nep-int New Economics Papers
on International Trade
Issue of 2022‒12‒05
43 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. China and Latin America and the Caribbean: Exports competition in the United States market By Artecona, Raquel; Perrotti, Daniel E.; Welslau, Lennard
  2. Decomposing the impact of GMO regulation on bilateral trade: An application to corn trade By Hedoui, M. Amine; Beghin, John C.
  3. Trade, Insecurity, and the Costs of Conflict By Michelle R. Garfinkel; Stergios Skaperdas; Constantinos Syropoulos
  4. The Impact of Globalization on Domestic Employmen By Zhou, Peng; Tzivanakis, Nikolaos; Wang, Tuanfeng; Lu, Yao; Liu, Peng
  5. Can Value Chain Integration Explain the Diverging Economic Performance within the EU? By Agnes Kügler; Andreas Reinstaller; Klaus Friesenbichler
  6. The consequences of unilateral withdrawals from the Paris Agreement By Larch, Mario; Wanner, Joschka
  7. Pursuing Environmental and Social Objectives through Trade Agreements By Francois, Joseph; Hoekman, Bernard; Manchin, Miriam
  8. Trends, investor types and drivers of renewable energy FDI By Polina Knutsson; Perla Ibarlucea Flores
  9. Estimating the elasticity of consumer prices to the exchange rate: an accounting approach By Hadrien Camatte; Guillaume Daudin; Violaine Faubert; Antoine Lalliard; Christine Rifflart
  10. Global Value Chains and the transmission of exchange rate shocks to consumer prices By Hadrien Camatte; Guillaume Daudin; Violaine Faubert; Antoine Lalliard; Christine Rifflart
  11. Russia's technology imports from East Asia By Röyskö, Aino; Simola, Heli
  12. Foreign Direct Investment and Inclusive Green Growth in Africa: Energy Efficiency Contingencies and Thresholds By Isaac K. Ofori; Emmanuel Y. Gbolonyo; Nathanael Ojong
  13. The Impact of Immigration and Integration Policies On Immigrant-Native Labor Market Hierarchies By Martin Guzi; Martin Kahanec; Lucia Mýtna Kureková
  14. The Effect of Recent Technological Change on US Immigration Policy By Björn Brey
  15. Measuring Horizontal and Vertical Differentiation in Intra-industry Trade By Dutta, Sourish
  16. Nepal's graduation from the LDC category : Implications for international trade and development cooperation By Posh Raj Pandey; Paras Kharel; Kshitiz Dahal; Dikshya Singh; Swastik Aryal
  17. TheconsumerpriceeffectsofspecifictradepolicyrestrictionsinSouthAfrica By Lawrence Edwards; Zaakirah Ismail; Godfrey Kamutando; Simbarashe Mambara; Matthew Stern; Fouche
  18. Multidimensional Economic Complexity: How the Geography of Trade, Technology, and Research Explain Inclusive Green Growth By Viktor Stojkoski; Philipp Koch; Cesar A. Hidalgo;
  19. The Global Sanctions Data Base - Release 3: COVID-19, Russia, and Multilateral Sanctions By Syropoulos, Constantinos; Felbermayr, Gabriel; Kirilakha, Aleksandra; Yalcin, Erdal; Yotov, Yoto
  20. Profit Shifting Frictions and the Geography of Multinational Activity By Alessandro Ferrari; Sébastien Laffitte; Mathieu Parenti; Farid Toubal
  21. International Trade and Stable Resolutions of Resource Disputes By Michelle R. Garfinkel; Constantinos Syropoulos
  22. Endogenous Product Adjustment and Exchange Rate Pass-Through By Freitag, Andreas; Lein, Sarah
  23. Sustainable Development in Chilean International Investment Agreements By Polanco, Rodrigo
  24. Product Mix and Firm Productivity Responses to Trade Competition By Thierry Mayer; Marc Melitz; Gianmarco Ottaviano
  25. Brothers in arms: The value of coalitions in sanctions regimes By Chowdhry, Sonali; Hinz, Julian; Kamin, Katrin; Wanner, Joschka
  26. The opportunities of economic and legal cooperation between EU - Armenia within the framework of the BRI By Ghazaryan, Armen Ju.; Marukyan, Liana; Abrahamyan, Meline V.; Ayvazyan, Meline A.
  27. Immigration, integration, and the informal economy in OECD countries By Oussama Ben Atta; Isabelle Chort; Jean-Noël Senne
  28. The Global Sanctions Data Base. Release 3: COVID-19, Russia, and Multilateral Sanctions By Constantinos Syropoulos; Gabriel Felbermayr; Aleksandra Kirilakha; Erdal Yalcin; Yoto V. Yotov
  29. Financing imports, the Triffin dilemma and more By Saccal, Alessandro
  30. Economic Sanctions: Evolution, Consequences, and Challenges By Morgan, T. Clifton; Syropoulos, Constantinos; Yotov, Yoto
  31. Gender patterns of EU exports: jobs and wage differentials By Kutlina-Dimitrova, Zornitsa; Piñero, Pablo; Rueda-Cantuche, Jose Manuel
  32. TRIPS+: IP Privileges for Pharmaceuticals and Agricultural Chemicals By Moir, Hazel
  33. Trade Conflicts and Credit Supply Spillovers: Evidence from the Nobel Peace Prize Trade Shock By Jin Cao; Valeriya Dinger; Ragnar E. Juelsrud; Karolis Liaudinskas
  34. The Impact of Brexit on Maltese Firms – Insights from a Survey with Local Non-Financial Corporations By Warren Deguara; Erica Maria Brincat; Aleandra Muscat
  35. The Deforestation Effects of Trade and Agricultural Productivity in Brazil By Carreira, Igor; Costa, Francisco J M; Pessoa, Joao Paulo
  36. The Role of Immigrants, Emigrants, and Locals in the Historical Formation of Knowledge Agglomerations By Viktor Stojkoski; Philipp Koch; Cesar A. Hidalgo;
  37. Multiplicity, the Corporation and Human Rights in Global Value Chains By Scheper, Christian
  38. Private equity buyouts & firm exporting during the global financial crisis By Paul Lavery; Marian-Eliza Spaliara
  39. The United States of Europe: A Gravity Model Evaluation of the Four Freedoms By Keith Head; Thierry Mayer
  40. Banning wildlife trade can boost demand for unregulated threatened species By KUBO, Takahiro; Mieno, Taro; Uryu, Shinya; Terada, Saeko; Veríssimo, Diogo
  41. The Economic Effects of Immigration Pardons: Evidence from Venezuelan Entrepreneurs By Dany Bahar; Bo Cowgill; Jorge Guzman
  42. Deglobalisation and Protectionism By Uri Dadush
  43. The global geography of digital platforms: towards platforms international locational determinants By Victo José da Silva Neto; Tulio Chiarini; Leonardo Costa Ribeiro; Igor Santos Tupy

  1. By: Artecona, Raquel; Perrotti, Daniel E.; Welslau, Lennard
    Abstract: This paper uses an augmented gravity trade model to examine the impact of Chinese exports to the United States on Latin America and the Caribbean (LAC) exports to the same market over the last two decades. The analysis relies on a sample of 33 LAC countries and trade data disaggregated to the 10- digit Harmonized Tariff Schedule (HTS) level. The results show that the impact of Chinese exports on US imports from LAC is negative and statistically significant across model specifications and levels of aggregation in the trade data. In addition, the model suggests that after accounting for such export competition, Free Trade Agreements with the United States, on average, increased imports from LAC countries by up to 1.5 percent. That is, countries with a trade agreement with the US have an advantage over those without, particularly in the manufacturing sector.
    Date: 2022–10–27
  2. By: Hedoui, M. Amine; Beghin, John C.
    Abstract: The stringency of GMO regulation affects trade of agricultural products among countries. On that account, our investigation attempts to shed the light on the complexity of the impact of genetically modified organisms (GMO) regulations among countries on bilateral trade with a focus on GMO approvals. We develop a framework extending Xiong and Beghin (2014) and their decomposition of export supply and imports demand effects. Our approach encompasses the supplemental effect of GMO regulation laxity in production on the exporter’s productivity. It decomposes three effects that impact bilateral trade flows between trade partners: productivity in the source country, sorting cost from bilateral dissimilarity in regulations, and stringency impact on import demand. We estimate the model using a panel dataset of corn trade and two econometric approaches (PPML, Heckman sample-selection). We find that GMO laxity in production of exporters has the most prominent and robust effect of enhancing bilateral trade of corn. The effect of GMO laxity in demand appears to be smaller than the export booster effect of GMO adoption. Finally, bilateral dissimilarity in regulations does not appear to matter, once we account for the impact of GMO in production of the exporters and laxity in demand differentiated for importer and exporters. Hence, GMO approval regulations have dominating multilateral effects rather than bilateral ones.
    Keywords: Agricultural and Food Policy, International Relations/Trade
    Date: 2022–11–18
  3. By: Michelle R. Garfinkel; Stergios Skaperdas; Constantinos Syropoulos
    Abstract: Typically, economics assumes that property rights over productive resources or goods are perfectly defined and costlessly enforced. The costs of insecurity and the resultant conflict are, however, real and often economically significant. In this paper, we examine how international trade regimes affect the costs of conflict and, in turn, how the desirability of international trade is affected by these costs. We consider both domestic and international conflict. Trade openness reduces the costs of these types of conflict for countries that import goods whose production relies on supplies of contested resources. For countries that export such goods, trade openness intensifies conflict. The effect of conflict on the allocation of productive resources through prices under trade can also explain the “natural resource curse” and can overturn a country’s natural comparative advantage. Finally, we consider alternative channels through which trade can affect arming and conflict costs, with effects that can either improve or worsen international relations.
    Keywords: insecure resources, trade openness, the gains from trade, domestic conflict, interstate conflict
    JEL: C72 C78 D30 D70 D74 F10 F51 F60
    Date: 2022
  4. By: Zhou, Peng (Cardiff Business School); Tzivanakis, Nikolaos; Wang, Tuanfeng; Lu, Yao; Liu, Peng
    Abstract: Immigrants and offshore workers become important disturbing factors of domestic employment in the globalized economy. In this study we build a model with this feature to test how the three groups of workers in the labor force interact using a panel data of 155 countries over the period 1990-2015. We find that while immigrants replaced native workers (especially highly skilled ones), offshore workers who produce intermediate input imports do not. The productivity effect of offshoring is stronger for developed economies while the substitution effect of immigration is stronger for developing countries. Furthermore, the productivity effects of immigration and offshoring are stronger when governments impose less restrictions on international trade and domestic labor market.
    Keywords: immigration; offshoring; intermediate input imports; domestic employment; skill-bias effect
    Date: 2022–11
  5. By: Agnes Kügler; Andreas Reinstaller; Klaus Friesenbichler
    Abstract: This paper studies the interplay of integration into EU value chains and industrial development measured by labour productivity. Our integration indicator measures value chain trade within the Single Market relative to global value chain networks. Using a simultaneous equation model, we find an overall positive effect of integration on labour productivity, which is driven by upstream integration. Highly productive industries rather seek global value chain trade than regional integration, though. Better domestic institutions facilitate EU integration, although they favour industries with less complex product portfolios and lower levels of knowledge cumulativeness.
    Keywords: EU integration, Value chains, Productivity, Institutions, Industrial development, Product complexity
    Date: 2022–11–16
  6. By: Larch, Mario; Wanner, Joschka
    Abstract: International cooperation is at the core of multilateral climate policy. How is its effectiveness harmed by individual countries dropping out of the global mitigation effort? We develop a multisector structural trade model with emissions from production and a constant elasticity of fossil fuel supply function to simulate the consequences of unilateral withdrawals from the Paris Agreement. Taking into account both direct and leakage effects, we îond that a US withdrawal would eliminate more than a third of the world emissions reduction (31.8% direct effect and 6.4% leakage effect), while a potential Chinese withdrawal lowers the world emission reduction by 24.1% (11.9% direct effect and 12.2% leakage effect). The substantial leakage is primarily driven by technique effects induced by falling international fossil fuel prices.
    Keywords: Climate change,International trade,Carbon leakage,Fossil fuel supply
    JEL: F14 F18 Q56
    Date: 2022
  7. By: Francois, Joseph; Hoekman, Bernard; Manchin, Miriam
    Abstract: Abstract Using a large dataset covering more than 180 countries and spanning several decades, we employ a SDID estimator to identify the extent to which trade agreements incorporating non-trade provisions (labor standards, environmental protection and civil and political rights) are associated with improvements in corresponding non-trade performance indicators. We distinguish between binding (enforceable) and non-binding provisions in trade agreements, and also control for the allocation of official development assistance targeting these three non-trade policy areas. Overall, the results suggest that efforts made to date to include non-trade provisions in trade agreements have not resulted in consistent desired (better) non-trade outcomes.
    Date: 2022–11–23
  8. By: Polina Knutsson; Perla Ibarlucea Flores
    Abstract: As foreign direct investment (FDI) can help mitigate the repercussions of climate change, understanding what factors attract energy FDI is important. A large share of energy FDI originated from outside the energy sector, and given that renewable power FDI also comes from outside the energy sector, it is worthwhile to examine if drivers behind this type of FDI differ from what encourages investment by firms operating within the energy sector. This paper demonstrates that renewable energy FDI has been increasing, while FDI in fossil fuels is potentially slowing down. Results of the empirical analysis show that both the broader investment conditions and the strength of climate policies are vital for ensuring the favourable environment for renewable energy FDI, but the extent to which these factors impact investment decisions varies depending on where the investors come from: greenfield investors from outside the energy sector seem less responsive to the climate mitigation policies of host countries, whereas their location choices are tightly linked to the broader investment conditions in the destination economies.
    Keywords: energy FDI, energy sector
    Date: 2022–11–25
  9. By: Hadrien Camatte; Guillaume Daudin (DIAL - Développement, institutions et analyses de long terme, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Violaine Faubert; Antoine Lalliard; Christine Rifflart (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)
    Abstract: We analyse the elasticity of the household consumption expenditure (HCE) deflator to the exchange rate, using world input-output tables (WIOT) from 1995 to 2019. In line with the existing literature, we find a modest output-weighted elasticity of around 0.1. This elasticity is stable over time but heterogeneous across countries, ranging from 0.05 to 0.22. Such heterogeneity mainly reflects differences in foreign product content of consumption and intermediate products. Direct effects through imported consumption and intermediate products entering domestic production explain most of the transmission of an exchange rate appreciation to domestic prices. By contrast, indirect effects linked to participation in global value chains play a limited role. Our results are robust to using four different WIOT datasets. As WIOT are data-demanding and available with a lag of several years, we extrapolate a reliable estimate of the HCE deflator elasticity from 2015 onwards using trade data and GDP statistics.
    Keywords: Input-output linkages,Spillovers,Global value chains,Cost-push inflation
    Date: 2021–11–02
  10. By: Hadrien Camatte (Banque de France - Gaz de France Direction de la Recherche); Guillaume Daudin (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Violaine Faubert (Banque de France - Gaz de France Direction de la Recherche); Antoine Lalliard (Banque de France - Gaz de France Direction de la Recherche); Christine Rifflart (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)
    Abstract: Following the 2008 financial crisis, inflation rates in advanced economies have been at odds with the prediction of a standard Phillips curve. This puzzle has triggered a debate on the global determinants of domestic prices. We contribute to this debate by investigating the impact of exchange rate shocks on consumer prices from 1995 to 2018. We focus on cost-push inflation through global value chains, using three sectoral world input-output datasets. Depending on countries, the absolute value of the elasticity of the household consumption expenditure (HCE hereafter) deflator to the exchange rate ranges from 0.05 to 0.35, confirming the importance of global value chains in channelling external shocks to domestic inflation. Using data from WIOD on a sample of 43 countries, we find that the mean output-weighted elasticity of the HCE deflator to the exchange rate increased in absolute value from 0.075 in 2000 to 0.094 in 2008. After peaking in 2008, it declined to 0.088 in 2014. World Input-Output tables (WIOT hereafter) are released with a lag of several years and the latest WIOT dates back to 2015. To fill this gap, we approximate the impact of an exchange rate shock on the HCE deflator from 2016 onwards using up-to -date GDP and trade data. Our extrapolations suggest that the decline in the elasticity of the HCE deflator continued until 2016, before reversing in 2017 and 2018. Our findings are robust to using three different datasets.
    Keywords: Inflation,global value chains,Phillips curve,input output tables,international trade,pass through
    Date: 2021–02–08
  11. By: Röyskö, Aino; Simola, Heli
    Abstract: This brief considers the role of East Asian economies in Russia's technology imports. The EU, US and UK have set strict sanctions and export restrictions on Russia in response to the war in Ukraine, while responses from East Asian economies have been mixed. By restricting exports of technology production equipment and inputs, Japan, Korea, Taiwan and Singapore have substantially hindered the availability of certain technology products in Russia. China and most other emerging economies in East Asia have not imposed sanctions on Russia and thus could potentially provide substitutes for Russia for some technology imports restricted by sanctions. There is little evidence so far, however, of any such shift occurring.
    Keywords: Russia,trade,East Asia,sanctions,technology imports
    Date: 2022
  12. By: Isaac K. Ofori (University of Insubria, Varese, Italy); Emmanuel Y. Gbolonyo (University of Cape Town, South Africa); Nathanael Ojong (York University,Toronto, Canada)
    Abstract: Despite the growing number of empirical studies on foreign direct investment (FDI) and energy efficiency (EE) as they relate to green growth, there remains an empirical research gap with respect to whether EE can engender positive synergy with FDI to foster inclusive green growth (IGG) in Africa. Also, little has been done to show the IGG gains from improving EE in both the short and long terms. Thus, this paper aims to investigate whether there exists a relevant synergy between EE and FDI in fostering IGG in Africa by using macrodata for 23 countries from 2000 to 2020. According to our findings, which are based on dynamic GMM estimator, FDI hampers IGG in Africa, while EE fosters IGG. Notably, in the presence of EE, the environmental-quality-deterioration effect of FDI is reduced. Additional evidence by way of threshold analysis indicates that improving EE in Africa generates positive sustainable development gains in both the short and long terms. This study suggests that a country’s drive to attract FDI needs to be accompanied by appropriate policy options to promote energy efficiency.
    Keywords: Africa; Energy efficiency; FDI; Inclusive Green Growth; Greenhouse Gases; Environmental Sustainability
    JEL: F2 F21 O11 O44 O55 Q01 Q43 Q56
    Date: 2022–01
  13. By: Martin Guzi; Martin Kahanec; Lucia Mýtna Kureková
    Abstract: Across European Union (EU) labor markets, immigrant and native populations exhibit disparate labor market outcomes, signifying widespread labor market hierarchies. While significant resources have been invested in migration and integration policies, it remains unclear whether these contribute to or mitigate labor market hierarchies between natives and immigrants. Using a longitudinal model based on individual-level EU LFS and country-level DEMIG POLICY and POLMIG databases, we explore variation in changes of immigration and integration policies across Western EU member states to study how they are associated with labor market hierarchies in terms of unemployment and employment quality gaps between immigrant and native populations. Our findings imply that designing less restrictive policies may help mitigate immigrant-native labor market hierarchies by reducing existing labor market disadvantages of immigrants and making the most of their potential.
    Keywords: decomposition, immigrant-native gaps, labor market, DEMIG POLICY database, immigrant integration, hierarchies
    JEL: J15 J18 J61 K37
    Date: 2022–11–18
  14. By: Björn Brey
    Abstract: Did recent technological change shape immigration policy in the United States? I argue that as automation shifted employment from routine to manual occupations, it increased competition between natives and immigrants. In turn, this lead to a more restrictive US immigration policy. I provide empirical evidence for this by analyzing voting on low-skill immigration bills in the House of Representatives. Policy makers representing congressional districts with a higher share of manual employment and those exposed to manual-biased technological change are more likely to support restricting low-skill immigration. Additional results on the effect of (i) immigration on wages, (ii) voter’s attitudes on low-skill immigration, and (iii) political polarization complete the analysis. I do not find a corresponding effect of technological change on trade policy consistent with the highlighted mechanism.
    Keywords: Political Economy, Voting, Immigration Policy, Technological Change
    Date: 2022–10
  15. By: Dutta, Sourish
    Abstract: The development of research studies concerning the emergence of intra-industry trade is fruitful interaction between theoretical explanations and empirical methods to measure this phenomenon. The foundation of indicators to measure the intensity of intra-industry trading caused the rise of theoretical models explaining the determinants of these trade flows. It also contributed to the debate on the need to distinguish, in empirical analyses, intra-industry trade in horizontal differentiation from that in vertical differentiation.
    Date: 2022–06–02
  16. By: Posh Raj Pandey (South Asia Watch on Trade, Economics and Environment); Paras Kharel (South Asia Watch on Trade, Economics and Environment); Kshitiz Dahal (South Asia Watch on Trade, Economics and Environment); Dikshya Singh (South Asia Watch on Trade, Economics and Environment); Swastik Aryal (South Asia Watch on Trade, Economics and Environment)
    Abstract: This paper investigates the implications of LDC graduation for Nepal in the areas of market access, development cooperation, and trade-related policy space, and offers recommendations for the government to consider when formulating a transition strategy.
    Keywords: LDC Graduation, International Trade, Foreign Aid, Market Access, Rules of Origin, Intellectual Property Rights, Policy Space, Loans, Grants
    JEL: F02 F12 F13 F14 F35 F63 O2
    Date: 2022–09
  17. By: Lawrence Edwards; Zaakirah Ismail; Godfrey Kamutando; Simbarashe Mambara; Matthew Stern; Fouche
    Abstract: The consumer price effects of specific trade policy restrictions in South Africa
    Date: 2022–11–18
  18. By: Viktor Stojkoski; Philipp Koch; Cesar A. Hidalgo;
    Abstract: To achieve inclusive green growth, countries need to consider a multiplicity of economic, social, and environmental factors. These are often captured by metrics of economic complexity derived from the geography of trade, thus missing key information on innovative activities. To bridge this gap, we combine trade data with data on patent applications and research publications to build models that significantly and robustly improve the ability of economic complexity metrics to explain international variations in inclusive green growth. We show that measures of complexity built on trade and patent data combine to explain future economic growth and income inequality and that countries that score high in all three metrics tend to exhibit lower emission intensities. These findings illustrate how the geography of trade, technology, and research combine to explain inclusive green growth. nations.
    Keywords: economic complexity, inclusive green growth, complex systems
    JEL: F14 F43 O12 O15 O47 Q56
    Date: 2022–11
  19. By: Syropoulos, Constantinos (Drexel University); Felbermayr, Gabriel (WIFO & Vienna University); Kirilakha, Aleksandra (Drexel University); Yalcin, Erdal (Konstanz University); Yotov, Yoto (Drexel University)
    Abstract: This paper introduces the third update/release of the Global Sanctions Data Base (GSDB-R3). The GSDB-R3 extends the period of coverage from 1950-2019 to 1950-2022, which includes two special periods – COVID-19 and the war between Russia and Ukraine. The new update of the GSDB contains a total of 1,325 cases. In response to multiple inquiries and requests, the GSDB-R3 has been amended with a new variable that distinguishes between unilateral and multilateral sanctions. As before, the GSDB comes in two versions, case-specific and dyadic, which are freely available upon request at To highlight one of the new features of the GSDB, we estimate the heterogeneous effects of unilateral and multilateral sanctions on trade. We also obtain estimates of the effects on trade of the 2014 sanctions on Russia.
    Keywords: Sanctions; COVID; Russia; Multilateral Sanctions; Unilateral Sanctions
    JEL: F13 F14 F51
    Date: 2022–11–13
  20. By: Alessandro Ferrari; Sébastien Laffitte; Mathieu Parenti; Farid Toubal
    Abstract: We develop a quantitative general equilibrium model of multinational activity embedding corporate taxation and profit shifting. In addition to trade and investment frictions, our model shows that profit-shifting frictions shape the geography of multinational production. Key to our model is the distinction between the corporate tax elasticity of real activity and profit shifting. The quantification of our model requires estimates of shifted profits flows. We provide a new, model-consistent methodology to calibrate bilateral profitshifting frictions based on accounting identities. We simulate various tax reforms aimed at curbing tax-dodging practices of multinationals and their impact on a range of outcomes, including tax revenues and production. Our results show that the effects of the international relocation of firms across countries are of comparable magnitude as the direct gains in taxable income.
    Keywords: Profit Shifting; Tax Avoidance; Tax Havens, International Tax Reforms, Minimum taxation, DBCFT, Multinational firms
    Date: 2022–10
  21. By: Michelle R. Garfinkel; Constantinos Syropoulos
    Abstract: We consider a dynamic setting in which two sovereign states with overlapping ownership claims on a resource/asset first arm and then choose whether to resolve their dispute violently through war or peacefully through settlement. Both approaches depend on the states’ military capacities, but have very different outcomes. War precludes the possibility of international trade and can be destructive; however, once a winner is declared, arming is unnecessary in future periods. By contrast, a peaceful resolution avoids destruction and supports mutually advantageous trade; yet, settlements must be renegotiated in the shadow of arming and the threat of war. In this setting, we characterize the conditions under which peace arises as a stable equilibrium over time. We find that, depending on the destructiveness of war, time preferences, and the initial distribution of resource endowments, greater gains from trade can reduce arming and pacify international tensions. Even when the gains from trade are relatively small, peace might be sustainable, but only for more uneven endowment distributions.
    Keywords: interstate war, armed peace, unarmed peace, security policies, gains from trade, shadow of the future
    JEL: C72 C78 D30 D70 D74 F10 F51 F60
    Date: 2022
  22. By: Freitag, Andreas (University of Basel); Lein, Sarah
    Abstract: We document how product quality responds to exchange rate movements and quantify the extent to which these quality changes affect the aggregate pass-through into export prices. We analyze the substantial sudden appreciation of the Swiss franc post removal of the 1.20-CHF-per-euro lower bound in 2015 using export data representing a large share of the universe of goods exports from Switzerland. We find that firms upgrade the quality of their products after the appreciation. Furthermore, they disproportionately remove lower-quality products from their product ranges. This quality upgrading and quality sorting effect accounts for a substantial share of the total pass-through one year after the appreciation. We cross-check our results with the microdata underlying the Swiss export price index, which includes an adjustment factor for quality based on firms' reported product replacements, and obtain similar results.
    Keywords: large exchange rate shocks, exchange rate pass-through, quality adjustment
    JEL: E3 E31 E50 F14 F41
    Date: 2022–11–18
  23. By: Polanco, Rodrigo
    Abstract: This article describes the sustainable development provisions (SDPs) that are generally found in international investment agreements (IIAs), as well as those that explicitly refer to environmental and labour standards. In turn, it examines Chilean IIAs and their sustainable development provisions in bilateral investment promotion and protection agreements (BITs) and as part of preferential trade agreements (PTAs), and compares them with the inclusion of these provisions in IIAs worldwide. Considering that Chile is one of the leading countries in the negotiation of trade agreements and that, at the same time, it has made a strong public commitment to promote sustainable development, we propose some recommendations for future negotiations or renegotiations of Chilean IIAs to include more sustainable development provisions. Read the full Working Paper by clicking on the link below.
    Date: 2022–11–22
  24. By: Thierry Mayer (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, CEPR - Center for Economic Policy Research - CEPR); Marc Melitz (Department of Economics, Harvard University - Harvard University [Cambridge], NBER - National Bureau of Economic Research [New York] - NBER - The National Bureau of Economic Research, CEPR - Center for Economic Policy Research - CEPR); Gianmarco Ottaviano (Bocconi University [Milan, Italy], CEP - LSE - Centre for Economic Performance - LSE - London School of Economics and Political Science, CEPR - Center for Economic Policy Research - CEPR)
    Abstract: We document how demand shocks in export markets lead French multiproduct exporters to reallocate the mix of products sold in those destinations. In response to positive demand shocks, French firms skew their export sales toward their best-performing products. We develop a theoretical model of multiproduct firms and derive the specific demand conditions (with endogenous price elasticities) needed to generate these product-mix reallocations. Under those demand conditions, the increased competition from demand shocks in export markets also induces productivity changes within the firm. We empirically test for this connection between demand shocks and the productivity of multiproduct firms. We find that this connection is economically substantial.
    Date: 2021–12–02
  25. By: Chowdhry, Sonali; Hinz, Julian; Kamin, Katrin; Wanner, Joschka
    Abstract: This paper examines the impact of coalitions on the economic costs of the 2012 Iran and 2014 Russia sanctions. By estimating and simulating a quantitative general equilibrium trade model under different coalition set-ups, we (i) dissect welfare losses for sanction-senders and target; (ii) compare prospective coalition partners and; (iii) provide bounds for the sanctions potential - the maximum welfare change attainable - when sanctions are scaled vertically, i.e. across sectors up to an embargo, or horizontally, i.e. across countries up to a global regime. To gauge the significance of simulation outcomes, we implement a Bayesian bootstrap procedure that generates confidence bands. We find that the implemented measures against Iran and Russia inflicted considerable economic harm, yielding 32 - 37% of the vertical sanctions potential. Our key finding is that coalitions lower the average welfare loss incurred from sanctions relative to unilateral implementation. They also increase the welfare loss imposed on Iran and Russia. Adding China to the coalition further amplifies the welfare loss by 79% for Iran and 22% for Russia. Finally, we quantify transfers that would equalize losses across coalition members. These hypothetical transfers can be seen as a sanctions-equivalent of NATO spending goals and provide a measure of the relative burden borne by coalition countries.
    Keywords: Sanctions,Embargoes,Alliances,Sectoral linkages
    JEL: F10 F13 F14 F51
    Date: 2022
  26. By: Ghazaryan, Armen Ju.; Marukyan, Liana; Abrahamyan, Meline V.; Ayvazyan, Meline A.
    Abstract: The EU's relations with Armenia are based on the EU - Armenia Comprehensive and Enhanced Partnership Agreement (CEPA), which was signed on November 24, 2017, and entered into force on March 31, 2021. Within the framework of this agreement, the cooperation of the EU and Armenia in various spheres is envisaged. The EU's support, in particular for the development of democracy and political, economic and institutional stability, is very important for the Republic of Armenia. From an economic point of view, the EU is one of the most colossal donors providing financial aid and doing foreign investment, which is an important component both in promoting exports in general and especially in the high-tech sector. The article aims to present in detail the existing achievements in the field of economic and legal cooperation, the prospects and opportunities for deepening sectoral cooperation, taking into account the potential mutual economic benefits that the EU and Armenia could have within the framework of the Armenian North-South Road Corridor and the Belt and Road Initiative.
    Keywords: EU-Armenia cooperation,CEPA,Belt and Road Initiative,Armenian North-South Road
    Date: 2022
  27. By: Oussama Ben Atta (EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay, TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique); Isabelle Chort (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique, IUF - Institut Universitaire de France - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics); Jean-Noël Senne (RITM - Réseaux Innovation Territoires et Mondialisation - Université Paris-Saclay)
    Abstract: This article assesses the impact of immigrant and asylum seeker inflows on the size of the informal sector in host countries from a macroeconomic perspective. We use two indicators of informality provided by Medina and Schneider (2019) and Elgin and Oztunali (2012) combined with migration data from the OECD International Migration Database and data on asylum seeker flows from the UNHCR for the period 1997-2017. We estimate a first-difference model, instrumenting immigrant and asylum seeker flows by their predicted values derived from the estimation of a pseudo-gravity model. Results suggest that both immigrant and asylum seeker inflows increase the size of the informal sector at destination, but the size of the effect is very small: a one percentage point increase in the stock of immigrants as a share of population leads to an increase of the informal sector as a share of GDP of 0.05-0.06 percentage points. Unsurprisingly, the effect is about four times larger for asylum seeker flows, but remains economically insignificant. We investigate several potential channels, and find that integration policies do matter. We find no impact of imported norms or institutions, but rather that the effect is larger in destination countries with a large informal sector. A larger diversity in incoming flows is associated with a smaller impact on the informal sector. Finally, we document the dynamics with a VAR model.
    Keywords: migration,informal economy,asylum seekers,integration policies,shadow economy
    Date: 2022–10–20
  28. By: Constantinos Syropoulos; Gabriel Felbermayr (Austrian Institute of Economic Research); Aleksandra Kirilakha; Erdal Yalcin; Yoto V. Yotov
    Abstract: This paper introduces the third update/release of the Global Sanctions Data Base (GSDB-R3). The GSDB-R3 extends the period of coverage from 1950-2019 to 1950-2022, which includes two special periods – COVID-19 and the war between Russia and Ukraine. The new update of the GSDB contains a total of 1,325 cases. In response to multiple inquiries and requests, the GSDB-R3 has been amended with a new variable that distinguishes between unilateral and multilateral sanctions. As before, the GSDB comes in two versions, case-specific and dyadic, which are freely available upon request at To highlight one of the new features of the GSDB, we estimate the heterogeneous effects of unilateral and multilateral sanctions on trade. We also obtain estimates of the effects on trade of the 2014 sanctions on Russia.
    Keywords: Sanctions, Covid-19, Russia, Multilateral Sanctions, Unilateral Sanctions
    Date: 2022–11–17
  29. By: Saccal, Alessandro
    Abstract: This monograph presents a formal proof of the notion by which a country devoid of tradable assets and without access to foreign borrowing and lending must systematically pay for its imports in foreign currency through its exports alone, provided a demand for them to begin with. It likewise sets forth a formal proof of the Triffin dilemma, by which a country whose external currency enjoys the status of an international reserve currency is bound to incur a trade deficit and an attendant excess of extant foreign net borrowing in relation to its tradable assets, meanwhile advancing an innovative, orderly model of the balance of payments. Currency regimes, sudden stops in foreign net borrowing, international reserve currencies and changes in private and public consumption are additionally examined. This monograph completes its study of the dynamics pertaining to exports and foreign borrowing by means of a static deterministic partial equilibrium (SDPE) model, via stability analysis.
    Keywords: balance of payments; exports; imports; international reserve currency; Triffin dilemma; tradable assets.
    JEL: E12 F13 F30 F31 F41 F45 F52 N10
    Date: 2022–10–03
  30. By: Morgan, T. Clifton (Rice University); Syropoulos, Constantinos (Drexel University); Yotov, Yoto (Drexel University)
    Abstract: Taking an interdisciplinary perspective, we examine the evolution of economic sanctions in the post-World War II era and reflect on the lessons that could be drawn from their patterns of use. We observe that, during this time, there has been a remarkable increase in the use of sanctions as an instrument of foreign policy. We classify this period into four `eras' and discuss, in this context, how the evolution of sanctions may be linked to salient features of the contemporaneous international political and economic orders. Our review of the literatures on sanctions in economics and political science suggests, among other things, that our understanding of sanction processes could be significantly advanced by marrying these perspectives. We conclude by identifying several questions and challenges, and by discussing how interdisciplinary research could address them.
    Keywords: Sanctions; Evolution of Sanctions; Sanction Success and Effectiveness
    JEL: F13 F14 F51
    Date: 2022–11–12
  31. By: Kutlina-Dimitrova, Zornitsa (DG Trade); Piñero, Pablo (DG Trade); Rueda-Cantuche, Jose Manuel (DG Trade)
    Abstract: Our paper provides new insights into the gender specific dimension of extra-EU exports. In 2019, the employment of more than 14 million women depended on EU exports to the world. The female share of exports related jobs however stood at only 38%, almost unchanged from its previous level in 2010. While exploring the drivers behind this gender specific employment gap, we find out that women are predominantly employed in the provision of services that are less tradable. In fact, the share of female workers in least-tradable sectors (defined as a sectoral openness of less than 15%) is close to 80%. Furthermore, while exploring the gender specific wage premium gap at EU level, our results show that although women benefit from a wage premium of 8%, their male co-workers enjoy a markedly higher wage premium of 11% at EU level.
    Keywords: international trade; employment; multi-regional input-output tables; EU; gender; wages
    JEL: F16 F17 J16
    Date: 2022–07–08
  32. By: Moir, Hazel
    Abstract: Intellectual property (IP) privileges are one of the most contentious areas of international economic regulation. This chapter uses the example of pharmaceuticals to consider the question of balance in patent policy and how this is impacted by international trade negotiations. It reviews key provisions in TRIPS from the contrasting perspectives of inventors of new medicines and users of such medicines. A critical issue identified is the breadth of privilege granted to patent holders and the removal of prior social safeguards in TRIPS. Evidence from recent trade treaties and their negotiation shows how the interests of patent holders often prevail against the interests of patients and society. Closely related to patent privileges for pharmaceuticals are privileges regarding the use of clinical trial data to obtain marketing approval for medicines. Such privileges are also provided in TRIPS, and subsequent treaties, for agricultural chemicals. An interesting aspect emerging from the comparison of data protection privileges for these two product categories is that treaties embody protections to protect unnecessary testing on animals but not on humans.
    Date: 2022–06–18
  33. By: Jin Cao; Valeriya Dinger; Ragnar E. Juelsrud; Karolis Liaudinskas
    Abstract: In this paper, we examine how a trade conflict’s impact on the real economy can be amplified by financial intermediaries. After the Norwegian Nobel Peace Prize Committee awarded the 2010 Nobel Peace Prize to Chinese dissident Liu Xiaobo, China in practice banned imports of Norwegian salmon. The ban was an unexpected trade shock to the Norwegian salmon industry. Using bank balance sheet and credit register data, we trace how this trade shock affected the lending behavior of banks highly exposed to the salmon industry when the shock occurred. We find that, in the years following the trade shock, highly exposed banks cut back lending to non-salmon firms and households by 3-6 percent more than other banks. Furthermore, we find that the reduction in lending was not driven by the erosion of bank capital, but rather by the shift in expectations about the performance of loans to salmon producers, which drove highly exposed banks to increase their loan loss provisions and reduce risk-taking.
    Keywords: trade shock, bank lending channel, expectation shock
    JEL: F14 G21
    Date: 2022
  34. By: Warren Deguara; Erica Maria Brincat; Aleandra Muscat
    Abstract: This study aims to assess the impact on Maltese firms following Brexit through a survey with non-financial corporations (NFCs). This survey was designed to collect information regarding the impact of Brexit on firms’ operations, costs and trade patterns following Brexit. Responses were received from 96 firms that were selected using quota sampling covering four sectors of economic activity (construction and real estate, manufacturing, wholesale and retail trade, and services) and three firm sizes (small, medium, and large firms). Slightly more than half of the respondents stated that they were not impacted by Brexit while the remaining companies noted that the impact of Brexit on their company was either negative or very negative. Only 1% reported a positive impact. Negative impacts were more often cited by small and medium sized firms and by manufacturing and wholesale and retail firms. The most common effects mentioned were increases in costs and regulations, longer lead times and lower availability of inputs and demand. As a response to such impacts, over half of the companies decreased their imports from the UK, while only around a tenth of surveyed companies reduced exports. Some firms also increased selling prices. The majority of companies kept marketing efforts, investment plans and employment levels unchanged.
    JEL: C8 C83 M1
  35. By: Carreira, Igor; Costa, Francisco J M (FGV EPGE Brazilian School of Economics and Finance); Pessoa, Joao Paulo
    Abstract: This paper quantifies the relative footprint of trade and agricultural productivity on deforestation in Brazil between 2000 and 2017. Using remote-sensing data, we find that these two phenomena have distinct effects on land use. Greater exposure to new genetically engineered soy seeds is associated with faster deforestation through the expansion of cropland. We find no association between exposure to demand from China and deforestation – although, trade induces conversion of cropland to pastureland. Our results suggest that, when taken together, agriculture productivity gains, and not trade, were the main driver of deforestation and the expansion of the agriculture sector.
    Date: 2022–06–27
  36. By: Viktor Stojkoski; Philipp Koch; Cesar A. Hidalgo;
    Abstract: Did migrants help make Paris a center for the arts and Vienna a beacon of classical music? Or was the rise of these knowledge agglomerations a sole consequence of local actors? Here, we use data on the biographies of more than 22,000 famous historical individuals born between the years 1000 and 2000 to estimate the contribution of famous immigrants, emigrants, and locals to the knowledge specializations of European regions. We find that the probability that a region develops a specialization in a new activity (physics, philosophy, painting, music, etc.) grows with the presence of immigrants with knowledge on that activity and of immigrants specialized in related activities. We also find that the probability that a region loses one of its existing areas of specialization decreases with the presence of immigrants specialized in that activity and in related activities. In contrast, we do not find robust evidence that locals with related knowledge play a statistically significant role in a region entering or exiting a new specialization. These findings advance our understanding of the role of migration in the historical formation of knowledge agglomerations. nations.
    Keywords: migration, knowledge spillovers, relatedness, economic history
    JEL: N13 N93 O15 O33
    Date: 2022–11
  37. By: Scheper, Christian
    Abstract: Human rights in global value chains have become a key field of study in international law and corporate governance. The analysis often starts with a gap – a ‘governance gap’ in human rights protection. This pragmatic starting point calls for pragmatic solutions: better corporate compliance and more accountability. While this goes a long way in addressing corporate misconduct, the global corporate form, its power and legitimation in transnationally generating and appropriating value tend to become naturalized phenomena. Moreover, the effects of accountability agendas on corporate power and legitimation are hardly considered. Instead, I propose to address the ‘human rights problem’ by understanding the corporation and its networks as consequences of international politics – conceptualized as inter-societal multiplicity. The multiplicity lens offers a possibility to replace the governance gap with a productive conception of inter-societal conditions and can complement the focus on accountability and compliance. I conclude the article by tentatively sketching three important consequences of such a starting point for defining the problem of human rights in global value chains: the international dimensions of the division of labour under competitive conditions, the legitimation of corporate practices and the production of knowledge for their regulation.
    Date: 2022–07–31
  38. By: Paul Lavery; Marian-Eliza Spaliara
    Abstract: This paper examines the impact of the global financial crisis on the firm-level exporting of private equity-backed companies. With a sample of over 600 UK companies which were under private equity ownership during the financial crisis, we show that the exporting of sponsored firms was significantly more resilient to the effects of the crisis, relative to a matched sample of control firms. Moreover, private equity-backed companies were also less likely to exit the export market during the crisis. We provide evidence that more efficient working capital and cash flow management may have helped sponsored companies maintain their levels of exporting relative to similar, non sponsored firms. Our results align with recent evidence that private equity-backed companies may outperform non sponsored peers during economic downturns.
    Keywords: Private equity buyouts, exporting, financial crisis
    JEL: F14 G01 G32 G34
    Date: 2022–08
  39. By: Keith Head (UBC - University of British Columbia); Thierry Mayer (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)
    Abstract: One of the pillars of the 1957 Treaty of Rome that ultimately led to the European Union is the commitment to the four freedoms of movement (goods, services, persons, and capital). Over the following decades, as the members expanded in numbers, they also sought to deepen the integration amongst themselves in all four dimensions. This paper estimates the success of these policies based primarily on a gravity framework. Distinct from past evaluations, we augment the traditional equation for international flows with the corresponding intra-national flows, permitting us to distinguish welfare-improving reductions in frictions from Fortress-Europe effects. We complement the gravity approach by measuring the extent of price convergence. We compare both quantity and price assessments of free movement with corresponding estimates for the 50 American states.
    Date: 2021–05–01
  40. By: KUBO, Takahiro; Mieno, Taro; Uryu, Shinya; Terada, Saeko; Veríssimo, Diogo
    Abstract: Regulation of natural resource use might have unintended spillover impacts beyond the policy targets. Overexploitation is a major cause of species extinction and banning wildlife trade is a common and immediate measure to tackle it. However, few rigorous studies have investigated consequences of wildlife trade bans, and those few studies have focused only on the policy target species. This means governments and researchers may have overlooked side effects of trade bans on unregulated threatened species. This study explores whether trade ban regulations on three threatened species (i.e., giant water bugs Kirkaldyia deyrolli, Tokyo salamanders Hynobius tokyoensis and golden venus chub Hemigrammocypris neglectus) have spillover impacts on the demand for non-banned species considered as substitutes. We draw on a 10-year online auction dataset and the recently developed causal inference approach—synthetic difference-in-differences—to analyze the trade ban regulation implemented in February 2020 in Japan, one of the largest wildlife trade markets. The results show that bans on the giant water bugs and Tokyo salamanders led to an increase in the trade of non-banned species, whereas there was no such evidence concerning the golden venus chub. The findings suggest that policy evaluations ignoring spillover effects might overstate the benefits of trade bans. Our findings raise concerns about the unintended consequences caused by trade bans and restate the importance of further efforts around consumer research, monitoring and enforcement beyond the species targeted by policies, while minimizing the costs by applying modern technologies and enhancing international cooperation.
    Date: 2022–05–29
  41. By: Dany Bahar; Bo Cowgill; Jorge Guzman
    Abstract: This paper shows that providing undocumented immigrants with an immigration pardon, or amnesty, increases their economic activity in the form of higher entrepreneurship. Using administrative census data linked to the complete formal business registry, we study a 2018 policy shift in Colombia that made nearly half a million Venezuelan undocumented migrants eligible for a pardon. Our identification uses quasi-random variation in the amount of time available to get the pardon, introducing a novel regression discontinuity approach to study this policy. Receiving the pardon has small initial effects but raises formal firm formation to close to parity with native Colombians by 2022. This impact is concentrated on individuals active in the labor force, and on sole proprietorships rather than sociedades (limited liability entities). The new firms created include both employer and non-employer firms and are relatively low on assets. In panel data specifications, the effect of the pardon on firm formation is twice the effect of migration. Our heterogeneous effects suggest a mechanism whereby legalization induces greater investments of time in developing new firms.
    JEL: J26 K37 L26
    Date: 2022–11
  42. By: Uri Dadush
    Abstract: This paper presents a data-driven examination of whether deglobalisation has happened and whether protectionism was the cause.
    Date: 2022–11
  43. By: Victo José da Silva Neto (Radboud University); Tulio Chiarini (IPEA); Leonardo Costa Ribeiro (Cedeplar/UFMG); Igor Santos Tupy (UFV)
    Abstract: Digital platforms have positioned themselves at the center of global flows of capital, knowledge, and work. Their ability to influence and organize these flows makes it imperative to understand the locational decisions of platform companies. This paper explores new evidence on the digital platform economy geography. Our objective is threefold. First, we propose a novel methodology using data science and artificial intelligence tools to identify platform companies. Second, with a set of over three thousand companies, we introduce worldwide maps where it is possible to see the countries and cities that host platform companies. Third, we present platform companies’ locational choice using econometric models.While we observe a geographic concentration of platform companies in the U.S. and China, we also see that digital platform companies are spreading to all geographical directions, including tax havens, reinforcing the hypothesis that "platforming" is a worldwide phenomenon.
    Keywords: Platformization; Platform capitalism; Natural language processing; Zero-Inflated Negative Binomial regression model; Orbis
    JEL: F01 L86 O33
    Date: 2022–11

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