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on International Trade |
| By: | Freeman, Rebecca; Manova, Kalina; Prayer, Thomas; Sampson, Thomas |
| Abstract: | This paper studies the impact of Brexit on the UK's trade with the EU relative to its trade with the rest of the world. We find no evidence that uncertainty and anticipation effects led to a significant decline in relative UK trade with the EU during the period after the UK voted for Brexit in 2016 and before the change in policy was implemented under the new Trade and Cooperation Agreement (TCA) in 2021. However, the UK's departure from the EU's single market and customs union at the start of 2021 caused a major shock to UK-EU trade. We estimate that the new TCA trade relationship led to a sudden and persistent 25% fall in relative UK imports from the EU. In contrast, we find a smaller and only temporary decline in relative UK exports to the EU, but nevertheless a large and sustained drop in the extensive margin of exports, driven by the exit of low-value relationships. The timing and asymmetry of Brexit effects on UK imports and exports is puzzling and provides evidence of important differences in adjustment to integration and disintegration shocks. |
| Keywords: | Brexit; EU; exports; trade policy; globalisation; imports; uncertainty |
| JEL: | L81 R14 J01 |
| Date: | 2022–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:117855&r=int |
| By: | Léa Marchal (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, IC Migrations - Institut Convergences Migrations [Aubervilliers], UP1 - Université Paris 1 Panthéon-Sorbonne); Giulia Sabbadini (DICE - Düsseldorf Institute for Competition Economics - Heinrich Heine Universität Düsseldorf = Heinrich Heine University [Düsseldorf]) |
| Abstract: | This paper studies whether firms employing immigrant workers are more resilient to an increase in competition in their export markets. Exploiting the surge of Chinese imports following its accession to the World Trade Organization and using a sample of French manufacturing exporters from 2002 to 2015, we find that an increase in the growth rate of Chinese competition in a foreign market has a negative effect on both the two-year survival and growth rate of sales of French exporters on that foreign market. This negative effect on firm performance is mitigated by the employment of immigrant workers. |
| Keywords: | Firm Heterogeneity Immigrant workers Import competition Productivity JEL Codes: F14 F22 F16, Firm, Heterogeneity, Immigrant workers, Import competition, Productivity JEL Codes: F14 F22 F16 |
| Date: | 2022–11–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-03905523&r=int |
| By: | Jens Arnold; Christine Arriola; Przemyslaw Kowalski; Cyrille Schwellnus; Colin Webb |
| Abstract: | International trade and in particular global value chains have provided many economies with new opportunities to participate in international trade and access new technologies. The COVID-19 pandemic has brought to the fore specific vulnerabilities in some supply chains and ignited a discussion about future lessons to be learned from these events. This paper reviews patterns of integration into trade and global value chains among Latin American economies, traces some recent developments, including during the pandemic, and provides a look at future trade risks and opportunities for Latin American economies through model simulations. |
| Keywords: | Global value chains, GVCs, International supply chains, International trade, Latin America and the Caribbean |
| JEL: | F1 F2 F6 |
| Date: | 2023–01–17 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:266-en&r=int |
| By: | Thierry Mayer; Gianluca Santoni; Vincent Vicard |
| Abstract: | This paper documents the CEPII Trade and Production Database (TradeProd), which provides data on international and domestic trade flows and trade protection. The database covers 162 countries and 9 industrial sectors over the period 1966-2018. TradeProd is intended for econometric estimation of the gravity equation and also includes a yearly balanced dataset necessary for counterfactual exercises using new quantitative trade models. |
| Keywords: | International Trade;Gravity Equation;Tariffs |
| JEL: | F14 F13 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2023-01&r=int |
| By: | Hinz, Julian; Chowdhry, Sonali; Jacobs, Anna; Thiele, Rainer |
| Abstract: | Despite some growth, intra-African trade activity remains at low levels and falls far behind the levels of internal trade observed in more integrated regions like the EU. The European continent remains a major trading partner, but its share in total African exports and imports has decreased from nearly 50% to 35% between 2000 and 2020. Our simulations suggest that implementing the African Continental Free Trade Area (AfCFTA) agreement can lead to substantial welfare gains in Africa, but only if tariff reductions are accompanied by a significant lowering of Non-Tariff-Barriers (NTBs). If NTBs are reduced on a multilateral basis, the EU's declining trade share with Africa might also be reversed. European governments and EU institutions should therefore have an incentive to provide technical and financial assistance - possibly within the framework of the existing WTO-led aid-for-trade initiative - to help AfCFTA economies lowering NTBs on a multilateral basis. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:pegnpb:282022&r=int |
| By: | Ronald B. Davies; Zuzanna Studnicka |
| Abstract: | While it is well-recognized that there are differences in the trade values reported by exporters and importers, a literature has emerged linking this trade gap to tariff evasion. These efforts, however, lack a structural theoretic underpinning and limit their product-level investigations to a small number of countries. Our first contribution is to provide a structural model of endogenous tariff evasion, one which then highlights the importance of both tariffs and border enforcement. Our second contribution is to use a global, product-level dataset from 2002-2019, the analysis of which is consistent with our model’s predictions. |
| Keywords: | tariff evasion, structural gravity, trade gap, border controls |
| JEL: | F13 F14 H26 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10151&r=int |
| By: | Roberta Piermartini; Adam Jakubik; Alexander Keck |
| Abstract: | Economic theory suggests that countries’ tariff commitments in trade agreements reflect their import market power at the time of negotiations. However, as countries grow, their market power in different sectors can change in unforeseen ways and their commitments may no longer reflect changed economic conditions. Using a newly built dataset of pre-Uruguay Round applied tariffs and relying on the theoretical framework of the terms-of-trade motive for trade agreements, we estimate hypothetical tariff commitments under current levels of market power and compare them with actual tariff commitments. We find that lower tariff commitments required to reflect current economic conditions would amount to a reduction in annual tariff costs of up to $26.4 billion – equivalent to nearly 10% of global tariff costs. Our results reveal substantial heterogeneity between countries and sectors. The sectors with the largest potential tariff cost reductions are vehicles (HS 87) and machinery and appliances (HS 84-85). Product-level tariff reductions would range from 0 to 18.5 percentage points and are on average largest for China. In the past, the GATT/WTO system has updated tariff commitments through periodic rounds of negotiations, and our findings support the revival of the WTO's negotiation function in this area. |
| Keywords: | trade agreements; trade policy; terms of trade |
| Date: | 2023–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2023/005&r=int |
| By: | Saalfield, Jon |
| Abstract: | This paper investigates Latin America and Caribbean (LAC)’s nationally determined contributions (NDCs) and their potential implications for the region’s balance of payments. The first section summarizes prevailing trade dynamics, finding that in LAC, exports of raw materials help to cover the cost of importing capital goods. The second section turns to the region’s NDCs to identify policies affecting import expenditure. The third section employs a similar methodology on the export side, tallying policies affecting output and global cost competitiveness in key sectors (crops, livestock, timber, metals and minerals, manufactured goods, fisheries, and tourism). |
| Keywords: | CAMBIO CLIMATICO, INSTRUMENTOS INTERNACIONALES, ASPECTOS ECONOMICOS, COMERCIO INTERNACIONAL, POLITICA COMERCIAL, IMPORTACIONES, EXPORTACIONES, DESARROLLO SOSTENIBLE, CLIMATE CHANGE, INTERNATIONAL INSTRUMENTS, ECONOMIC ASPECTS, INTERNATIONAL TRADE, TRADE POLICY, IMPORTS, EXPORTS, SUSTAINABLE DEVELOPMENT |
| Date: | 2022–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col025:48555&r=int |
| By: | Beata S. Javorcik; Lucas Kitzmueller; Helena Schweiger; Muhammed A. Yildirim (Center for International Development at Harvard University) |
| Abstract: | Geo-political tensions and disruptions to global value chains have led policymakers to reevaluate their approach to globalisation. Many countries are considering regionalisation and friend-shoring – trading primarily with countries sharing similar values – as a way of minimising exposure to weaponisation of trade and securing access to critical inputs. If followed through, this process has the potential to reverse global economic integration of recent decades. This paper estimates the economic costs of friend-shoring using a quantitative model incorporating inter-country inter-industry linkages. The results suggest that friend-shoring may lead to real GDP losses of up to 4.6% of global GDP. Thus, although friend-shoring may provide insurance against extreme disruptions and increase the security of supply of vital inputs, it would come at a significant cost. |
| Keywords: | Friend-shoring; Regionalisation; Global Trade and Production Network; International I-O Linkages |
| JEL: | F15 F51 F60 R15 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:cid:wpfacu:422&r=int |
| By: | Luke H. Grayson; Brian D. Varian |
| Abstract: | The federation of Australia in 1901 entailed the formation of a customs union among its six formerly tariff-autonomous colonies. Although the elimination of tariff barriers to intercolonial/interstate trade would have been welfare-enhancing, Australia’s common external tariff was set considerably higher than the tariffs on external goods imported by the pre-federation colonies, implying a welfare reduction. Relying on a newly compiled dataset of 3, 584 commodity- and colonydisaggregated imports, this paper estimates trade restrictiveness indices (TRIs) and static welfare losses for the six Australian colonies in 1900 and for the Commonwealth of Australia in 1903. This paper finds that the TRIs substantially exceeded average weighted tariffs in the colonies and in the Commonwealth. Moreover, this paper finds that, despite the high external tariff legislated by the newly formed Australian Commonwealth, the customs union produced an enormous net static welfare gain, estimated to have been 1.16 per cent of Australian GDP. |
| Keywords: | Australia, customs union, federation, tariffs, trade restrictiveness index |
| JEL: | F13 F15 N77 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:auu:hpaper:111&r=int |
| By: | Pietrobelli, Carlo; Rabellotti, Roberta; Van Assche, Ari |
| Abstract: | Global value chains (GVCs) have taken the policy world by storm, with many policymakers viewing them as potent tools to boost economic development through industrial upgrading. In this Perspective, the authors argue that zooming in on the roles of tasks, linkages and firms helps clarify the novelty of GVC-oriented policies. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:colfdi:343&r=int |
| By: | James E. Anderson |
| Abstract: | Non-parametric gravity as defined in this paper encompasses previous parametric forms. The model generates non-parametric sufficient statistics for arbitrage gains from trade and terms of trade, and a non-parametric elasticity of terms of trade with respect to supply. For world manufacturing trade 2000-2014, China’s gains rose 2%yearly and terms of trade fell 8.3%. US gains fell 2% yearly and terms of trade rose 5.5%. Counterfactual industrial policy that raises US 2014 world sales share by 1% lowers US gains per unit 0.72%, leaving a surplus of 0.28%. A novel minimum distance estimator generates the CES trade elasticity required. |
| JEL: | F10 F14 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30807&r=int |
| By: | Bulent Unel |
| Abstract: | This paper investigates effects of increased Chinese import competition (following a change in U.S. trade policy that eliminated uncertainties surrounding tariff rates on Chinese imports) on self-employment across U.S. local markets. Areas most exposed to the trade policy change experienced a more significant decline in self-employment, which, in turn, explains about an 11.5% reduction in total employment. Further, effects almost entirely come from non-manufacturing sectors and are larger on in- corporated self-employed business owners. Finally, the impact varies considerably across different groups characterized by gender, age, and education, and the results are robust to the choice of controls. |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:lsu:lsuwpp:2021-01&r=int |
| By: | Elias Dinopoulos; Gunnar Heins; Bulent Unel |
| Abstract: | We propose a multi-country model with occupational choice, heterogeneous firms, unemployment, and revenue-generating tariffs to study the aggregate and distributional consequences of tariff wars in a unified framework. Motivated by the 2018 global tariff, we calibrate the model to fit a global economy with four countries, the United States, the European Union, China and the Rest of the World. If governments maximize aggregate welfare, the average optimal tariff and the average Nash-equilibrium tariff are about 16 percent. Multilateral trade negotiations lead to zero cooperative tariffs and free trade. No country can win a trade war. If governments adopt a political-economy perspective and maximize a weighted sum of entrepreneurial and worker interests with weights incorporating factual "autonomous rate" tariffs, then trade talks lead to positive cooperative tariffs in the range of 14 percent for the U.S. to 43 percent for China, and tend to increase unemployment and income inequality. |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:lsu:lsuwpp:2021-02&r=int |
| By: | Uehara, Thiago Kanashiro; O'Reilly, Kate |
| Abstract: | This article analyses the scope and overall direction of the World Trade Organization and the International Fair-Trade Charter to examine contrasting trade-related institutions with regards to sustainable development. Many institutions have addressed sustainable development in commercial or trade affairs. However, we found that trade-related institutions and frameworks have relied on narrow or obsolete conceptualizations of sustainability, and that equity and sustainability remains marginal or slotted into regimes of exception. In this paper, we combine our knowledge of Sustainability Sciences, Economics, Law, and Development Studies to articulate a principled approach to trade and public policy, which serves to inform debates on civilization transitions required for true sustainability, fairness, planetary health, and a revamped set of global goals that reposition trade in societal formation. |
| Date: | 2023–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:gqu5z&r=int |
| By: | NAKAGAWA Junji |
| Abstract: | The post-WWII international trade law system, which was established and developed to liberalise international trade, is facing multiple legitimacy crises. First, the system has contributed to the globalisation of the economy but has not addressed the income disparity within and among states. Second, multinational enterprises that have proliferated under the system have violated human rights, caused environmental degradation and engaged in anti-monopoly practices. Third, the system has not provided effective means for addressing global issues such as global warming and the COVID-19 pandemic. In light of these legitimacy crises of the post-WWII international trade law system, two fundamental questions should be raised: first, whether the system’s goal of trade liberalisation is adequate and, second, whether the structure and functions of the system’s regulation of international trade are adequate as well. To answer these fundamental questions, this study suggests (1) replacing the goal of the international trade law system from trade liberalisation to sustainability or sustainable development and (2) reconstructing the structure and functions of the regulation of international trade based on the broad definition of ‘international trade law system’, which comprises not only hard law on international trade but also soft law instruments regarding international trade addressed to states and private firms. |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:22116&r=int |
| By: | Kossi Messanh Agbekponou (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Angela Cheptea (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Karine Latouche (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement) |
| Abstract: | The present paper investigates the link between the decision of French agri-food firms to supply retailers with private-label (PL) products and their integration in global value chains (GVCs). In line with the recent literature, we identify firms that participate to GVCs by the ones that engage simultaneously in import and export activities. We consider the certification with the private International Featured Standard (IFS), required by all retailers operating in France, as an indicator of firms' choice to become private label suppliers. We combine firm-level data from the AMADEUS database and French customs over the 2006-2011 period, and estimate the linkage betweens firms' decision to engage in foreign trade and to integrate a retailer-driven value chain using a multivariate binary choice model. Results confirm a strong positive correlation of these decisions, and show that retailers' PL suppliers (i.e. IFS-certified firms) are by 5.83 percentage points more likely to integrate GVCs (i.e. to jointly import and export) than other firms in the agri-food sector. This figure corresponds to an almost twofold increase in firms' probability to participate to GVCs observed in the sector. We also show that the integration in GVCs is primarily driven by the higher probability to export of these firms. Our findings are robust to the control for endgeneity and the use of alternative estimation techniques. |
| Abstract: | Le présent papier étudie le lien entre la décision des entreprises de l'industrie agro-alimentaire française d'approvisionner la grande distribution en produits marque de distributeur (MDD) et leur intégration dans les chaînes de valeur mondiales (CVM). En accord avec des travaux récents dans la littérature, nous identifions les entreprises qui participent aux CVM par leur engagement simultané dans des activités d'importation et d'exportation. Nous considérons la certification avec le standard privé International Featured Standard (IFS), exigée par tous les détaillants opérant en France, comme un indicateur du choix des entreprises de devenir des fournisseurs de produits marque MDD. Nous combinons des données issues de la base AMADEUS et des douanes françaises sur la période 2006-2011 pour estimer le lien entre la décision des entreprises de s'engager dans le commerce extérieur et de devenir fournisseur de la grande distribution à l'aide d'un modèle de choix binaire multivarié. Les résultats confirment une forte corrélation positive entre ces décisions et montrent que les fournisseurs de MDD (les entreprises certifiées IFS) ont une probabilité d'intégrer les CVM 5, 83 points de pourcentage supérieure à celle des autres entreprises du secteur agroalimentaire. Ce chiffre correspond à un accroissement par presqu'un facteur de deux de la probabilité des entreprises de participer aux CVM observée dans le secteur. Nous montrons également que l'intégration dans les CVM s'explique principalement par la probabilité plus élevée d'exporter de ces entreprises. Nos résultats sont robustes au contrôle pour l'endogénéité et à l'utilisation de techniques alternatives d'estimation. |
| Keywords: | Global value chains, Retailers, Private standards, Grande distribution, Marque de distributeur, Chaînes de valeur mondiales |
| Date: | 2022–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03910461&r=int |
| By: | Luca Fontanelli; Mattia Guerini; Mauro Napoletano (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po) |
| Abstract: | We build a simple dynamic model to study the effects of technological learning, market selection and international competition in the determination of export flows and market shares. The model features two countries populated by firms with heterogeneous productivity levels and sales. Market selection in each country is driven by a finite pairwise Pólya urn process. We show that market selection leads either to a national or to an international monopoly in presence of a static distribution of firm productivity levels. We then incorporate firm learning and entry-exit in the model and we show that the market structure does not converge to a monopoly. In addition, we show that the extended model is able to jointly reproduce a wide ensemble of stylized facts concerning intra-industry trade, industry and firm dynamics. |
| Keywords: | firm dynamics, market selection, Pólya urn, international trade, industrial dynamics |
| Date: | 2021–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:spmain:hal-03370650&r=int |
| By: | Charles Serfaty |
| Abstract: | Evidence suggests that sovereign defaults disrupt international trade. As a consequence, countries that are more open have more to lose from a sovereign default and are less inclined to renege on their debt. In turn, lenders should trust more open countries and charge them with lower interest rate. In most cases, the country should also borrow more debt as it gets more open. This paper formalizes this idea in a sovereign debt model à la Eaton and Gersovitz (1981), proves these theoretical relations, and quantifies them in a calibrating model. We also provide evidence suggesting a causal relationship between trade and debt or CDS spreads, using gravitational instrumental variables from Frankel and Romer (1999) and Feyrer (2019) as a source for exogenous variation in trade openness. |
| Keywords: | Sovereign Debt, International Trade and Finance, Economic Integration |
| JEL: | H63 B17 F15 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:901&r=int |
| By: | Léa Marchal (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, IC Migrations - Institut Convergences Migrations [Aubervilliers], UP1 - Université Paris 1 Panthéon-Sorbonne); Guzman Ourens (Tilburg University [Tilburg] - Netspar); Giulia Sabbadini (Institut de hautes études internationales et du développement - Graduate Institute of International and Development Studies [Geneva, Switzerland]) |
| Abstract: | We use French employer-employee data to reassess the wage gap between native and foreign workers. We find that the wage gap varies with the export intensity of the firm and the occupation of the worker. A model with heterogeneous firms and workers shows that our findings are consistent with white-collar immigrants capturing an informational rent. The evidence supports this mechanism. First, we show that the wage gap is positively correlated with the complexity of the firm export activity. Second, we show that wages react to changes in export intensity when the export destination coincides with the origin of foreign workers. |
| Keywords: | export, firm, immigrants, wage inequality |
| Date: | 2022–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03905529&r=int |
| By: | Robert Reinhardt (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This study investigates which effect earthquakes have on the inflow of foreign direct investment (FDI) within a country from a temporal, spatial and sectoral dimension. It uses a dynamic difference-indifference model of physical disaster exposure in 416 Indonesian districts between 2003 and 2019 in order to quantify the impact on investment behavior from abroad. Drawing geolocated data from a variety of sources, the results indicate that FDI inflows are temporarily reduced of around 90% in the year after the disaster. In this case study, spatial effects play a subordinate role, yet earthquake shocks affecting upstream industries tend to have substantial negative effects. Manufacturing appears to be the most affected sector. |
| Keywords: | Foreign Direct Investment, Disasters, Risk, Economic Growth, Input-Output |
| Date: | 2022–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-03908250&r=int |
| By: | Strange, Roger |
| Abstract: | The COVID-19 pandemic has heightened concerns about the viability of GVCs. Globalization was already under threat, but the pandemic has exacerbated the effects of underlying trends in the world economy. This Perspective considers whether MNEs should forsake cost-efficiency and reconfigure their GVCs to put more emphasis on robustness and resilience. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:colfdi:328&r=int |
| By: | Philippe Aghion; Antonin Bergeaud; Matthieu Lequien; Marc Melitz; Thomas Zuber |
| Abstract: | We decompose the “China shock” into two components that induce different adjustments for firms exposed to Chinese exports: an output shock affecting firms selling goods that compete with similar imported Chinese goods, and an input supply shock affecting firms using inputs similar to the imported Chinese goods. Combining French accounting, customs, and patent information at the firm-level, we show that the output shock is detrimental to firms' sales, employment, and innovation. Moreover, this negative impact is concentrated on low-productivity firms. By contrast, we find a positive effect - although often not significant - of the input supply shock on firms' sales, employment and innovation. |
| Keywords: | Competition Shock, Patent, Firms, Import |
| JEL: | F14 O19 O31 O33 O34 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:899&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:202211-425&r=int |
| By: | Jean-Charles Bricongne; Juan Carluccio; Lionel Fontagné; Guillaume Gaulier; Sebastian Stumpner |
| Abstract: | Since Gabaix (2011), the role of changes in the performance of some very large firms in shaping aggregate outcomes has been intensively studied in the economic literature. Changes in the performance of a few large firms can arise due to idiosyncratic shocks or idiosyncratic reactions to common shocks. This paper provides direct evidence for the second channel using data on the universe of French firm-level exports and imports over 1993-2020. Granularity matters for the micro-dynamics of aggregate French exports over the long run: the granular residual explains 42% of the variance in aggregate export growth during the period. Moreover, it co-moves with the macro shocks: the largest firms do better than average in good times and worse in bad times. Studying firm-level performance during the Great Financial Crisis and the Pandemic reveals that top exporters contributed to the export collapses disproportionably more than their pre-crisis share of exports, even within finely defined markets. We investigate the reasons for such over-reaction of the top exporters using the Pandemic as a natural experiment. We find that a higher elasticity to demand shocks explains the larger reaction of top exporters to the Pandemic, with GVC exposure having weak explanatory power. Our findings have macro implications, as they help understand the macro reaction to foreign shocks, and micro implications, since they can inform micro models of exports. |
| Keywords: | Granularity; Exports; COVID crisis |
| JEL: | F14 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:881&r=int |
| By: | Finck, David; Tillmann, Peter |
| Abstract: | Highly interconnected global supply chains make countries vulnerable to supply chain disruptions. This paper estimates the macroeconomic effects of global supply chain shocks for the euro area. Our empirical model combines business cycle variables with data from international container trade. Using a novel identification scheme, we augment conventional sign restrictions on the impulse responses by narrative information about three episodes: the Tohoku earthquake in 2011, the Suez Canal obstruction in 2021, and the Shanghai backlog in 2022. We show that a global supply chain shock causes a drop in euro area real economic activity and a strong increase in consumer prices. Over a horizon of one year, the global supply chain shock explains about 30% of inflation dynamics. We also use regional data on supply chain pressure to isolate shocks originating in China. Our results show that supply chain disruptions originating in China are an important driver for unexpected movements in industrial production, while disruptions originating outside China are an especially important driver for the dynamics of consumer prices. |
| Keywords: | Container Trade, Supply Chain, Inflation, Narrative Identification, Sign Restrictions |
| JEL: | E32 F14 F62 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:imfswp:178&r=int |
| By: | Camille da Piedade; Luc Jacolin; Patrick Plane |
| Abstract: | We investigate the role of undervaluation of African currencies in export “surges” of some primary and manufactured goods. We calculate country-product specific misalignments on the basis of the absolute purchasing power parity principle adjusted for the productivity level. Using a panel of 41 African countries and a basket of 149 primary and manufactured exported goods (4-digit HS code), we identify 96 export surges over the period 1995-2017. The complementary log-log (cloglog), which more appropriately treats rare events, brings to light undervaluation as an influential determinant for triggering an export surge then sustaining it over time. This effect is controlled for relevant covariates. Results prove robust to alternative calculations of export surges and to different estimators used in regression analyses. |
| Keywords: | Exports Surges, Competitiveness, Exchange Rate Misalignements, Developing Countries |
| JEL: | F14 O24 O55 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:879&r=int |
| By: | Saeed, Mohammad |
| Abstract: | There are many commonalities between the Investment Facilitation Framework for Development (IFF4D) and the Trade Facilitation Agreement (TFA), including transparency, simplification, user-friendliness, and stakeholders' collaboration. The author shares key takeaways from the successful negotiations and implementation of the TFA that can guide the world community in the context of the IFF4D. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:colfdi:322&r=int |
| By: | Jobbágy, Luca |
| Abstract: | Is the OECD's new global minimum tax agreement the end of fiscal incentives to attract foreign direct investment? This Perspective offers policy recommendations as governments seek to adapt to the unprecedented international framework, which will likely shape international taxation for years to come. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:colfdi:333&r=int |
| By: | Carballo, Alejandro; Nitschke, Frauke |
| Abstract: | This Perspective highlights the two key elements that governments need to consider at the domestic level to effectively manage investment disputes, independently of any reform of the investor-state dispute-settlement (ISDS) mechanism. Such a domestic framework increases stakeholders' confidence, strengthens FDI retention and enables countries to be proactive and save resources. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:colfdi:345&r=int |
| By: | Javier Ortega; Gregory Verdugo (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po) |
| Abstract: | We study the impact of local immigration inflows on natives' wages using a large French administrative panel from 1976-2007. We show that local immigration inflows are followed by reallocations of blue-collar natives across commuting zones. Because these reallocations vary with the initial occupation and blue-collar location movers have wages below the blue-collar average, controlling for changes in local composition is crucial to assess how wages adjust to immigration. Immigration temporarily lowers the wages of blue-collar workers, with unskilled workers experiencing larger losses. Location movers lose more than stayers in terms of daily wages but move to locations with cheaper housing. |
| Keywords: | France, immigration, wages, employment |
| Date: | 2021–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:spmain:hal-03370661&r=int |
| By: | Tsang, Vanessa |
| Abstract: | It is important for developing host countries to ensure that the investment contracts they enter into with foreign investors are fit-for-purpose and effectively protect the parties' often competing commercial interests. To ensure that these contracts are fair and equitable, host countries may need to rely on international negotiation support. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:colfdi:341&r=int |
| By: | Maria Koumenta; Mario Pagliero; Davud Rostam-Afschar |
| Abstract: | We study how licensing, certification and unionisation affect the wages of natives and migrants and their representation among licensed, certified, and unionized workers. We provide evidence of a dual role of labor market institutions, which both screen workers based on unobservable characteristics and also provide them with wage setting power. Labor market institutions confer significant wage premia to native workers (4, 1.6, and 2.7 log points for licensing, certification, and unionization respectively), due to screening and wage setting power. Wage premia are significantly larger for licensed and certified migrants (10.3 and 6.6 log points), reflecting a more intense screening of migrant than native workers. The representation of migrants among licensed (but not certified or unionized) workers is 15% lower than that of natives. This again implies a more intense screening of migrants by licensing institutions than by certification and unionization. |
| Keywords: | Occupational regulation, Licensing, Certification, Unionization, Migration, Wages |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:685&r=int |
| By: | Pitschas, Christian |
| Abstract: | The draft text for an Investment Facilitation for Development Agreement does not define the term "investment." If negotiators wish to define said term, they should take guidance from the WTO rule book. It characterizes trade-related investment as a business or professional establishment by a WTO member's person in another WTO member's territory for purposes of providing goods or services. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:colfdi:339&r=int |
| By: | Baumann, Phil |
| Abstract: | In cross-border M&A transactions, certain investors enjoy government-created, undue competitive advantages. To ensure competitive neutrality, host country governments may implement investment-control measures. However, how can investment controls be imposed without themselves leading to competitive distortions? This Perspective highlights the key elements that governments need to consider in this regard. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:colfdi:336&r=int |
| By: | Prema-chandra Athukorala; Hal Hill |
| Abstract: | This paper examines trade and commercial policy in Kyrgyzstan in the context of that country’s distinctive historical and geographical characteristics, drawing on the World Trade Organisation’s latest Trade Policy Review. A former Soviet republic, it is a geographically isolated, effectively a ‘double-landlocked’, transition economy. The country was an early liberalizer, both economically and politically, among the former Soviet republics, and it is now a broadly open economy. After a catastrophic economic decline in the immediate transition era it also achieved macroeconomic stabilization relatively quickly. However the growth dividend from these major policy reforms has been modest, and the country has become one of the most remittance-dependent economies in the world. While its geographical handicaps are immutable, we argue that key explanations for the slow economic growth are the limited ‘behind-the-border’ reforms, the dualistic economic structure, and misdirected fiscal allocations. We also draw out some of the broader implications for trade policy reform in other transition economies. |
| Keywords: | Kyrgyzstan, landlocked, transition economy, behind-the-border reform |
| JEL: | F13 O53 P27 P33 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2023-02&r=int |
| By: | Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa) |
| Abstract: | In this study, nexuses between governance and trade performance in terms of natural resource rents are assessed in 44 sub-Saharan African countries. The empirical evidence is based on Tobit regressions. The findings show that political governance (entailing “voice & accountability†and political stability) and institutional governance (consisting of the rule of law and corruption control) have a negative effect on trade performance. The findings are consistent with the perspective that resources rents are linked to inefficiencies in governance which are further detrimental to trade performance within the remit of natural resource rents on the one hand and, on the other, the premise of the prevailing weak institutions in the region less likely to boost trade performance. |
| Keywords: | Natural Resources; Economic Growth; Governance; Sub-Saharan Africa |
| JEL: | H10 Q20 Q30 O11 O55 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:23/006&r=int |
| By: | Berbée, Paul; Brücker, Herbert; Garloff, Alfred; Sommerfeld, Katrin |
| Abstract: | We study the labor demand effect of immigration on local labor markets by exploiting the fact that refugees in Germany are banned from working in the first few months after arrival. This natural experiment allows isolating a pure immigration-induced labor demand effect. For empirical identification we rely on the local presence of vacant military bases and on allocation quotas from a dispersal policy. The results are in line with our predictions from a theoretical framework with non-homothetic demand, where an increasing share in the consumption of necessities is associated with rising demand of labor-intensive goods: As the number of recently arrived refugees and thus the demand for locally produced goods increases, local employment increases particularly in non-tradable sectors in the short run. At the same time, unemployment drops while individual wages do not change significantly which can be traced back to widespread labor market rigidities in Germany. The isolation of labor demand effects complements the literature that isolates labor supply shocks from immigration, so as to gain a more comprehensive understanding of how immigration affects labor markets. |
| Keywords: | Labor demand, employment, immigration, refugees, natural experiment |
| JEL: | J23 J60 H50 R10 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:22069&r=int |
| By: | Lee, Youngjoo (Korea Institute for Industrial Economics and Trade) |
| Abstract: | As the COVID-19 pandemic transitions to an endemic phase worldwide, the expansion of e-commerce exports is likely to continue. The strategic advantages of e-commerce exports can be leveraged to boost exports for SMEs. Promoting e-commerce exports for policy purposes requires policy development based on an understanding of the characteristics of e-commerce exports. According to surveys of SMEs, the current structure and patterns of e-commerce exports by SMEs are not well suited to capture the strategic benefits of e-commerce exports. Without policy intervention, e-commerce exporters may increase slightly in number, but it would be difficult to expect any high-performing e-commerce exporters to emerge among SMEs. The Korean government should take a distinctive policy approach to enhance the export momentum of SMEs, taking advantage of the expansion of e-commerce exports. Most of all, policy priorities should focus on equipping SMEs with greater export capabilities in the e-commerce market. While it would be better for the government to let the market do its work in areas where immediate effects are expected — such as supporting SMEs to penetrate major online marketplaces, or in areas where dedicated private players are active — from a policy perspective, it would be more effective to focus on SMEs which are interested in e-commerce exports but cannot afford the necessary investments. The government should take policy steps to create a robust ecosystem which builds a broader base for e-commerce exports and upgrades the e-commerce export structure. It can do so by increasing the number of e-commerce exporters, assisting exporters in expanding to e-commerce exports, and increasing their sales exposure to e-commerce. The government should step up policy efforts to better align e-commerce exports with offline exports, and thus scale up e-commerce exports, allowing offline SMEs to pursue exports across offline and online marketplaces. |
| Keywords: | Online Marketplace; e-commerce Export Structure; e-commerce Market |
| JEL: | F18 L25 |
| Date: | 2022–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kietrp:2022_008&r=int |
| By: | Oke, Emmanuel; Olabode, Olufunmilola |
| Abstract: | This Perspective explores the interrelation between the international investment law (IIL) regime and the host countries' intellectual property policy space. It then suggests how host countries can shape their international investment agreements to ensure their consistency with the domestic IP legal framework and that both regimes contribute to economic development. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:colfdi:334&r=int |
| By: | Sauvant, Karl P.; Ortino, Federico |
| Abstract: | The authors argue that a WTO Investment Facilitation for Development Agreement needs a strong responsible business conduct provision, as such a provision helps to increase the contribution that FDI can make to sustainable development. They suggest some elements of such a provision. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:colfdi:335&r=int |
| By: | Ping Hua (ECONOMIX) |
| Abstract: | The theoretical and empirical studies argue ambiguous effects of GVCs participation of developing countries on productivity. By using panel data of 15 Chinese manufacturing industries over the 2005-2014 period, we find that China's GVCs backward and forward linkages contributed to labor productivity growth of 6.41% and 1.97% per year on average respectively, via drawing out from low value added low labor cost backward linkages sectors, optimizing resource allocation towards more efficiency manufacturing sectors (rarely studied) and developing higher value added forward linkages. The resulting structural transformation along to the rise of labor costs diminished the risk for Chinese manufacturing industry to be trapped in low-profitability low productivity GVCs activities. However, the productivity contribution of moving out from backward linkages 3 times higher than that of forward linkages suggest that the future positive impact of GVCs on productivity may be much more difficult to realize in particular in a less favorable context (trade war between China and USA, reindustrialization of developed countries and trade protection related to Covid-19 etc.) than the studied period. |
| Date: | 2022–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03767838&r=int |
| By: | Chaisse, Julien |
| Abstract: | The EU-China Comprehensive Agreement on Investment is China's first treaty with a section dedicated to sustainable development and labor regulations. It introduces major innovations such as ensuring corporate due diligence to end forced labor, among others. This significant development aims to promote sustainable economic growth and investment. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:colfdi:323&r=int |
| By: | Gayá, Romina |
| Abstract: | This paper studies the digital payments landscape of B2C e-commerce marketplaces in Latin America and the Caribbean. It presents the main characteristics of different digital payment methods, as well as their advantages and disadvantages. It also examines how digital payments contribute to financial inclusion and it describes the global and regional trends and prospects. It presents the main findings of an exhaustive analysis of payment methods accepted by more than 550 transactional marketplaces in 33 countries in LAC. It also examines the main obstacles to development of digital payments in LAC, especially regarding cross-border e-commerce, and proposes some initiatives to address those constraints. |
| Keywords: | COMERCIO INTERNACIONAL, INNOVACIONES TECNOLOGICAS, COMERCIO ELECTRONICO, TECNOLOGIA DIGITAL, FACILITACION DEL COMERCIO, TECNOLOGIA DE LA INFORMACION, TECNOLOGIA DE LAS COMUNICACIONES, INTERNATIONAL TRADE, TECHNOLOGICAL INNOVATIONS, ELECTRONIC COMMERCE, DIGITAL TECHNOLOGY, TRADE FACILITATION, INFORMATION TECHNOLOGY, COMMUNICATION TECHNOLOGY |
| Date: | 2022–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col026:48557&r=int |
| By: | André Carrascal; Luis Orea |
| Abstract: | The main contribution of this paper is the proposal of a new method to estimate trade elasticities based on a production model where trade elasticities and technological parameters are estimated simultaneously. Our empirical model, inspired by the theoretical framework introduced by Caliendo et al (2018) to study the propagation of productivity shocks, also permits assessing whether their central equation aimed at understanding the sources of productivity change, is supported by the data. Furthermore, using econometric techniques, our paper examines trade-related productivity effects that have rarely been examined in the literature on productivity growth decomposition. The proposed model provides a common analytical framework for an empirical examination of several issues that both traditionally and more recently have attracted the interest of many academics and policy/makers, namely TFP growth, embeddedness, and Covid-19. We use the World Input-Output Database (WIOD) for the period 2000-2014 to compute most of the relevant variables employed in these applications. |
| Keywords: | Total factor productivity, embeddedness, trade elasticities, Covid-19. |
| JEL: | F47 O47 C68 |
| URL: | http://d.repec.org/n?u=RePEc:aso:wpaper:wp0006&r=int |
| By: | Sauvant, Karl P.; Chacon Naranjo, Rebecca |
| Abstract: | As WTO agreements involve complex issues, it is useful to obtain information/advice from civil society. The WTO Investment Facilitation for Development Agreement offers an opportunity to institutionalize civil-society input for its implementation. This Perspective uses the OECD's experience as an example of how obtaining such information/advice could be institutionalized. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:colfdi:330&r=int |
| By: | Willem THORBECKE |
| Abstract: | The U.S. real effective exchange rate is at its highest level since 1985. In that year, the U.S. and its trading partners coordinated a depreciation of the dollar and the U.S. agreed to reduce its budget deficit. This paper reports that a dollar depreciation today would still improve U.S. trade imbalances with East Asia and the world. East Asian countries would also benefit from a dollar depreciation because it would lower the local currency costs of imported oil, commodities, and food and reduce imported inflation. The U.S. and East Asia should consider engineering a coordinated dollar depreciation and the U.S. should again reduce its budget deficit. |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:22115&r=int |
| By: | Kym Anderson |
| Abstract: | The Fiji Government’s response since 2010 to the loss of preferential access to the European Union’s previously highly protected sugar market has been to increasingly support its producers. That support is now much higher than most other countries’ assistance to the sugar sector. This study provides detailed estimates of the changing extent of those transfers to producers from both taxpayers and consumers during 2010-21. In doing so it estimates for the first time an annual time series of nominal rates of assistance to producers and consumer tax equivalent rates (NRAs and CTEs, but they are also converted to producer and consumer support estimates as defined by the OECD). Those NRA and CTE estimates may well now exceed 100%. The level of support was equivalent to 10% of Fiji’s agricultural value added in 2018-21 and is around 5% of its government’s consolidated revenue – at a time when the government has had one of the highest debt-to-GDP ratios, at 80% in 2021. Since the nature of the support is economically inefficient, inequitable, environmentally damaging and fiscally unsustainable given foreseeable market prospects, suggestions are made as to how that support might be gradually re-purposed to provide better economic, social and environmental outcomes. |
| Keywords: | agricultural subsidies, consumer taxation, international competitiveness, preferential market access |
| JEL: | F14 F54 H21 O13 Q18 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2022-11&r=int |
| By: | Otto, James |
| Abstract: | Governments increasingly mandate that mining companies implement sustainable development initiatives in communities affected by their operations. The use of corporate social responsibility programs and community development agreements can help communities to overcome the historical boom-bust cycle associated with large mines and broaden their ability to prosper after the mine closes. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:colfdi:325&r=int |
| By: | Bertoli, Simone (CERDI, Université Clermont Auvergne); Laouénan, Morgane (CNRS); Valette, Jérôme (CEPII, Paris) |
| Abstract: | We provide evidence that Hispanic citizens receive significantly longer sentences than non-Hispanic citizens in the Federal Criminal Justice System in the United States when a higher number of illegal aliens are apprehended along the southwest border. Apprehensions can increase the salience of Hispanic ethnic identity, which is associated with persistent negative stereotypes, and can also deteriorate attitudes toward Hispanics. We rule out concerns that apprehensions might be conveying legally relevant information to judges. Thus, we provide direct evidence for time-varying discrimination toward Hispanic defendants. Our estimated effect is only at play for defendants without a heavy previous criminal record. |
| Keywords: | immigration, ethnic identity, discrimination, attitudes, salience, sentences |
| JEL: | K42 J15 F22 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15866&r=int |
| By: | International Monetary Fund |
| Abstract: | CEMAC is broadly benefiting from the positive terms of trade shock amidst the fallout from Russia’s war in Ukraine. Post-pandemic economic recovery is taking hold, albeit slowly, supported by high oil prices and the lifting of COVID-19 containment measures. External reserves have started to build up, though still short of the desired level, owing in part to costly untargeted energy and food subsidies. Global inflation pressures have passed through to domestic prices, putting pressure on real incomes. Rebuilding buffers and sustaining a recovery that protects the most vulnerable will require stricter adherence to budget and reform plans consistent with Fund-supported programs and policy advice; this will ensure that part of the oil windfall is saved. Implementation of these policies in current favorable conditions is critical to strengthening resilience in the face of rising risks, including most notably to food security, debt vulnerabilities, and tightening of global financial conditions. |
| Keywords: | CEMAC authorities; IMF article; CEMAC country; consultation discussion; CEMAC member country; Oil prices; Inflation; Fiscal stance; Liquidity; Global |
| Date: | 2023–01–06 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2023/001&r=int |