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on International Trade |
| By: | Larch, Mario (University of Bayreuth); Yotov, Yoto (Drexel University) |
| 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: | 2022–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2022_007&r=int |
| By: | Escaith, Hubert |
| Abstract: | Those speaking notes are a contribution to the panel on “Future of Business: Disruptions and Strategic Impact”. While the 1990s and early 2000s were seen as a golden age for Global Value Chains, the 2010s have witnessed a series of crisis that shacked the political and institutional foundations of global trade. After years of neo-liberal trade policies, trend is now towards neo-realist mercantilism and trade politics. The COVID-19 pandemics and the rise of geopolitical tensions are redefining and perhaps reversing what have been the drivers of world trade since the end of the Cold War in 1989. Geopolitical and institutional uncertainties increase the chance of unpredictable or unforeseen event disrupting entire international segments of the value chain, with potentially extreme consequences. When fat-tailed black-swans run around like headless chickens, disruptions are unpredictable. Yet, understanding the main changes affecting the geo-politics of trade and the possibilities of safeguarding a functional global trade governance is expected to reduce the risks and help future managers preparing for new business paradigms. |
| Keywords: | international political economy; deglobalization; nearshoring; trade conflicts; WTO |
| JEL: | F13 F23 F53 |
| Date: | 2022–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115267&r=int |
| By: | Kox, Henk L.M. |
| Abstract: | This paper proposes a stand-alone model for explaining international foreign direct investment (FDI) patterns, including zero flows. The model provides a micro foundation for FDI decisions at firm level that supports a structural gravity model. The FDI supply push depends on the relative abundance of proprietary knowledge assets of firms, which in turn depends on knowledge creation by the public sector. The demand pull for inward FDI depends on market size and the relative knowledge gap of countries. Firms self-select into FDI if their productivity is high enough to overcome the fixed costs of an international headquarter and the setup costs of a foreign subsidiary. Both types of fixed costs increase in the level of bilateral FDI frictions (physical and policy-related). Aggregated at country level, the model explains the occurrence of zero FDI flows between countries. The model is generalised to a n-country model, which includes the effects third-country policies. The latter affect the relative FDI start-up costs of all other countries, depending on the size and distance of the third countries. The paper derives testable predictions from the model. The model implications have high potential policy relevance. |
| Keywords: | foreign direct investment, firm behaviour, decision model, structural gravity, zero FDI flows, policy implications |
| JEL: | D21 D23 F21 F23 L1 O34 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115273&r=int |
| By: | Garfinkel, Michelle (University of California, Irvine); Skaperdas, Stergios (University of California, Irvine); Syropoulos, Constantinos (Drexel University) |
| 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: | 2022–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2022_008&r=int |
| By: | Chang, Pao-Li (Singapore Management University); Chen, Renjing (Wuhan University); Jin, Wei (Nankai University) |
| Abstract: | In this paper, we develop an estimation procedure to identify the partial (direct) effects of the GATT/WTO membership on the variable and the fixed trade cost, respectively. This extends the techniques of Anderson and Van Wincoop (2003) on the structural relationship of multilateral resistance terms and of Helpman, Melitz and Rubinstein (2008) on the structural modelling of trade incidence. We then develop a general equilibrium framework (that allows the presence of zero trade) to simulate the impact of variable, fixed, and total trade cost changes on the firm-level trade structure (including bilateral export productivity cutoff, weighted/unweighted extensive margin of export, intensive margin, and the mass of active firms) and the aggregate welfare, due to the GATT/WTO system (given the trade cost effects estimated from the first stage), for the period 1991–2017. |
| Keywords: | Firm Entry/Exit; Truncated Pareto; Identi cation of Fixed and Variable Trade Costs; Simulation of Counterfactual Changes in Active/Inactive Trading Relationship; Quantitative Welfare Analysis |
| JEL: | F13 F14 F17 F61 |
| Date: | 2022–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:ris:smuesw:2022_005&r=int |
| By: | Jan Hagemejer (Faculty of Economic Sciences, University of Warsaw); Maria Dunin-Wąsowicz (European Movement Forum); Jan Jakub Michałek (Faculty of Economic Sciences, University of Warsaw); Jacek Szyszka (Faculty of Economic Sciences, University of Warsaw) |
| Abstract: | We use a global computable general equilibrium (CGE) model to analyze several scenarios of Brexit to assess it on the EU New Member States (NMS) to complement the literature exist. Our scenarios are based on expected outcomes of the negotiations, ie. the Soft Brexit with a limited FTA and a Hard Brexit governed by WTO MFN rules. The shocks imposed on the CGE model include modifications of both tariff and non-tariff barriers. While the former is based on actual tariff data, the latter are estimated using an econometric model for both merchandise trade and services. Our results show the macroeconomic effects of Brexit are mild with a slight decline of NMS GDP of roughly 0.4 % even in the case of a Hard Brexit. However, there are some sectors that may experience somewhat significant drops in output, in particular the food sector and some other manufacturing export-oriented sectors. |
| Keywords: | CGE modelling, international trade, Brexit, trade policy |
| JEL: | F17 F10 F13 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2021-17&r=int |
| By: | Lee, Hyun-Hoon (Kangwon National University); Park, Cyn-Young (Asian Development Bank); Pyu, Ju Hyun (Korea University) |
| Abstract: | We synthetically assess the three major transmission channels of international business cycles: bilateral trade, foreign direct investment (FDI), and portfolio investment flows between economies with multiple fixed effects. Using the data of 72 economies during 2010–2019, we find that real and financial integration generates heterogeneous impacts on business cycle comovement. Trade integration, particularly through intermediate input trade, drives business cycle synchronization. We also find greenfield FDI leads business cycle comovements. This may be due to deepening intra-industry trade and dense global value chains. Higher debt market integration is also associated with more synchronized business cycle comovement, implying that balance sheet effects and the related credit cycle can exert influence on business cycle comovements. However, equity integration leads to business cycle divergence, suggesting that cross-border equity holdings may help stabilize transmission of a foreign economy’s shocks. |
| Keywords: | business cycle synchronization; trade; FDI; portfolio investment |
| JEL: | F15 F21 F34 F44 |
| Date: | 2022–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0668&r=int |
| By: | Postigo, Antonio |
| Abstract: | Many works have examined the variables driving the formation of North-South free trade agreements (FTAs) between developed and developing countries. This study analyzes the determinants shaping their utilization in the contexts of their political economy and of Generalized System of Preferences (GSP) schemes that are unilaterally granted by developed economies to developing countries’ exports. Most of the goods liberalized through GSP are liberalized from early on in North-South FTAs; however, since FTA concessions are legally binding, goods that are excluded or only partially liberalized in GSP will be also excluded or protected in FTAs. As GSP schemes are subject to unilateral restriction/elimination by the developed country, exporters using GSP tariffs will lobby for the non-removable liberalization of their exports through an FTA and subsequently will have a high FTA utilization. These scenarios result in North-South FTAs being used to a great extent to export goods covered by and exported through GSP, thus consolidating pre-FTA trade patterns. These arguments were tested by analyzing disaggregated and rarely accessed data on Thailand’s and Malaysia’s exports through the Japanese GSP and their bilateral FTAs with Japan, as well as interviews with key actors involved in the policymaking of these FTAs. Most sectors in Thailand and Malaysia that benefited from GSP lobbied for FTA liberalization with Japan. Goods previously exported through GSP account for most of FTA utilization and the previous use of GSP preferences has a higher predictive value of subsequent FTA utilization than FTA tariff savings. |
| Keywords: | East and Southeast Asia; free trade agreements (FTAs; FTA utilization; generalized system of preferences (GSP; GSP utilization; unilateral liberalization |
| JEL: | L81 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:114892&r=int |
| By: | Panda, Jagannath P. |
| Abstract: | The Belt and Road Initiative paved the way for China to establish far-reaching trade relations and greater political influence across continents. Dominating the Indo-Pacific region by building up the dependence of the countries there on China is only part of the strategy. China's actions in this regard are observed with unease by researchers and practitioners. Various multilateral projects are trying to present an alternative in the Indo-Pacific region, including the EU's Global Gateway Strategy Project. What this strategy entails and how it can play a role in shaping global consensus on the BRI will be outlined below. |
| Keywords: | Belt and Road Initiative,China,Geopolitics,EU,Global Gateway Strategy,Indo-Pacific |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:opodis:202210&r=int |
| By: | Sciences, Research Coach in Social; Quach, Hoang Phoi |
| Abstract: | It is an undeniable fact that Foreign Direct Investment (FDI) plays a key role in the development of a certain country, especially developing countries. Therefore, a number of academic studies have investigated the FDI allocation decisions of multinational corporations. Many found that tax rates have a negative influence on FDI decisions of multinational enterprises (MNEs) leading to their favourable reactions. This present study focuses on corporate income tax and how it affects investment decisions. Moreover, non-tax factors (market size, labour productivity and labour costs) which are also taken into consideration as other influence factors on FDI decisions. In order to have more knowledge about the FDI allocation decisions in developing countries, the present study is carried out in the Singapore context from 2006 and 2011. The key findings of this paper are that the corporate income tax has a negative influence on inward FDI; thus, foreign investors base their investment decisions by tax rates. This paper is extracted from the author’s master thesis which was submitted to Bournemouth University in 2014. |
| Date: | 2022–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:arjpc&r=int |
| By: | Orefice, Gianluca (Université Paris-Dauphine); Rapoport, Hillel (Paris School of Economics); Santoni, Gianluca (CEPII, Paris) |
| Abstract: | How do immigrants promote exports? To answer this question we propose a unified empirical framework allowing to identify and disentangle the main mechanisms put forth in the literature: the role of networks in reducing bilateral transaction costs, and the productivity shifts arising from migrationinduced knowledge diffusion and increased workforce diversity. While we find evidence supporting all three channels (at both the intensive and the extensive margins of trade), our framework allows to gauge their relative importance. When focusing on diversity, we find stronger results in sectors characterized by more complex production processes and more intense teamwork cooperation. This is consistent with theories linking the distribution of skills to the comparative advantage of nations. The results are robust to using a theoretically-grounded IV approach combining three variations on the shift-share methodology. |
| Keywords: | international trade, birthplace diversity, migration, productivity |
| JEL: | F14 F16 F22 O47 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15722&r=int |
| By: | Das, Sanchita Basu (Asian Development Bank); Sen, Rahul (Auckland University of Technology) |
| Abstract: | This paper empirically investigates the state of trade interdependency for coronavirus disease (COVID-19) essential medical goods—vaccines and their value chains, personal protective equipment, and diagnostic test kits—across 29 Asia and the Pacific economies. Expanding on Hayakawa and Imai (2022), the analysis investigates whether trade facilitation, proxied by membership in regional trade agreements (RTAs), can help mitigate any adverse impact on trade in essential medical goods. The results confirm that while trade is critical for Asian economies, its nature differs. Low-income economies are largely dependent on imports, whereas selected middle- and high-income economies are part of two-way trade and engaged in low end of vaccine value chain. We find that onset of the pandemic had hurt exports of these goods. This adverse effect is found to be lowered for economies engaged in RTAs. This emphasizes role of governments in committing to RTAs and implementing trade facilitation measures. |
| Keywords: | COVID-19; vaccine supply chain; essential medical goods; regional trade agreements |
| JEL: | F12 F13 R11 |
| Date: | 2022–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0666&r=int |
| By: | Malo Beguin (LFIN/LIDAM, UCLouvain) |
| Abstract: | Increasingly present at the WTO, Specific Trade Concerns (STCs) on Technical Barriers to Trade (TBTs) are assumed to signal the most stringent TBTs in terms of trade costs. Lacking information in the only available WTO STC database, the previous literature relies on the assumption that the raised dates at the WTO effectively proxy the trade shock. Building an updated WTO STC database, we examine two potential endogeneity issues when using raised dates. First, a third of all STCs are raised a long time before or after the TBT is in force. Second, a TBT reducing trade increases the willingness to complain at the WTO and complaints impact trade in return. As a result, it creates a bias when using only raised dates to measure the trade shock of a TBT STC. We create a 1:1 match of STCs with respective TBTs which includes notification and enforcement dates. Then, we also examine the role of timings when complaining at the WTO. Complaining before or after the in force date is not equivalent and discards the initial hypothesis that STC are the most restrictive TBTs. In line with Ghodsi et al. (2017), we show that TBT STCs increase trade levels at the mean. Also, raised dates are accurate to measure TBT impacts on trade in the manufacturing sector, but not in agriculture and in many specific industries inside the manufacturing, mining and energy, and services broad sectors. Finally, we find that agriculture is only impacted by STCs when raised before the respective TBT enter into force. It confirms the need to reassess the use of TBT STC in the literature. |
| Keywords: | Specific Trade Concerns, Technical Trade Barriers, Gravity, WTO |
| JEL: | F13 P48 |
| Date: | 2022–10–25 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2022023&r=int |
| By: | Basak Bayramoglu (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Jean-François Jacques (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel); Clément Nedoncelle (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Lucille Neumann-Noel (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | Foreign aid allocation by donor countries to developing economies is known to be motivated by the donor country's bilateral trade interests. Does this apply also to bilateral climate aid? In this paper, we combine theoretical and empirical analyses to investigate how bilateral trade affects donor countries' allocations of bilateral climate aid. Our theoretical analysis develops a simple model to support our hypothesis that bilateral trade has a positive impact on climate aid transfers. The model highlights the terms-of-trade and positive income effects of climate aid, and predicts a positive relationship between donor countries' exports to and imports from recipient countries and their climate aid transfers. The empirical analysis is based on bilateral climate aid data for 2002 to 2017. We employ fixed effects and instrumental variable-2 stage least square estimations (IV-2SLS) with a shift-share instrument to overcome the endogeneity of trade. Our empirical results show that donors' exports have a significant, robust, positive effect on climate aid transfers. |
| Abstract: | L'allocation de l'aide étrangère par les pays donateurs aux économies en développement est connue pour être motivée par les intérêts commerciaux bilatéraux du pays donateur. Cela s'applique-t-il également à l'aide climatique bilatérale ? Dans cet article, nous combinons des analyses théoriques et empiriques pour étudier comment le commerce bilatéral affecte les allocations d'aide climatique bilatérale aux pays donateurs. Notre analyse théorique développe un modèle simple pour soutenir notre hypothèse selon laquelle le commerce bilatéral a un impact positif sur les transferts d'aide climatique. Le modèle met en évidence les termes de l'échange et les effets positifs de l'aide climatique sur les revenus, et prédit une relation positive entre les exportations et importations des pays donateurs vers les pays bénéficiaires et leurs transferts d'aide climatique. L'analyse empirique est basée sur les données de l'aide climatique bilatérale pour 2002 à 2017. Nous utilisons des effets fixes et des estimations des moindres carrés de la variable instrumentale à 2 étapes (IV-2SLS) avec un instrument de répartition pour surmonter l'endogénéité du commerce. Nos résultats empiriques montrent que les exportations des donateurs ont un effet significatif, robuste et positif sur les transferts d'aide climatique. |
| Keywords: | Climate Aid,Trade,Transfers,Mitigation |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03833067&r=int |
| By: | Chang, Pao-Li (Singapore Management University); Chen, Yi-Fan (National University of Kaohsiung); Hsu, Wen-Tai (Academia Sinica); Yi, Xin (Singapore Management University) |
| Abstract: | We study the effects of Taiwan’s accession to the WTO in 2002 on the labor market dynamics in Taiwan during 1995–2020. Based on the dynamic hat algebra of Caliendo, Dvorkin and Parro (2019), we modify the framework to allow for differently skilled labor inputs (low, middle, high) and sector-skill dynamic choice by workers. We map the model to the labor-market transition data in Taiwan (based on quasi-longitudinal household surveys), the country-sector-specific skill shares in production, and the bilateral trade flows and import tariffs, for 61 economies and 22 sectors for the period 1995–2007. We study the counterfactual dynamics if the bilateral tariffs related to Taiwan’s imports and exports were rolled back to their levels in 1995, and calculate the cumulative effects on the employment shares and on the welfare of workers by sector and skill. We find the tariff reductions during this period to explain very much the observed expansion of Taiwan’s MCEE and business services sectors in their employment shares, and the growing share of high-skilled workers in Taiwan’s labor composition. We also conduct alternative counterfactuals to evaluate the effects of bilateral tariff concessions between Taiwan and China only, China’s WTO accession, and combined accessions by both Taiwan and China. We find bilateral tariff concessions to account for the bulk of the effects of Taiwan’s WTO accession, illustrating the importance of China to Taiwan in the latter’s trade structure. |
| Keywords: | WTO; Dynamic Quantitative Analysis; Labor Market Dynamics; Welfare Effects; Mobility Frictions; Skill Upgrading |
| JEL: | E24 F13 F14 F16 F17 |
| Date: | 2022–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:ris:smuesw:2022_007&r=int |
| By: | Beghin, John |
| Abstract: | This article updates the recent article on world fertilizer markets by Beghin and Nogueira (2021), which noted the perfect storm affecting global fertilizer markets through high demand, droughts affecting fertilizer supply, high fossil energy prices, covid-9-related supply-chain disruptions, and trade policies, all conspiring to elevate fertilizer nominal prices to levels not seen since 2008. In the last 10 months, the Ukraine-Russia war and associated trade sanctions have exacerbated the disruptions in fossil energy, grain, vegetable oil and fertilizer markets already present in 2021. On the more hopeful side, some US trade policy developments will help reduce US fertilizer prices. Trade restrictions put in place by some countries are concerning. |
| Keywords: | International Relations/Trade |
| Date: | 2022–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:ags:nbaece:329491&r=int |
| By: | Alexandra Lukyanova; Ayaz Zeynalov |
| Abstract: | The motivation for focusing on economic sanctions is the mixed evidence of their effectiveness. We assess the role of sanctions on Russian international trade flow after 2014. The main expectation was that the Russian economy would take a hit since it had lost its importers. We use a differences-in-differences model of trade flows data for imported and exported agricultural products from 2010 to 2020 in Russia. We assess the economic impact of the Russian food embargo on agricultural commodities, questioning whether it has achieved its objective and resulted in a window of opportunity for entrepreneurs as well as investors to take advantage of. We estimate the impact of sanctions by Russia imposed on European and American food exports that resulted in the food independence of Russia and facilitated the development of local businesses in the agriculture sector of Russia. |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2211.09205&r=int |
| By: | Brunhart, Andreas; Geiger, Martin |
| Abstract: | Using granular customs data, we construct a counterfactual of the evolution of Swiss goods exports under the premise that the minimum exchange rate policy would have been continued. We study the dynamic adjustment of aggregate and sectoral goods exports due to the exchange rate shock in January 2015. In absence of a comprehensive J-curve type adjustment we find that Swiss nominal export values increase in Euro, while they drop in Swiss Franc. In real quantities, exports remain largely unaffected indicating a high degree of resilience of the Swiss export industry. On the sectoral level, we observe heterogenous adjustment of exports consistent with varying degrees of flexibility for supply side adjustment and market power. |
| Keywords: | exchange rate shock,goods exports,export sectors,synthetic control method |
| JEL: | F14 F31 F41 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:266362&r=int |
| By: | Mayda, Anna Maria (Georgetown University); Orefice, Gianluca (Université Paris-Dauphine); Santoni, Gianluca (CEPII, Paris) |
| Abstract: | This paper analyses the impact of skilled migrants on the innovation (patenting) activity of French firms between 1995 and 2010, and investigates the underlying mechanism. We present districtlevel and firm-level estimates and address endogeneity using a modified version of the shift-share instrument. Skilled migrants increase the number of patents at both the district and firm level. Large, high-productivity and capital-intensive firms benefit the most, in terms of innovation activity, from skilled immigrant workers. Importantly, we provide evidence that one channel through which the effect works is task specialization (as in Peri and Sparber, 2009). The arrival of skilled immigrants drives French skilled workers towards language-intensive, managerial tasks while foreign skilled workers specialize in technical, research-oriented tasks. This mechanism manifests itself in the estimated increase in the share of foreign inventors in patenting teams as a consequence of skilled migration. Through this channel, greater innovation is the result of productivity gains from specialization. |
| Keywords: | skilled immigration, innovation, patents |
| JEL: | F22 J61 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15693&r=int |
| By: | Arogundade, Sodiq; Biyase, Mduduzi; Eita, Joel Hinaunye |
| Abstract: | This study examines the impact of sovereign credit ratings (SCR) on foreign direct investment (FDI) inflow of 20 SSA countries. In achieving this, the study uses the fixed effect model, fixed effect instrumental variable regression, and the bootstrap panel granger causality test proposed by Emirmahmutoglu and Kose (2011). There are three main important findings from this empirical study: (1) sovereign credit ratings have a significant and positive impact on FDI inflows in the region; this result is robust to sub-regional analysis, the instrumental regression model and an alternative measure of credit rating, (2) the impact of SCR on FDI increases after the global financial crises (GFC), and (3) there is a unidirectional causality running from SCR to FDI in SSA. In increasing foreign investors' appetite, this study recommends that SSA countries get rated, and the ones rated should put in place appropriate policies to get better ratings. |
| Keywords: | Foreign direct investment, Sovereign credit ratings, Global financial crises Bootstrap panel Granger causality test, and Sub-Sahara African Countries |
| JEL: | E00 F0 F30 G00 G01 |
| Date: | 2022–11–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115404&r=int |
| By: | Wei, Shang-Jin (Columbia University); Yu, Xinding (University of International Business and Economics) |
| Abstract: | This paper employs a modern global value chain (GVC) decomposition framework to quantify economic interdependence among Asian economies and between Asia and the rest of the world. It pays special attention to the value-added relationships among three sets of economies: those belonging to both Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Regional Comprehensive Economic Partnership (RCEP), those belonging to one but not the other, and those belonging to neither. GVC linkages in value-added terms across economies are found to have grown faster than the value-added linkage through final goods trade. For GVC connections, indirect GVC linkages via third economies have been growing faster than the direct linkages. Finally, there is an increased tendency in Asia for both “near selling” of the value added in output and “near sourcing” of value added in inputs. |
| Keywords: | global value chain; decomposition framework; economic regionalism; economic integration; value-added linkages |
| JEL: | F10 F15 F63 |
| Date: | 2022–09–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0671&r=int |
| By: | Baniya, Suprabha (Clark University); Taniguchi, Kiyoshi (Asian Development Bank) |
| Abstract: | This paper investigates the trade effects of transportation infrastructure reforms funded by the Asian Development Bank (ADB) in the Central Asia Regional Economic Cooperation (CAREC) program. To do this, we applied a combination of geographic information systems (GIS), econometric, and computable general equilibrium (CGE) analyses. Using GIS analysis, we compute the reduction in bilateral transport time and potential substitution across transportation modes induced by ADB-funded transportation reforms in the CAREC program. Then, using econometric analyses, we examine the direct impacts of transport time on the extensive and intensive margins of trade. We use the average geographical features of trade partners as the instruments of bilateral transport time to address the endogeneity between trade and infrastructure. Finally, implementing the partial equilibrium impacts of transport time reductions on trade in a firm-heterogeneity CGE model in the Global Trade Analysis Project (GTAP), we investigate the additional endogenous effects of transport time on trade. Combining the estimates of bilateral transport time reductions from the GIS analysis and the estimates of extensive and intensive margins of the trade from the two-part model, we find that the ADB transportation reforms in CAREC countries increase the trade values for existing exporters by 3.31% and trade participation by 1.21% on average. Using the CGE analysis, we find that trade values for CAREC countries increase by 2.04% to 8.72%, on average, due to additional endogenous effects on trade. We also find a positive change in total welfare for CAREC countries. |
| Keywords: | CAREC; transportation infrastructure; trade pattern and time sensitivity; CGE analysis; GIS analysis |
| JEL: | F15 R13 R41 |
| Date: | 2022–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0669&r=int |
| By: | Yakubu, Ibrahim Nandom; Musah, Alhassan |
| Abstract: | In this study, we examine the relationship between foreign direct investment (FDI) and environmental pollution within the context of the pollution haven hypothesis (PHH) in Ghana. We also investigate the role of regulatory quality in the FDI-pollution linkage. The study employs quarterly data spanning the period 2000Q1-2017Q4 and applies the fully modified least squares (FMOLS) technique. The empirical results show that FDI inflows significantly and positively drive environmental pollution. This result holds in the presence of regulatory quality. Accordingly, we confirm the validity of the pollution haven hypothesis in Ghana. The study also finds that industrialization increases pollution given its significant positive relationship with ecological footprint. We discuss relevant policy implications. |
| Keywords: | FDI, Pollution haven hypothesis, Ecological footprint, FMOLS, Ghana |
| JEL: | F2 F20 Q5 Q58 |
| Date: | 2022–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115410&r=int |
| By: | Konrad Adler; Simon Fuchs |
| Abstract: | Linder (1961) conjectured that taste differences could impede trade flows. We extend Krugman (1980) to allow for producers that face taste heterogeneity with volatile demand. Consumers are characterized by different taste over product attributes and idiosyncratic risk. Firms face a portfolio type of problem where they trade off supplying the largest consumer groups against higher exposure to group-specific risk. We develop an empirical strategy to estimate consumer taste from observed market shares across multiple distinct markets of the same product, as well as the key parameters that pin down the firm’s portfolio choice problem. We apply our framework to estimate the impact of the rise of China on the global movies market and characterize the heterogeneous welfare effects across countries. |
| Keywords: | taste heterogeneity; volatility; gains from trade |
| JEL: | F11 F14 |
| Date: | 2022–10–06 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:95079&r=int |
| By: | Mario Larch; Leandro Navarro |
| Abstract: | We analyse firms’ sourcing decisions under institutional uncertainty in foreign countries. Firms can reduce their uncertainty by observing offshoring firms’ behaviour. The model characterises a sequential offshoring equilibrium path, led by the most productive firms in the market. With multiple countries, information spillovers drive sourcing location choices, leading to multiple equilibria with implications for countries’ comparative advantages and welfare. Using firm-level data from Colombia, we test for the determinants and timing of offshoring decisions. We also derive spatial probit structural models to identify the firms’ dynamic trade-off when they decide on the offshoring location. We find supportive evidence for the model’s predictions. |
| Keywords: | global sourcing, institutions, uncertainty, information externalities, learning, sequential offshoring, specialisation patterns, comparative advantages, survival analysis, transition analysis, spatial probit |
| JEL: | D81 D83 F10 F14 F23 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10043&r=int |
| By: | Chang, Pao-Li (Singapore Management University); Jin, Wei (Nankai University); Yao, Kefang (Hunan University) |
| Abstract: | This paper evaluates the welfare effects of GATT/WTO-induced reductions in tariffs, variable and fixed trade costs, based on identified direct effects of membership indicators on trade flows via nonparametric matching estimations. The identification does not require the use of tariff data, which permits a comprehensive evaluation of the welfare impact of GATT/WTO for a long panel since its inception (1950–2015) of as many as 180 economies. The results indicate substantial (but highly dispersed) welfare gains across members of different development stages and increasing welfare losses of nonmembers in later decades by staying outside the system. An extensive set of robustness checks with respect to model specifications, parameter values, and matching estimations are provided. We also characterize the effects of GATT/WTO on cross-country income disparity, its complementarity with preferential trade agreements, and the welfare impacts of China’s WTO entry on the other economies. |
| Keywords: | matching estimation; quantitative analysis; welfare; fi rm entry; income disparity |
| JEL: | F13 F14 F17 |
| Date: | 2022–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:ris:smuesw:2022_004&r=int |
| By: | Farrokhi, Farid (Purdue University); Jinkins, David (Copenhagen Business School); Xiang, Chong (Purdue University) |
| Abstract: | This paper examines the extent to which gains-from-trade predictions from commonly-used trade theories are consistent with observed household consumption decisions. Our approach is based on inference from household-level estimation of food Engel curves in the US and in a few other countries. For a given price index as the deflator of income, deviations from food Engel curves indicate how biased that price index is relative to the true household price index. We construct open-economy price indices based on trade theory and data, evaluate their biases according to our approach, and compare them with the bias of official CPI statistics. We find that theory-consistent open-economy price indices that account for industry-level heterogeneity and input-output linkages tend to eliminate a large fraction of the bias of CPI. |
| Keywords: | Food Engel Curves, price indices, household-level consumption, gains from trade |
| JEL: | D12 F14 E31 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15674&r=int |
| By: | Ping Hua (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | The literature on the employment impact of China's GVCs participation has focused on the Chinese imports substitution effects in developed countries, while few studies are made on the impact on domestic job creations. To complete this gap, this study proposes GVCs labor demand functions, which is augmented of domestic demand to control the impact of the Chinese reorientation development strategy to domestic consumption-led growth model (rarely studied). The functions are applied to panel data of 16 Chinese manufacturing industries over the 2005-2014 period using Arellano and Bond's GMM estimator for dynamic panel data model specifications. The obtained results show that China's backward linkages increased employment while forward linkages and GVCs position decreased it. The decline in processing and assembly activities of 3.4% per year on average diminished the employment of 0.9%. The increase of 0.95% per year on average of Chinese intermediate goods embodied in third countries' exports decreased the employment of 0.3%. The rise in final domestic demand of 20% per year on average increased the employment of 1.6% per year on average, which is higher than the negative effects of backward and forward linkages. These results provide a favor argument for China's "dual circulation" development strategy from the point of view of employment. |
| Keywords: | GVCs,domestic consumption,manufacturing employment,China |
| Date: | 2022–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03840490&r=int |
| By: | Brad, Stelian |
| Abstract: | In a world that is shaped by globalization and global value chains we must identify smarter ways to handle complexity and to build more adapted organizations to nonlinear behaviors of the environments where they operate. We highlight in this paper the role of digital transformation to assist the creation of more resilient economies in front of various crises and how this can facilitate the creation of better-balanced economic models. |
| Date: | 2022–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:vczpd&r=int |
| By: | Woraphon Yamaka; Paravee Maneejuk |
| Abstract: | Contagion has been one of the most widely studied and challenging problems in recent economic research. This study aims to measure the lower-tail dependence of risk contagion between the US economy and emerging countries. Four time-varying copulas, namely Student-t, Clayton, rotated survival Gumbel, and rotated survival Joe are considered to quantify the tail dependence. Overall, the results show the contagion effects of the US economy on 18 emerging economies. The size of contagion effects gradually increases for all countries, except Thailand, the Philippines, Argentina, and Chile. Furthermore, the Granger causality test and regression analysis reveal a temporal and contemporaneous effects of contagion risk on FDI inflows in 8 out of the 18 countries. |
| Keywords: | Contagion Risk; Emerging Economies; Foreign Direct Investment; Copula; Tail Dependence |
| JEL: | B23 C01 F21 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:pui:dpaper:192&r=int |
| By: | Garfinkel, Michelle (University of California, Irvine); Syropoulos, Constantinos (Drexel University) |
| 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: | 2022–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2022_009&r=int |
| By: | Andrei, Liviu Catalin; Andrei, Dalina Maria |
| Abstract: | This paper below is continuing once more on our studies about international directly invested capital. This latest approach of ours still aims to detect such specific flows across the world as resulting from data provided by the UNCTAD’s specific statistics for the 1990-2015 interval the way that equations, in general, are supposed to be solved once their unknowns are found. This case still is one of „a single equation with several unknowns”. And here the previous methods, as well as descriptions, will bear some adjustments in the below lines, despite the model that remains the same as in our previous papers, and some of our previous conclusions will here come to adjust, as well. But first of all it is our theory on FDI requiring its assertion, together with its specific model – i.e. another kind of model – able to identify the investor countries and then find where these investor countries invest their capitals and, on the other hand, where the recipient countries collect their international capital funding from. |
| Keywords: | foreign direct investments, direct investments abroad, external balance of payments, economic theories. |
| JEL: | E22 F21 |
| Date: | 2022–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115303&r=int |
| By: | Sabien Dobbelaere (: Vrije Universiteit Amsterdam, Tinbergen Institute and IZA Institute of Labor Economics); Catherine Fuss (Economics and Research Department, NBB); Mark Vancauteren (Universiteit Hasselt and Statistics Netherlands (CBS)) |
| Abstract: | This paper examines the relationship between offshoring and the prevalence and intensity of labor market imperfections at the firm level. For this purpose, we use Belgian and Dutch manufacturing firm-level data over the period 2009-2017 from Business registers and VAT declarations combined with information in the Transaction Trade database that reports values and volumes of international transactions at the country, firm and product level. In both countries, we find that wage markup-pricing stemming from workers’ monopoly power is more prevalent than wage markdown-pricing originating from employers’ monopsony power. Offshoring benefits Belgian and Dutch employers in that imports of final as well as intermediate goods are associated with a larger prevalence and intensity of wage markdowns. The opposite holds for the prevalence of wage markups. In Belgium, we also find that offshoring is negatively related to the intensity of wage markups measured by workers’ bargaining power. The origin of imports matters for the prevalence of labor market imperfections in Belgian firms. This is far less so in Dutch firms, which could be explained by their more global focus and the more global scale of the vertical chain in which they operate. |
| Keywords: | Wage markdowns, wage markups, firm-level offshoring |
| JEL: | F14 F16 J42 J50 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:202210-425&r=int |
| By: | Hidalgo, Eduardo (University of Cologne,); Hornung, Erik (University of Cologne,); Selaya, Pablo (University of Copenhagen) |
| Abstract: | We study how NAFTA changed the geography of violence in Mexico. We propose that this open border policy increased traffcking 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-traffcking routes. Routes are predicted least cost paths connecting municipalities with a recent history of detected drug traffcking 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. JEL Codes: K42 ; F14 ; D74 ; O54 |
| Keywords: | Violence ; NAFTA ; Free Trade ; Mexico ; Illegal Drug Traffcking ; Conflict |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:640&r=int |
| By: | Frédéric Docquier; Lucas Guichard; Stefano Iandolo; Hillel Rapoport; Ricardo Turati; Gonzague Vannoorenberghe |
| Abstract: | We analyze the long-run evolution of populism and explore the role of globalization in shaping such evolution. We use an imbalanced panel of 628 national elections in 55 countries over 60 years. A first novelty is our reliance on both standard (e.g., the ”volume margin”, or vote share of populist parties) and new (e.g., the ”mean margin”, a continuous vote-weighted average of populism scores of all parties) measures of the extent of populism. We show that levels of populism in the world have strongly fluctuated since the 1960s, peaking after each major economic crisis and reaching an all-time high – especially for right-wing populism in Europe – after the great recession of 2007-10. The second novelty is that when we investigate the ”global” determinants of populism, we look at trade and immigration jointly and consider their size as well as their skill-structure. Using OLS, PPML and IV regressions, our results consistently suggest that populism responds to globalization shocks in a way which is closely linked to the skill structure of these shocks. Imports of low-skill labor intensive goods increase both total and right-wing populism at the volume and mean margins, and more so in times of de-industrialization and of internet expansion. Low-skill immigration, on the other hand, tends to induce a transfer of votes from left-wing to right-wing populist parties, apparently without affecting the total. Finally, imports of high-skill labor intensive goods, as well as high-skill immigration, tend to reduce the volume of populism. |
| Keywords: | elections, populism, immigration, trade |
| JEL: | D72 F22 F52 J61 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10068&r=int |
| By: | Alessandro Ferrari; S\'ebastien 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 profit-shifting 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. |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2211.04388&r=int |
| By: | Rania Gihleb; Osea Giuntella; Luca Stella |
| Abstract: | How does previous exposure to massive immigrant inflows affect concerns about current immigration and the integration of refugees? To answer this question, we investigate attitudes toward newcomers among natives and previous immigrants. In areas that in the 1990s received higher inflows of immigrants of German origin—so-called ethnic Germans—native Germans are more likely to believe that refugees are a resource for the economy and the culture, viewing them as an opportunity rather than a risk. Refugees living in these areas report better health and feel less exposed to xenophobia. |
| Keywords: | Immigration, refugees, birthplace diversity, public opinion |
| JEL: | A13 D64 J6 I31 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1174&r=int |
| By: | Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Branimir Jovanović (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | This study assesses the economic and social impacts of foreign direct investment (FDI) in 17 economies in Central, East and Southeast Europe (CESEE). More precisely, we investigate how different FDI inflows have affected various economic and social indicators, such as GDP growth, labour market outcomes, and poverty and inequality, for the period since the fall of communism until 2020. We pay particular attention to FDI that originates from the EU, as well as FDI from Germany and Austria, in order to evaluate whether their effects are different from the effects of FDI from other places of origin. We also examine whether there are differences in the impacts of different types of FDI – equity capital, reinvested earnings and intra-company debt, as well as of FDI that goes to different sectors of the economy – the primary, secondary and tertiary sectors. We find that FDI inflows have had, in general, a positive effect on economic growth in CESEE, and that this effect has been particularly strong for German and Austrian FDI. For total FDI, higher inflows of 1 percentage point (pp) of GDP are associated with 0.19 pp higher GDP growth. For FDI from Germany and Austria, this effect is five times higher – FDI inflows of 1 pp of GDP have led to 0.9 pp higher GDP growth. The positive GDP effects have come from the higher consumption and exports that the FDI has induced. FDI inflows have also reduced unemployment and increased wages, but have had no effects on labour productivity. Total FDI has had only limited effects on inequality and poverty, but FDI from Germany and Austria has been found to reduce both inequality and poverty, likely because they have benefitted mainly lower-income persons. There are differences in the effects of the different types of FDI, with reinvested earnings and equity capital having in general more beneficial effects than intra-company loans. Also, FDI in different sectors of the economy has had different effects, with inflows to the secondary and tertiary sectors having greater effects than inflows to the primary sector. The policy implications of these results are that CESEE economies should not give up on their efforts to attract more FDI, but also that their endeavours should be more targeted, focusing on investments that have greater economic and social impacts. Moreover, foreign investment should not be criticised for the perhaps unsatisfactory economic and social performances of the economies from this region. Instead, the reasons for this should be sought in domestic factors and in the modest growth of the European Union during the past two decades. |
| Keywords: | FDI, growth, unemployment, poverty, inequality, Eastern Europe |
| JEL: | F21 O40 J01 D63 I3 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:wii:rpaper:rr:464&r=int |
| By: | Bernardo Caldarola |
| Abstract: | This paper uses the case of Ghana to unpack the role of the informal sector in the process of structural change. A structuralist view of structural change - framed as changes in the employment shares of different industries - is combined with the insight that countries strive to diversify towards more complex industries in pursuit of economic upgrading. The paper adopts and adapts the product space and complexity analytical frameworks to compare changes in the relative importance of industries across the trade, formal and informal sectors, over a ten-year period starting in 2003. To assess whether the Ghanaian labour force has moved towards more or less complex industries, the changes in relative shares of finely disaggregated industries are assessed against an employment-based industrial complexity index. The results indicate that Ghana’s export and formal sectors have moved towards more complex industries, although export specialisation has moved towards export of natural resources. While exports of manufactured goods have increased, employment in formal and informal manufacturing has contracted, although, in the former case, employment has relocated towards more complex manufacturing industries. In contrast, the informal sector has moved towards less complex activities. The results stress on the need to align the productive capabilities of the informal sector with the Ghana's productive structure in order to allow the participation of Ghanaian households to the process of structural transformation. |
| Keywords: | Structural change; industrial complexity; Ghana; employment; informality. |
| Date: | 2022–11–28 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2022/36&r=int |
| By: | Sonali Chowdhry; Julian Hinz; Katrin Kamin; Joschka Wanner |
| 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: | F13 F14 F17 F51 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp2021&r=int |
| By: | Silvia Peracchi |
| Abstract: | This paper investigates the impact of local exposure to the migrant crisis on the local news market. Exploiting a narrow geographical setting, it explores a policy dating from June 2015, whereby French authorities introduced militarized controls at the Italian frontier. With the border controls in place, groups of migrants and asylum seekers who had planned to cross the border irregularly were pushed back to the Italian lands. With rejected migrants clustering at the border, natives residing along the Italian region were unevenly exposed to their settlement. Taking advantage of this unequal treatment as a natural experiment, this study uses novel data collected on the text and on the number of local news items for the border areas of Liguria, Italy, between 2011 and 2019. It documents that the backlog of migrants in the Italian border area was substantially mediatized: coverage of migration rose most in the most exposed municipalities. Conversely, anti-immigrant discourse in the news grew more in areas least directly in contact with the border. Exploring further this framing dimension, the bias effect turns out to be shaped by readers’ demand and to be closely associated with local news penetration. Finally, this study documents that anti-immigrant slant and voting preferences share a similar broad direction, while a related broad pattern also appears in hate-crime records. |
| Keywords: | media slant, EU borders, immigration, diff-in-diff |
| JEL: | F22 L82 F50 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10070&r=int |
| By: | Chang, Pao-Li (Singapore Management University); Chen, Yi-Fan (National University of Kaohsiung); Hsu, Wen-Tai (Academia Sinica) |
| Abstract: | This paper studies a household model in which households consume both goods available from the markets and a home good and allocate their time between working and home production. Households differ in their skills and hence income. The household model predicts a monotonic relationship between household labor participation rate and skill/income, and the direction depends on whether the market-good composite and the home good are substitutes or complements. We test the model predictions with Taiwanese household income survey data. The empirical evidence is in support of the theory for the case where the market and home goods are substitutes instead of complements. In contrast to the trade literature, in which most models feature inelastic labor supply, we study the role of the labor-participation mechanism by embedding the household model into the Ricardian trade model of Eaton and Kortum (2002). Our calibrated model suggests that the welfare gains from trade is only 46% of those in the Eaton-Kortum model, showing a strong dampening effect due to this mechanism. |
| Date: | 2022–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:ris:smuesw:2022_006&r=int |
| By: | Arkadiusz J Derkacza (Institute of Economics, University of Social Sciences, Warsaw, Poland); Santos Bila (College of Business and Economics, University of Johannesburg); Sodiq Arogundadec (College of Business and Economics, University of Johannesburg) |
| Abstract: | This study answers two main questions. What are the South African fiscal, export, and investment multipliers? Is obtaining the impact of autonomous expenditure on gross value-added growth rate possible? In answering these questions, we use the principle of aggregate demand and data spanning 1992 to 2019. The results suggest that autonomous expenditure multipliers exert a positive effect on the change in gross value added. These multipliers are however driven by several factors. First, the import intensity level - the import intensities of each autonomous expenditure reduce their significance. This means that the leakage of aggregate demand in the form of expenditure on the purchase of imported goods increases. Secondly, the value of the fiscal, investment and export multipliers is determined by the propensity for total private consumption. The value of the propensity for total private consumption depends on the household income taxes and the propensity to save. An increase in these two ratios decreases the value of the propensity to private consumption. This indicates that the leakage of aggregate demand is driven by a decline in total private consumption in the economy, and this may be caused by an increase in savings and/or an increase in the average household income tax. |
| Keywords: | Fiscal multiplier; export multiplier; investment multiplier; GVA; South Africa |
| JEL: | E0 E12 E20 E63 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ady:wpaper:edwrg-04-2022&r=int |
| By: | Kwon, Ohyun (Drexel University); Syropoulos, Costas (Drexel University); Yotov, Yoto (Drexel University) |
| Abstract: | Direct measures of the economic impact of sanctions are contaminated by the endogeneity that arises when other events in target countries (e.g., civil or interstate conflicts, political independence, etc.) instigate the imposition of sanctions. To address this issue, we propose a novel instrument, sender's aggressiveness, captured by the number of sanctions imposed in a given year. After establishing the validity of this instrument, we quantify the impact of sanctions on growth in sanctioned states and show that, on average, an additional sanction decreases contemporaneous real GDP per capita in target states by 0.39 percent. We also substantiate the presence of a significant (in magnitude) downward bias in the corresponding OLS estimates and demonstrate that the effects of sanctions on growth vary widely depending on the types of sanctions considered, their purported objectives, measures of their success, and the duration of their effects. |
| Keywords: | Real GDP per capita growth; trade sanctions; smart sanctions; long-run effects |
| JEL: | F43 F51 F63 |
| Date: | 2022–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2022_006&r=int |
| By: | Giacomo Battiston (University of Padova) |
| Abstract: | Irregular migrants take many risks when attempting to cross borders, and border enforcement policy has to balance deterrence and humanitarian motives. Exploiting georeferenced data on the universe of sea rescue operations for migrants crossing from Libya to Europe between 2014 and 2017, this paper makes three contributions. First, it shows that a more humanitarian rescue policy increases future crossing attempts. Second, it establishes that tougher border control increases the death risk for migrants. Third, it develops and estimates a dynamic model of border enforcement with endogenous public attention, which Iuse to obtain attention and policy counterfactuals. According to model results, temporary increases in public attention intensify incentives for rescuing migrants, and sample years policy was suboptimal in minimizing migrants’ deaths. Leveraging recent policy outsourcing border enforcement to Libyan authorities, I compute policymakers’ evaluation of irregularmigrants’ lives; this is an order of magnitude lower than comparable estimates for citizens. |
| Keywords: | irregular migration, border control, search and rescue, public attention |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0292&r=int |
| By: | Ma, Lin (Singapore Management University); Yang, Tang (Nanyang Technological University) |
| Abstract: | This paper evaluates the distributional impacts of transportation networks in China. We show that the quality of roads and railroads vary substantially over time and space, and ignoring these variations biases the estimates of travel time. To account for quality differences, we construct a new panel dataset and approximate quality using the design speed of roads and railroads that varies by vintage, class, and terrain at the pixel level. We then build a dynamic spatial general equilibrium model that allows for multiple modes and routes of transportation and forward-looking migration decision. We find aggregate welfare gain and less spatial income inequality led by expanding transportation network. |
| Keywords: | regional trade; migration; welfare; economic geography |
| Date: | 2022–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:smuesw:2022_009&r=int |
| By: | Ikhenaode, Bright Isaac; Parello, Carmelo Pierpaolo |
| Abstract: | This paper proposes a two-country AK model of growth with cross-country knowledge diffusion and endogenous migration to study the relationship between migration, income inequality and economic growth. In contrast with mainstream AK literature, we show that introducing knowledge diffusion from frontier to non-frontier countries makes AK models predict conditional convergence, with migration playing an important role in speeding up the catching-up process of non-frontier countries. When testing the robustness of the policy implications of the AK literature, we find that subsidizing capital accumulation in frontier countries stimulates migration and worldwide growth, but also that it increases cross-country inequalities in terms of both income and technology. On the contrary, subsidizing capital accumulation in non-frontier countries reduces migration and mitigates inequalities worldwide, but has no effects on the long-run pace of economic growth of the two countries. |
| Keywords: | Two-Country Model; Endogenous Growth; Labor Migration; Technology Transfer; Growth Policy |
| JEL: | E1 F1 O4 |
| Date: | 2022–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115340&r=int |
| By: | Silva, J.M.C. Santos; Tenreyo, Silvana |
| Abstract: | We review the contribution of “The Log of Gravity” (Santos Silva and Tenreyro, Rev Econ Stat 88:641–658, 2006), summarize the main results in the ensuing literature, and provide a brief review of the state-of-the-art in the estimation of gravity equations and other constant-elasticity models. |
| Keywords: | gravity equation; incidental parameters; Jense's inequality; poisson regression; separation |
| JEL: | C13 F10 F14 F21 F22 |
| Date: | 2022–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:112437&r=int |
| By: | Marie-Laure Cabon-Dhersin (LERN - Laboratoire d'Economie Rouen Normandie - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université) |
| Abstract: | We revisit the classic comparison of Bertrand and Cournot competition by studying how the form of competition between shipping companies affects transport prices, international trade, consumer and producer surplus, and social welfare in two countries that coordinate their environmental policies. We show that the standard Bertrand-Cournot ranking only prevails when pollution abatement technologies are sufficiently efficient. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03822627&r=int |
| By: | Tranos, Emmanouil; Incera, Andre Carrascal; Willis, George |
| Abstract: | Despite the importance of interregional trade for building effective regional economic policies, there is very little hard data to illustrate such interdependencies. We propose here a novel research framework to predict interregional trade flows by utilising freely available web data and machine learning algorithms. Specifically, we extract hyperlinks between archived websites in the UK and we aggregate these data to create an interregional network of hyperlinks between geolocated and commercial webpages over time. We also use some existing interregional trade data to train our models using random forests and then make out-of-sample predictions of interregional trade flows using a rolling-forecasting framework. Our models illustrative great predictive capability with $R^2$ greater than 0.9. We are also able to disaggregate our predictions in terms of industrial sectors, but also at a sub-regional level, for which trade data are not available. In total, our models provide a proof of concept that the digital traces left behind by physical trade can help us capture such economic activities at a more granular level and, consequently, inform regional policies. |
| Date: | 2022–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:9bu5z&r=int |
| By: | Kuantan, Dhaha Praviandi; Siregar, Hermanto; Ratnawati, Anny; Juhro, Solikin M. |
| Abstract: | This study was conducted to comprehensively identify factors that potentially influence corporate investment behavior, including micro, macro, and sectoral variables. Furthermore, investment behavior was studied across nations based on their participation in the global value chain (GVC), which was evaluated based on commodities, limited manufacturing, advanced manufacturing, and innovative activities. The study uses the dynamic panel data analysis and Generalized Method of Moment (GMM) estimation for a sample of 800 corporations, with data spanning over 2000−2019. The study result shows that in all types of countries, the coefficient lag indicator of capital expenditure statistically has a significant effect on capital expenditure. Sales growth, exchange rate, and GDP have a significant positive effect on corporate investment growth, while DER has a negative effect. In commodity countries, corporate investment is influenced by sales growth, exchange rate, and FCI. The variables that influence corporate investment in manufacturing countries are the FCI, exchange rate, sales growth, GDP, and DER. In innovative countries, variables that significantly affect capital expenditure are DER, GDP, and TobinQ. In each type of country, the interaction terms between exchange rate and commodity price are positive and statistically significant. |
| Keywords: | Global Value Chain, Corporate Investment, Capital Expenditure |
| JEL: | F1 F2 F3 G0 G3 |
| Date: | 2021–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115417&r=int |
| By: | Michael A. Clemens; Ethan G. Lewis |
| Abstract: | The U.S. limits work visas for low-skill jobs outside of agriculture, with a binding quota that firms access via a randomized lottery. We evaluate the marginal impact of the quota on firms entering the 2021 H-2B visa lottery using a novel survey and pre-analysis plan. Firms exogenously authorized to employ more immigrants significantly increase production (elasticity +0.16) with no decrease or an increase in U.S. employment (elasticity +0.10, statistically imprecise) across several pre-registered subsamples. The results imply very low substitutability of native for foreign labor in the policy-relevant occupations. Forensic analysis suggests similarly low substitutability of black-market labor. |
| Keywords: | immigration, guest worker, H-2B, firms |
| JEL: | F22 J61 D22 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10057&r=int |
| By: | Ferwerda, Jeremy; Marbach, Moritz; Hangartner, Dominik |
| Abstract: | The welfare magnet hypothesis holds that immigrants are likely to relocate to regions with generous welfare benefits. Although this assumption has motivated extensive reforms to immigration policy and social programs, the empirical evidence remains contested. In this study, we assess detailed administrative records from Switzerland covering the full population of social assistance recipients between 2005 and 2015. By leveraging local variation in cash transfers and exogenous shocks to benefit levels, we identify how benefits shape within-country residential decisions. We find limited evidence that immigrants systematically move to localities with higher benefits. The lack of significant welfare migration within a context characterized by high variance in benefits and low barriers to movement suggests that the prevalence of this phenomenon may be overstated. These findings have important implications in the European setting, where subnational governments often possess discretion over welfare and parties frequently mobilize voters around the issue of “benefit tourism.” |
| Date: | 2022–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:a8rzx&r=int |
| By: | SO Hongbum |
| Abstract: | With a growing number of the WTO dispute settlement cases related to SPS measures, the appropriate standard of review and the specific legal standards to be applied under the provisions of the SPS Agreement have been gradually established and clarified by the WTO panels and Appellate Body. With respect to the obligations relating to a risk assessment and the principle of non-discrimination, the case law has focused mainly on the 'reasoning' or 'justification' provided by the regulating WTO Member and the panel’s examination in this regard centers on whether the Member has successfully provided ‘reasoned’ and ‘reasonable’ explanations. In keeping with this trend, the panel in Costa Rica – Avocados considered whether Costa Rica, the regulating Member, has provided reasoned and reasonable explanations with scientific basis for the risk assessment and the SPS measure at issue, concluding finally that Costa Rica acted inconsistently with the SPS Agreement. It is noteworthy that in reaching its conclusion, the panel thoroughly identified and referred to the previous SPS cases in which the issues of applicable standard of review had been addressed. In that respect, Costa Rica – Avocados constitutes an important precedent for understanding the nature and development of standard of review in WTO law and how it is to be applied in a specific case. This article outlines the legal issues raised in the Panel Report and examines matters such as the nature of the standard of review under the SPS Agreement, the relationship between the determination of ALOP and a Member’s discretion, and the obligation of the regulating WTO Member to provide explanation in the context of the principle of non-discrimination under the SPS Agreement. |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rpdpjp:22029&r=int |
| By: | OECD |
| Abstract: | Data flows are critical for our global economic and social interactions, but trust is necessary to facilitate data sharing, especially across borders. The challenge is to foster a global digital environment that enables the movement of data across international borders while ensuring that, upon crossing a border, data are granted the desired oversight and protection – a concept known as ‘data free flow with trust’ (DFFT). This report summarises how different countries and stakeholders are pursuing cross-border data flows with trust through direct and indirect approaches, across different levels, fora and policy communities. It then looks at related issues to promoting DFFT namely: interoperability of privacy and data protection frameworks; government access to personal data held by the private sector; and data localisation measures. The report shows that, although differences remain, there are commonalities, complementarities and elements of convergence that can help to build trust, foster future interoperability, and advance DFFT. |
| Date: | 2022–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaab:343-en&r=int |
| By: | Gehrke, Esther; Duquennois, Claire |
| Abstract: | We examine how shocks to migration affect schooling in origin communities. We focus on the migration between Mexico and the United States, and explore how the expansion of the Secure Communities program in the US -- a federal data sharing program that substantially increased the risk of detainment and deportation for illegal migrants -- affected attendance, enrollment, and grades in Mexico. Our results suggest that the Secure Communities program increased attendance and enrollment in municipalities that had stronger migration ties with counties in the US that adopted the program early-on, which is consistent with the interpretation that the Secure Communities program implicitly raised returns to education. We find no effect on grades (within the ?first year of Secure Communities exposure). |
| Date: | 2022–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:4a3g7&r=int |
| By: | Clemens, Michael A. (Center for Global Development); Lewis, Ethan Gatewood (Dartmouth College) |
| Abstract: | The U.S. limits work visas for low-skill jobs outside of agriculture, with a binding quota that firms access via a randomized lottery. We evaluate the marginal impact of the quota on firms entering the 2021 H-2B visa lottery using a novel survey and pre-analysis plan. Firms exogenously authorized to employ more immigrants significantly increase production (elasticity +0.16) with no decrease or an increase in U.S. employment (elasticity +0.10, statistically imprecise) across several pre-registered subsamples. The results imply very low substitutability of native for foreign labor in the policy-relevant occupations. Forensic analysis suggests similarly low substitutability of black-market labor. |
| Keywords: | immigration, immigrant, foreign, labor, mobility, skill, manual, high school, college, firms, elasticity, substitution, productivity, rural, urban |
| JEL: | F22 J61 D22 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15667&r=int |
| By: | Ansgar Rannenberg (: Economics and Research Department, National Bank of Belgium); Thomas Theobald |
| Abstract: | We investigate the contribution of the increase in German (DE) income inequality to the German export surplus increase and the decline of the natural rate of interest in the Euro Area in an open economy model with rich and non-rich households. Rich households have Capitalist Spirit type Preferences (CSP) over their wealth and thus save out of an increase in their permanent income. Simulating the increase in DE income inequality over the 1992-2016 period generates a decline of the EA natural rate of interest rate of about 1 p.p. and an increase of the DE net-export-to-GDP ratio of about 3 p.p. |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:202210-424&r=int |
| By: | Islam, Monirul; Sohag, Kazi; Alam, Md. Mahmudul (Universiti Utara Malaysia) |
| Abstract: | The clean energy transitions require a large volume of minerals to handle its diverse technologies, such as solar photovoltaics (PV), wind turbines etc. Therefore, mineral importing countries concentrated on cleaner energy production confront an uprising trend in critical mineral prices due to thriving demands. We quest for the response of the top mineral importing countries' import demand for minerals to the clean energy transitions from 1996 to 2019 within the import-demand function analysis. Using the cross-sectional autoregressive distributed lag (CS-ARDL) method, our findings divulge a significantly positive response of mineral import demand to solar and wind energy productions in the long run. We also find that mineral price elasticity holds the Marshallian demand hypothesis in the mineral-laden solar energy generation while contradicting it in wind energy production. In addition, the oil price substitution effect does not sustain, whereas exchange rate depreciates mineral import demands in the long run. Therefore, our policy implications encompass optimizing the mineral resources for clean energy transitions to materialize the 21st century's global agenda of a decarbonized or net-zero emissions trajectory. |
| Date: | 2022–07–12 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:kbj69&r=int |