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on International Trade |
| By: | Choi, Myoung Shik (Kyonggi University); Lee, Hun Dae (Kyonggi University) |
| Abstract: | Emphasizing foreign affiliates amid stagnant global value-chained trade, this study provides important evidence for measurable policies which should be taken dependent on the level of GVCs integration in shaping international trade flows and multinational production activity. The recent decreased share of value-added exports within gross exports represents characteristics of a wider value chained network. It is common not only for firms to increase their economic activities globally but also for oversea affiliates to operate as the linchpin between the international and domestic parts of value chains. Our findings suggest that foreign affiliate activity strengthens domestic value chains, thereby leading to the outcome of further growth in the host country, while domestic affiliate activity abroad strengthens global value chains which spur growth in the broader world economy. Based on empirical discussions centered on participating in GVCs, OECD high-income countries significantly integrated into GVCs will benefit from upgrading their GVCs policies such as capturing value-added in exports and building new technology or innovation. There is also a need to continue enforcing the domestic linkages of MNE affiliates, which contributes to growth and employment as they contract and cooperate with domestic firms. In addition, low-income countries not fully integrated into GVCs in the Asia-Pacific region may need to secure entry into existing GVCs with trade liberalization, while middle-income countries which have secured entry into GVCs may focus on enhancing competitiveness by increasing productivity and developing regional economic integration through forums like APEC. |
| Keywords: | Foreign Affiliate; Global Value Chains; Intermediate Goods; Multinational Production; Value-Added Exports |
| JEL: | F31 F32 F40 |
| Date: | 2022–08–26 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kiepwp:2022_002&r=int |
| By: | Subhayu Bandyopadhyay; Arnab K. Basu; Nancy H. Chau; Devashish Mitra |
| Abstract: | This paper unpacks the role of the domestic content of imports as a novel source of policy interdependence along the global supply chain. We show how a rise in local contents embodied in imports can skew national trade policy preferences, and pull upstream and downstream countries in asymmetric ways with respect to (i) the nature of unilaterally optimal trade policy prescriptions, and (ii) the attractiveness of leveraging market access-based dispute settlement procedures. We discuss the pros and cons of deep trade integration as a remedy, involving well-enforced labor standards both upstream and downstream as an integral part of trade agreements. |
| Keywords: | offshoring; dispute settlement reciprocity; labor standards |
| JEL: | F11 F13 F16 F66 O19 O24 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:95250&r=int |
| By: | Lu, Yue; Deng, Lijing; Tang, Yao |
| Abstract: | Exploiting a change in policy governing the entry of foreign direct investment (FDI) in 2002, we apply the difference-in-differences model to estimate the effect of FDI on the product scope of domestic Chinese firms. In industries that experienced relaxation in FDI regulations, the average product scope increased by 5% which indicates a rise in product innovation. FDI's spillovers along vertical linkages are also important, as we find that the product scope of firms is positively affected by FDI in upstream industries, but negatively affected by FDI in downstream industries. Further analysis shows that the negative effect of FDI in downstream industries is mainly concentrated in industries with a high level of processing trade, as firms in those industries rely more on imported inputs and have less contact with domestic suppliers. The main channels of effect are firm-level R&D and industry-level technological distance, as the entry of FDI leads to an improvement in these variables. Positive effects are found in medium- and low-tech industries but not in high-tech industries, indicating that indigenous effort is important for product innovation in high-tech industries. |
| Keywords: | Foreign direct investment, product scope, Chinese firms |
| JEL: | F2 L5 O3 |
| Date: | 2022–11–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115519&r=int |
| By: | Tobias Zander (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)) |
| Abstract: | This paper analyzes the question of if the size of shadow economy has an effect on foreign direct investment (FDI) flows and what effects, if any, there are. Since about 1990, FDI has become the second crucial pillar of economic globalization in OECD countries and worldwide; such FDI inward and outward flows contribute to higher per capita income and international technology transfer. To analyze this question, both fixed effects as well as dyadic fixed effects gravity models are used on an OECD-only dataset that allow for data on bilateral, bidirectional FDI flows for the years from 1992-2018. The empirical results suggest a positive effect of the shadow economy for FDI target countries and a negative effect for FDI origin countries. Additional findings via an interaction term show that the shadow economy can counteract negative effects of an increase in government size on FDI inflows. In a policy perspective, changes of the size of the shadow economy – typically taking place in periods of recession, in a high taxation environment or in the context of a pandemic shock – should be carefully monitored by economic policymakers as well as by policy monitoring international organizations such as the IMF and the EBRD. If a group of (OECD) countries decides to adopt anti-shadow economy economic policies, there will be pressure on other (OECD) countries to also adopt similar policies since the difference between the size of the shadow economy in the source country and the host country has a negative impact on FDI inflows. Thus, FDI could indirectly be a catalyst for reforms. |
| Keywords: | International Economics, Foreign Direct Investment, Gravity Model, Shadow Economy |
| JEL: | C23 E26 F21 F23 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:eiiwdp:disbei322&r=int |
| By: | Fabien Candau (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique); T Gbandi (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique); G Guepie (UNECA - United Nations Economic Commission for Africa - United Nations) |
| Abstract: | We use detailed information on the location of agricultural and mining production to approximate international trade for different ethnic groups in order to study its impact on ethnic conflicts in Africa between 1993 and 2010. The goal is to go beyond the income effects of trade to study the residual effects of globalization on conflicts. We find that once we control for income but also for a wide variety of different factors in conflicts (using political variables and fixed effects), the international trade by ethnic groups has a pacific impact on conflicts. While this peaceful impact of trade is mainly found in the trade in agricultural products, it does not have a significant impact in the international trade in mining products. Finally, we propose an original two-step analysis showing that exports significantly reduce conflicts by affecting time-varying national characteristics. We interpret this result as an indication that globalization in Africa has participated in the formation of new national identities with peaceful effects between ethnic groups. |
| Keywords: | Ethnic Wars,Regional Trade,Globalization,National Identity,Africa |
| Date: | 2021–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wptree:hal-03265017&r=int |
| By: | Robert Z. Lawrence (Peterson Institute for International Economics) |
| Abstract: | The clash between the Western and Chinese economic systems is threatening the world trading system, with countries increasingly using trade as a tool to coerce other countries. It is imperative to return to an inclusive, rules-based international trading order before the problems in trade spill over into the other geopolitical frictions that plague the world. This Policy Brief argues for a system that steers between two extremes that have emerged: "deep integration," a single undertaking in which all members of the World Trade Organization (WTO) are expected to adhere to all rules regardless of their preferences and circumstances, and "decoupling," in which groups of countries centered on the United States or China limit trade with each other. Instead, Lawrence says, the world trading system should have a "variable geometry" that allows open plurilateral agreements among self-selected members that desire deeper integration on particular issues while allowing members that prefer to implement distinctive domestic policies to remain outside some of these agreements and follow a set of more limited rules. The universal rules would permit diversity but still promote trade between all countries through measures such as safeguards that would deal mainly with the most harmful systemic frictions. If the multilateral system is not up to the task of creating such an approach, it is likely to lose its relevance as differentiated regional or topic groupings become increasingly dominant. |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb22-155&r=int |
| By: | Esteban Colla-De-Robertis (Universidad Panamericana); Rafael Garduño Rivera (Universidad Panamericana) |
| Abstract: | This study employs the synthetic control method (SCM) to estimate the economic effects of signing free trade agreements (FTAs) with the United States. This method allows for a counterfactual –the country’s per capita GDP had it not signed a FTA–, which can be compared with the observed per capita GDP. This difference speaks to the causal impact of the FTA. We principally find that FTAs seem to have a heterogeneous impact. In particular, there is evidence that signing a FTA with the U.S. had a positive impact on Chile and Jordan’s per capita GDP and that NAFTA harmed Mexico’s per capita GDP. In several other cases, no significant economic impact is discernible. Besides, the more a country depends on the U.S. for its trade, the less beneficial signing a FTA with the U.S. is. This article contributes to the debate on the effectiveness of trade as a development strategy. In particular, the SCM opens up the possibility of a "case-by-case" analysis, ultimately revealing that a FTA with the U.S.–a country situated at the world’s technology frontier–has heterogeneous outcomes and, by itself, does not guarantee economic development (obtained through a higher per capita GDP). |
| Keywords: | International Linkages to Development, Comparative Studies, Free Trade Agreement, Impact Evaluation, Synthetic control method. |
| JEL: | O19 O57 F43 F14 F15 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:aoz:wpaper:201&r=int |
| By: | Fabien Candau (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique); G Guepie (UNECA - United Nations Economic Commission for Africa - United Nations); R Kouakou (Université Alassane Ouattara) |
| Abstract: | This article puts into question the use of the gravity equation to analyze Regional Trade Agreements (RTAs) in Africa. By surveying the field qualitatively and quantitatively (via a meta-analysis) and by leading our own estimations (with bilateral fixed effects, exporter-time and importer-time effects) on different trade flow databases (UN COMTRADE, DOTS and BACI), we find that the RTAs elasticity of trade in Africa are unreliable due to their unrealistic high level. By introducing intranational trade and bilateral trends into the regression specification, we show that the coefficient of RTAs in Africa are either not significant or drastically reduced. Only COMESA is still significant. We then use a simple general equilibrium model to compare the results obtained with these new elasticities regarding the terms of trade and welfare for members of the COMESA. We find strong trade creation effects that are largely compensated by trade diversion. The welfare gain of COMESA is for most members very low (less than 0.2% of growth). |
| Date: | 2021–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wptree:hal-03257448&r=int |
| By: | Fabien Candau (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique); Charles Regnacq (BRGM - Bureau de Recherches Géologiques et Minières (BRGM)); Julie Schlick (RITM - Réseaux Innovation Territoires et Mondialisation - Université Paris-Saclay) |
| Abstract: | This article analyzes how climate change inuences the capabilities to export agricultural goods and the specialization of nations (e.g., comparative advantages) by altering farmers' capability to use available water. Our main contribution is methodological since we present the rst attempt to link precisely the micro-determinants of production to the macro-determinants governing the specialization of countries. We use a rich set of data both locally (at the crop level analyzing thousand elds that cover the Earth's surface) and at the global level (analyzing bilaterally the international trade of nations). At the local level, we estimate the elasticity of production to the thermal and hydrologic conditions (including blue and green water as well as groundwater storage) along with xed eects (at country-product and at the crop level) to control for omitted variables. At the global level, we use the predicted value of these elasticities to compute an indicator of the water capability to export agricultural goods, which is then used in a trade gravity equation to control for trade costs that also shape the specialization of countries. From these estimates, we nally build an indicator of comparative advantage in agricultural goods and analyze how these relative advantages are aected by climate change in 2050. We present unexpected results at rst sight, that are however in line with the Ricardian theory, such as cases where a deterioration of the local conditions to produce a good does not prevent an improvement in the comparative advantage to produce it (representing 32.51% of cases in our simulation), or the reverse, when the improvement of the local conditions happens simultaneously with a deterioration of the comparative advantages (representing 18.16% of cases in our simulation). |
| Keywords: | Agricultural trade,Water resources,Climate change,Revealed comparative advantage,Gravity equation |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wptree:hal-03671521&r=int |
| By: | Céline Azémar (Adam Smith Business School - University of Glasgow, ESC [Rennes] - ESC Rennes School of Business); Rodolphe Desbordes (SKEMA Business School); Ian Wooton (University of Strathclyde [Glasgow]) |
| Abstract: | This paper revisits tax competition among governments for foreign direct investment (FDI) by considering the role played by the economic dynamism of competitors on the setting of corporate tax rates (CTRs). Using a database with worldwide coverage over the period 1995–2014, we find that strong growth performance of neighbouring countries is associated with a lower CTR, especially in developed countries. This spatial effect is particularly manifest if competing countries are large and open to capital flows. These results appear to hold in most regions of the world and suggest that governments perceive foreign economic dynamism as a threat, leading them to reduce their CTRs to maintain their FDI attractiveness. |
| Keywords: | Tax competition,Country size,Foreign direct investment,Developing countries,Free-trade zones,Spatial lag |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03163896&r=int |
| By: | Anna Maria Mayda; Gianluca Orefice; Gianluca Santoni |
| 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 district-level 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 activ-ity, 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 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10076&r=int |
| By: | Knobel Alexandr (Russian Presidential Academy of National Economy and Public Administration); Baeva Marina (Russian Presidential Academy of National Economy and Public Administration); Zaytsev Yuriy (Russian Presidential Academy of National Economy and Public Administration); Kazaryan Margarita (Russian Presidential Academy of National Economy and Public Administration) |
| Abstract: | This study evaluates the impact of trade safeguards on Russian exporters. |
| Keywords: | protectionism, international economy, balance of trade |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:s21146&r=int |
| By: | Ofori, Isaac K.; Gbolonyo, Emmanuel Y.; Ojong, Nathanael |
| 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: | 2022–07–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115379&r=int |
| By: | Kalaitzi, Athanasia; Chamberlain, Trevor W. |
| Abstract: | This study investigates whether manufactured exports contribute to economic growth and whether imports can augment the role of exports in fostering export diversification. In the case of the latter, the study also examines which categories of imports are most likely to facilitate economic growth in the long run. In particular, the study focuses on the case of Kuwait over the period 1970–2019 and utilizes a Cobb–Douglas production function augmented with manufactured exports and primary and manufactured imports. The long-run relationships between the model variables are explored using two cointegration tests, namely the Johansen test and the dynamic ordinary least squares. The short-run causality is investigated utilizing the multivariate Granger approach in a vector autoregressive model, the parameters of which are assessed for stability using the CUSUM of squares test and recursive residuals plots. To examine the causal relationships in the long run, the Toda and Yamamoto test is applied. The cointegration tests show that the variables are cointegrated, while the Granger causality test shows that manufactured exports and disaggregated imports, together with the inputs of production, cause economic growth in the short run, which, in turn, leads to import growth. In the long run, the expansion of both primary and manufactured imports drives export diversification, whereas manufactured exports do not contribute to economic growth. These findings are very important for Kuwait’s policymakers to consider in their plans to implement Kuwait Vision 2035 as overseas demand for oil wanes. |
| Keywords: | causality; economic growth; export diversification; imports; Kuwait; Springer deal |
| JEL: | L81 N0 |
| Date: | 2022–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:116877&r=int |
| 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: | 2022–10–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wptree:hal-03822494&r=int |
| By: | Lee, Cheon-Kee (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Kang, Minji (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Kim, Minjoo (Legal Research Institute of Korea University) |
| Abstract: | In response to today’s rapidly changing global trade environment, countries have continued to make changes to their policy objectives and instruments to address new and emerging issues such as supply chain restructuring and reshoring, climate change, and currency undervaluation. To this end subsidies have been playing a particularly important role, and are expected to be used more broadly across different sectors in the coming years. While controversies over government subsidization are likely to continue at the international level, the United States and the European Union have proposed at the domestic level to expand the scope of subsidy regulation and to tighten regulation on newly emerging subsidy types beyond the traditional boundaries set by international trade rules. Among a number of the latest developments on subsidy regulation, this Brief intends to primarily focus on (i) transnational subsidies granted by a government to enterprises active in other foreign countries (“foreign subsidies”); (ii) green subsidies for climate change mitigation; and (iii) subsidies related to currency undervaluation. |
| Keywords: | foreign subsidies; climate change; currency undervaluation; countervailing duties; CVDs |
| Date: | 2022–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kiepwe:2022_023&r=int |
| By: | Cao, Jin; Dinger, Valeriya; Juelsrud, Ragnar Enger; Liaudinskas, Karolis |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bofitp:bdp2022_008&r=int |
| By: | Jeong, Hyung-Gon (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)) |
| Abstract: | The realization of digital transformation (DX) and the Fourth Industrial Revolution (4IR) has led to the development of new technologies in areas such as AI, big data, metaverse, autonomous vehicles, digital currency, and blockchain technology. While these sectors are expected to continue to grow, major countries including the United States and China are fiercely competing to secure a global supply chain for the semiconductor industry. Built on free trade, the global division of production in the semiconductor industry has driven corporate innovation and technology development. However, the trend of technological nationalism and countries’ efforts to build a value chain within their territory are expected to hurt the global semiconductor industry. The ever-deepening hegemony competition between the U.S. and China in the semiconductor industry could have a profound impact not only on the Korean economy but also on a restructuring of the global semiconductor supply chain. This study analyzes the supply chain structure and risks of the Korean semiconductor industry, along with U.S. and Chinese policies to foster the semiconductor industry, going on to explore corresponding countermeasures. |
| Keywords: | U.S.-China Battle; Semiconductor; Global Supply Chain |
| Date: | 2022–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kiepwe:2022_044&r=int |
| By: | Popov, Vladimir |
| Abstract: | After the Second World War British industry was oriented towards the markets of former colonies, where the standards of efficiency and quality were not that high, so it was gradually loosing competitiveness as compared to its European counterparts. Britain was falling behind continental Europe in productivity and personal income until it entered the EU in 1973: the UK did not start growing faster than continental Europe, but at least stopped falling behind. EU membership definitely benefited Britain mostly because it gained free access to the burgeoning markets of continental Europe. However, only a minority of the population benefited from the acceleration of economic growth: since the early 1980s income and wealth inequalities increased greatly. A large group of less well-off UK voters did not really have a chance to benefit from gains of British EU membership because these gains accrued mostly to the richest. The British elite, however, blamed the relative deterioration of the disadvantaged part of the population not on its own policies (failing to curb the rise of inequalities), but on globalization, foreign competition and the EU. The goal was to get the better deal from Brussels (even better than the special conditions granted to the country when it entered the EU in 1973). But the side effect was the rise of nationalism and anti EU mood among the disadvantaged groups, especially in less competitive and depression prone parts of the country. At the end of the day, it turned out that the British elite outsmarted itself: it was trying to play the “brexit card” for getting minor concessions from the EU, but instead lost the free access to the European market altogether. |
| Keywords: | BREXIT, EU, Inequalities, Competitiveness, Productivity growth, Political elite |
| JEL: | D31 D63 F50 F63 O15 O52 |
| Date: | 2022–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115465&r=int |
| By: | António Afonso; José Alves; Krzysztof Beck |
| Abstract: | We analyze the migration drivers within the European Union countries. For a set of 23 EU countries over the 1995-2019 period, we use Bayesian Model Averaging and quantile regression to assess notably the relevance of unemployment and earnings. We find that the existence of a common border increases the number of net migrants by 172 people per 1000 inhabitants. In addition, 1000 PPP Euro increase in the difference in net annual salaries increases net migration by approximately 50 and 42 people per 1000 inhabitants in a working age of both countries under uniform and binomial-beta model prior, respectively. Moreover, one percentage point increase in the difference in the unemployment rate is associated with an increase in net immigration by approximately 6 and 3 persons by 1000 inhabitants in both countries. These results are also corroborated with the quantile regression results. Hence, human capital inside the EU is moving in search of higher cross-country earnings. |
| Keywords: | Migration flows; Earnings; Unemployment; Bayesian Model Averaging; Quantile regression; EU |
| JEL: | J61 J62 E24 F15 F22 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp02512022&r=int |
| By: | Mavrotas, George; Van den Bosch, Catherine |
| Abstract: | Recent years have witnessed a growing importance of remittances with remittance flows to low and middle income countries in particular surpassing both Official Development Assistance (ODA) and Foreign Direct Investment (FDI). However, the very recent developments associated with the unprecedented COVID-19 pandemic had a major impact on various fronts including remittances, particularly in some countries and regions, thus resulting in potential negative economic and social effects. Against this background, the paper contributes to the growing recent literature on the impact of the pandemic in developing countries by trying to examine the influence of COVID-19 on remittances and provide insights into the potential developmental effects this could have in recipient countries. In particular the paper tries to address the following research questions: (1) In what way has the pandemic influenced trends in remittances? and (2) what potential influence does the COVID-19-induced drop in remittances have on development? To address the above questions we discuss the insights emerging from global studies on the economic and social impacts of remittances and we also use some new data currently available to demonstrate the potential impact of the pandemic on development outcomes. We found that both the annual remittance data and the survey data from the World Bank provide evidence that remittance inflows in a substantial number of countries decreased in 2020. Our simple empirical analysis based on the limited data currently available suggests a non-existent or, at best, weak positive relationship between the decline in remittances and food insecurity. In addition, we found a moderate positive correlation between these remittance reductions and households’ inability to pay for medical care. A moderate negative correlation was also found to exist between COVID-19-induced changes in remittances and educational activity. Needless to say, in view of the various data limitations, the reported findings are only tentative and they should be treated as such. Hopefully, as better and more data become available in the near future, researchers will be able to address these important research questions in more detail so we can delve deeper into the overall impact of the pandemic on remittances at the global, regional and country level. |
| Keywords: | COVID-19, remittances |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iob:dpaper:2022.04&r=int |
| By: | Lucke, Bernd; Rehfeldt, Erik |
| Abstract: | How do expropriations of foreign oil and gas assets affect the net inflow of FDI? We analyze political and legal developments which led to increased government control of natural resource extraction industries in South America in the early 2000s and discuss at which point in time foreign investors saw legislation as violating their legitimate property rights. We use synthetic control methods (SCM) to date expropriations and to quantify their effect on FDI inflows in subsequent years. Strongly negative and statistically significant effects are found for Bolivia and Venezuela, with similar, but less conclusive evidence for Ecuador. SCM approaches which focus on structural characteristics and put little weight on pre-treatment outcomes are better equipped to detect the true “treatment” date than canonical SCMs. This is shown for Argentina where the 2012 nationalization of Repsol hardly affected FDI still down from the reputational damage inflicted by Argentina’s 2001 sovereign default. |
| Keywords: | Expropriation, FDI, synthetic control method |
| JEL: | F21 H13 |
| Date: | 2022–11–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115374&r=int |
| By: | Plastina, Alejandro; Wongpiyabovorn, Oranuch; Crespi, John |
| Abstract: | This article examines voluntary agricultural carbon programs in the United States, the policy of international agreements to prevent further global warming, and reviews literature related to that policy and its impact on U.S. carbon programs. We discuss international, national, and regional carbon pricing mechanisms that provide the market signals to consumers and suppliers of carbon credits in detail in order to compare and contrast different programs that impact agricultural carbon markets. Economic descriptions of the programs are derived. This article is useful for those who wish to know how U.S. policy currently influences agricultural carbon markets as well as how proposals may need to be structured in order to avoid potential market obstacles. |
| Date: | 2022–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genstf:202202161950500000&r=int |
| By: | Roll, Yoav; Semyonov, Moshe; Mandel, Hadas |
| Abstract: | Despite the steady increase in the number of women who join the labor force, there are still substantial cross-country variations in both women’s labor force participation and gender-linked occupational inequality. Utilizing micro-data from 47 countries (circa 2013) obtained from the Luxembourg Income Study, we examine the extent to which globalization and each of its three components (economic, social and political) affect gender-based economic inequality. In particular, we investigate the effect of globalization on two outcomes: women’s labor force participation and women’s relative odds of obtaining high-income, high-status jobs. The findings show, first, that social globalization is more consequential for gender inequality in the labor market than either economic or political globalization. Second, while social globalization increases women’s labor force participation, it reduces women’s relative odds of obtaining lucrative, high-status jobs. The findings are discussed in light of the comparative literature on gender-based inequality. |
| Date: | 2022–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:fmbd2&r=int |
| By: | Andrés César (CEDLAS - IIE-UNLP); Guillermo Falcone (CEDLAS - IIE-UNLP); Pablo Garriga (World Bank) |
| Abstract: | The last decades have witnessed a revolution in manufacturing production characterized by increasing technology adoption and a strong expansion of international trade. Simultaneously, the income distribution has exhibited both polarization and concentration among the richest. Combining datasets from the U.S. Census Bureau, the U.S. Internal Revenue Service, the International Federation of Robotics, and EU KLEMS, we study the causal effect of industrial automation on income inequality in the U.S. during 2010–2015. We exploit spatial and time variations in exposure to robots arising from past differences in industry specialization across U.S. metropolitan areas and the evolution of robot adoption across industries. We document a robust positive impact of robotics on income for only the top 1 percent of taxpayers, which is largest for top income fractiles. Therefore, industrial automation fuels income inequality and, particularly, top income inequality. According to our estimates, one more robot per thousand workers results in relative increments of the total taxable income accruing to fractiles P99 to P99.9, P99.9 to P99.99 and P99.99 to P100, of 2.1 percent, 3.8 percent and 6.4 percent, respectively. We also show that robotization leads to increased exports to high-income and upper-middle-income countries and that this is one of the key mechanisms behind the surge in top incomes. |
| JEL: | J23 J24 J31 O14 O33 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:dls:wpaper:0307&r=int |
| By: | Caggiano, Giovanni; Castelnuovo, Efrem |
| Abstract: | We estimate a novel measure of global Önancial uncertainty (GFU) with a dynamic factor framework that jointly models global, regional, and country-speciÖc factors. We quantify the impact of GFU shocks on global output with a VAR analysis that achieves set-identiÖcation via a combination of narrative, sign, ratio, and correlation restrictions. We Önd that the world output loss that materialized during the great recession would have been 13% lower in absence of GFU shocks. We also unveil the existence of a global Önance uncertainty multiplier: the more global Önancial conditions deteriorate after GFU shocks, the larger the world output contraction is. |
| Keywords: | Global Financial Uncertainty,dynamic hierarchical factor model,structural VAR,world output loss,global finance uncertainty multiplier |
| JEL: | C32 E32 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bofrdp:rdp2021_001&r=int |