prioritise productive investment that is supportive of local private as well as foreign sector; the latter does provide positive spillovers to other sectors.
    Keywords: Foreign Direct Investment, Liberalisation, investment, economic growth
    JEL: O55
    Date: 2022–09–01
  28. By: Fernández-Amador, Octavio; Francois, Joseph; Oberdabernig, Doris; Tomberger, Patrick
    Abstract: Abstract Understanding the developments of energy effciency in the context of the global energy network is key to advance energy regulation and fight climate change. We develop a global panel dataset on energy usage accounts based on territorial production, final production and consumption over 1997-2014. We apply structural decomposition analysis to isolate energy efficiency changes and study the effectiveness of the European Union Energy Services Directive [2006/32/EC] on energy effciency. The effectiveness of the Directive is mixed. The different dynamics found among the European Union members result from differences in the ambition of national energy policies and from the structure of their supply chains. The observed trends towards energy efficiency gains and increases in renewable energy shares are not specific to the European Union, but are common among high income countries. Energy policies in high-income countries are less effective for energy footprints. Our findings are indicative of energy leakage. Energy regulation should account for global supply chains. Read the full Working Paper by clicking on the link below.
    Date: 2022–11–02
  29. By: Chi, Do Quynh
    Abstract: The Domestic Advisory Groups of the EU and Vietnam under the EVFTA (EU-Vietnam Free Trade Agreement) were officially established and met for the first time on November 12th, 2021 - nearly half a year later than originally planned. The formation of the Vietnam Domestic Advisory Group (DAG) was historic, as it is the first time non-governmental organisations (NGOs) in Vietnam are formally engaged in the review/monitoring process of a trade agreement. The research analysed the impacts of the DAG formation on the Vietnamese civil society and its relations with the government from a contextualised perspective. The conceptual framework is based on the combination of the imperfect reproduction model, which theorises the negotiation between rule-makers and rule-takers and the negotiating approach to the state-society relations in Vietnam, attempting to capture the nuances in the relationship between the authoritarian state and the civil society. On the one hand, the partystate imposed a tough legal framework that generally weakens and marginalises civil society from formal political processes; on the other hand, the state has shown certain concessions to civil society campaigns and contestations. The research showed that with the continuous pressure from the EU Parliament, the negative impacts of Covid-19 pandemic on Vietnam's economy, the prolonged internal political debate eventually led to the concession, though minimal, to include civil society organisations in the DAG. Upon consideration of the statesociety relations in Vietnam, this can be regarded as a small but important progress.
    Keywords: trade agreements,domestic advisory groups,civil society,Vietnam
    JEL: F53 F62 F65
    Date: 2022
  30. By: Liefert, William M; Mitchell, Lorraine; Seeley, Ralph
    Abstract: An examination of past economic crises and a simulation exercise of the effects of possible future crises show that such shocks can reduce U.S. agricultural exports considerably, especially if a crisis hits a number of countries simultaneously.
    Keywords: Agribusiness, International Relations/Trade
    Date: 2021–04
  31. By: Grigoryan, Karen; Arpanahi, Ali
    Abstract: Armenia-Iran North South Transport corridor is vital for Iran and Armenia and also for all parties involved. Recently, India increased its interest in Armenia and would like to see the INSTC passing through the Armenian territories, keeping in mind that Armenia is also the only country in the EAEU that has a land border with Iran. Taking into account Iran's desire to become a full member of the EAEU in the future, as well as India's interest in the EAEU structure and possible future membership, Armenia's chances of joining regional trade projects would be high. North South Transport Corridor route via India, Iran, Armenia, Georgia and Russia. This route is 30% cheaper and 40% shorter than the current traditional route. A country with a small domestic market like Armenia, of course, needs to expand its economic and trade ties with other countries in the world. The "One Belt, One Road" initiative can provide such an opportunity. An opportunity will also be created for the development of the Armenian transport infrastructure. Armenia aimed to construct the "North-South" transport road, 550-km long, to facilitate communication with Iran and Georgia and beyond.
    Keywords: Belt and Road Initiative,Armenia,Iran,China,India,trade,transport infrastructure,Silk RoadRoute
    Date: 2022
  32. By: Gale, Fred
    Abstract: Compliance with China’s food standards and regulations can be a challenge for exporters aspiring to sell to that country’s growing market. Refusals of imports fluctuate from year to year, peaking in 2007 and 2017 and dropping to their lowest-ever totals in 2018-19.
    Keywords: International Relations/Trade
    Date: 2021–03
  33. By: Gabriele Camera (Economic Science Institute, Chapman University); Lukas Hohl (University of Basel and Federal Finance Administration); Rolf Weder (University of Basel)
    Abstract: International economic theory suggests that people should embrace economic integration because it promises large gains. But policy reversals such as Brexit indicate a desire for economic disintegration. Here we report results of an experiment of how size and cross-country distribution of gains from integration influence individuals’ inclination to cooperate to reap its intended benefits and to embrace or reject integration. The design considers an indefinitely repeated helping game with multiple equilibria and strategic uncertainty. The data reveal that inequality of potential gains neither affected behavior nor reduced support for economic integration. However, integration may lead to disappointing, unequally distributed welfare gains, undermining support for the policy. This suggests that to better assess integration policies, we should account for the spillover effects of integration on behavior. Miscalculating this behavioral aspect may undermine the intended development goals and motivate calls for dramatic policy-reversals.
    Keywords: economic opportunity, endogenous institutions, globalization, indefinitely repeated games, social dilemmas
    JEL: C70 C90 F02
    Date: 2022
  34. By: Sangyup Choi; Gabriele Ciminelli; Davide Furceri
    Abstract: Theory and conventional wisdom suggest that an increase in uncertainty in one country scares away foreign investment. But, due to the limited availability of cross-country uncertainty data, empirical evidence remains scarce, and mostly confined to a limited set of countries. This paper provides a systematic analysis of how foreign capital inflows react to an increase in political and economic uncertainty, proxied using the World Uncertainty Index. We focus on bank credit, portfolio debt, and portfolio equity capital inflows into 143 countries from 51 source countries. We find that an increase in domestic uncertainty induces a substantial and persistent decrease in bank credit and portfolio debt inflows, and (to a lesser extent) in equity inflows. The effects on portfolio inflows are larger for countries with more open capital markets. We also uncover important differences in the response of portfolio inflows through actively-managed versus passive funds. The formers are similarly sensitive to changes in uncertainty that are country-specific (purely local uncertainty) and common across countries (global uncertainty), while the latter are only sensitive to global uncertainty.
    Keywords: Uncertainty, Capital flows, World Uncertainty Index, Mutual funds, ETFs, COVID-19
    JEL: F21 F32 F42
    Date: 2022–10
  35. By: Farris, Jarrad; Morgan, Stephen; Johnson, Michael E.
    Abstract: Africa is expected to be a key emerging market for international trade and investment due to rising consumer incomes and a population that is projected to double in size by 2050. However, the Coronavirus (COVID-19) pandemic led to major disruptions to markets and incomes in Africa that may have altered companies’ investment decisions. This paper addresses this issue by evaluating how the COVID-19 pandemic may have shifted trends in greenfield foreign direct investment (GFDI) in the region. The authors examined changes in the magnitude and composition of GFDI in Africa coinciding with the pandemic. The authors found that the onset of the pandemic in 2020 is associated with a large drop in GFDI in Africa. This reduction has been relatively persistent—while GFDI in Africa increased moderately in 2021 relative to 2020, it remains below historical levels. The authors also found substantial sector-specific variations coinciding with the pandemic. For example, GFDI in the food and beverages sector declined 34 percent in 2020 (relative to its 2010–19 annual average), while the communications sector experienced a more than 100-percent increase in 2020 GFDI. Finally, the authors found no association between countries’ differing COVID-19 fiscal policy responses and GFDI in the short term.
    Keywords: Financial Economics, International Development, International Relations/Trade, Political Economy, Public Economics, Resource /Energy Economics and Policy
    Date: 2022–10–20
  36. By: Ahn, Jae-Wan; Rhodes, M Taylor
    Abstract: Identifying contaminants in imported foods and refusing contaminated shipments help minimize the risk of foodborne illness from foreign products and are essential to keep U.S. consumers safe. This report uses import refusal data from the U.S. Food and Drug Administration (FDA) from 2002 to 2019 to explore import refusals based on contamination with pathogens and toxins. The report examines trends in total, annually, by industry, and by country.
    Keywords: Health Economics and Policy
    Date: 2021–12
  37. By: Khachikyan, Sos; Hongzhen, Jiang
    Abstract: The architecture of public policy through spatial principles has important features in the age of globalization. In this context, the Belt and Road Initiative can be considered as a worldwide public policy project, where conceptual thinking and legal understanding should be discussed. Soft and hard lows - as political and legal aspects, have important feature on the BRI implementation. Flexibility, openness, and inclusiveness are the main soft tools for Belt and Road Initiative participating countries. Based on these, networking and spatial particularities may generate new administrative principles for the BRI project. In this sense, the spatial administration definition was formulated, through which is possible to integrate spatial components of countries that have different social, national, ethnic or religious dimensions, and various geo-economics dimensions. Important to note that Armenia has specific economic and political status in the South Caucasus because of two circumstances. We consider that Belt and Road project is possible to integrate with the Armenian North-South Road Corridor program and free economic zone in Meghri, in order to introduce structural reforms and diversification of economy.
    Keywords: Spatial administration,North-South Road Corridor,Belt and Road Initiative,BRI legalaspects,digitalization
    Date: 2022
  38. By: Arenas-Arroyo, Esther; Schmidpeter, Bernhard
    Abstract: We study the spillover effects of immigration enforcement policies on children's human capital. Exploiting the temporal and geographic variation in the enactment of immigration enforcement policies, we find that English language skills of US-born children with at least one undocumented parent are negatively affected by the introduction of these policies. Changes in parental investment behavior cause this reduction in children's English skills. Parents are less likely to enroll their children in formal non-mandatory preschool, substituting formal non-mandatory preschool education with parental time at home. Parents also reduce time spent on leisure and socializing, providing children with fewer opportunities to interact and lean from others. Ultimately, these developments reduce children's long-term educational success. Exposure to immigration enforcement during early childhood lowersthe likelihood of high school completion. We also find negative, though imprecise, effects on college enrollment.
    Keywords: Immigration policies,children's human capital,children's language skills,parental investment
    JEL: K37 J13 J15
    Date: 2022

This nep-int issue is ©2022 by Luca Salvatici. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.