nep-int New Economics Papers
on International Trade
Issue of 2023‒02‒13
forty-four papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. International Trade and Global Value Chain: An Overview By Mondal, Supriyo
  2. The negative impact of disintegration on trade: the case of Brexit* By Juan de Lucio; Silviano Raúl Mínguez; Vicente Asier Minondo; Vicente Francisco Requena
  3. Global payment disruptions and firm-level exports By Haas, Ralph$cde; Kirschenmann, Karolin; Schultz, Alison
  4. Retailer-driven value chains in the agri-food sector: An analysis of French firms By Kossi Messanh Agbekponou; Angela Cheptea; Karine Latouche
  5. Trade intermediation by producers By Aksel Erbahar; Vincent Rebeyrol
  6. Multi-mode Trade Policy Retaliation By Robert M. Feinberg; Kjersti Nes; Kara Reynolds; Aleks Schaefer
  7. Role of Global Value Chains and Exchange Rate: An Empirical Examination in case of Pakistan By Mahmood, Asif; Zahoor, Muhammad Awais
  8. World, European and French trade in oilseeds By Vincent Chatellier
  9. Dissimilar FTA Strategies of Japan and the U.S.: An analysis of the product-specific rules of origin By ANDO Mitsuyo; URATA Shujiro; YAMANOUCHI Kenta
  10. Armenia and China’s Belt and Road Initiative: Lost Opportunities and Future Prospects 2.0 By Sahakyan, Mher
  11. Globalization and market power By Impullitti, Giammario; Kazmi, Syed
  12. Quantifying the impact of Russia–Ukraine crisis on food security and trade pattern: evidence from a structural general equilibrium trade model By Feng, Fan; Jia, Ningyuan; Lin, Faqin
  13. Quantifying Consumer Taste in Trade: Evidence from the Food Industry By Bee Yan Aw; Yi Lee; Hylke Vandenbussche
  14. Technology Gaps and Economic Effects of Minimum Quality Standards By Ryu, Haneol
  15. Technology transfer in global value chains By Sampson, Thomas
  16. Trade persistence and trader identity - evidence from the demise of the Hanseatic League By Marczinek, Max; Maurer, Stephan; Rauch, Ferdinand
  17. Foreign ownership and robot adoption By Leone, Fabrizio
  18. Import Quality in Former Centrally Planned EU Countries By Vincenzo Merella; Josef Tauser
  19. The costs and benefits of rules of origin in modern free trade agreements By Ornelas, Emanuel; Turner, John L.
  20. National Concentration of High-tech Products: The Second Great Divergence? By JU, Jiandong; LU, Bing; YU, Xinding
  21. An appraisal of alternative Ricardian trade models By Ariel Dvoskin; Gabriel Brondino
  22. Structural transformation in growing open economies: Australia’s experience By Kym Anderson
  23. Managerial input and firm performance. Evidence from a policy experiment By Manaresi, Francesco; Palma, Alessandro; Salvatici, Luca; Scrutinio, Vincenzo
  24. The Impact of the Russia-Ukraine War on Korean Defense Exports By Sim, Soonhyung
  25. Managing export complexity: the role of service outsourcing By Berlingieri, Giuseppe; Pisch, Frank
  26. Climate Policy Options: A Comparison of Economic Performance By Gregor Schwerhoff; Jean Chateau; Ms. Florence Jaumotte
  27. The Chinese Automobile Industry is Increasing its Leverage in the Global Market By Kang, Bada
  28. Industrial policy and global public goods provision: rethinking the environmental trade agreement By Andres, Pia-Katharina
  29. Rethinking trade rules to achieve a more climate resilient agriculture By Glauber, Joseph
  30. International mixed triopoly, privatization and subsidization By Ohnishi, Kazuhiro
  31. Mergers, Foreign Competition, and Jobs: Evidence from the U.S. Appliance Industry By Felix Montag
  32. Information Frictions, Investment Promotion, and Multinational Production: Firm-Level Evidence By Jerónimo Carballo; Ignacio Marra De Artinano; Christian Volpe Martincus
  33. Trade policies to promote the circular economy: A case study of lithium-ion batteries By Evdokia Moïsé; Stela Rubínová
  34. Like an Ink Blot on Paper: Testing the Diffusion Hypothesis of Mass Migration, Italy 1876-1920 By Yannay Spitzer; Ariell Zimran
  35. Financial Openness and Inflation: Recent Evidence By Alfred V Guender; Hamish McHugh-Smith
  36. Market size, markups and international price dispersion in the cement industry By Leone, Fabrizio; Macchiavello, Rocco; Reed, Tristan
  37. The world uncertainty index By Ahir, Hites; Furceri, Davide; Bloom, Nicholas
  38. Climate change increases resource-constrained international immobility By Hélène Benveniste; Michael Oppenheimer; Marc Fleurbaey
  39. Global Evidence on Profit Shifting Within Firms and Across Time By Fotis Delis; Manthos D. Delis; Luc Laeven; Steven Ongena
  40. Does highspeed internet boost exporting? By Lynda Sanderson; Garrick Wright-McNaughton; Naomitsu Yashiro
  41. ASEAN's Portfolio Investment in a Gravity Model By Tomoo Kikuchi; Satoshi Tobe
  42. What if? The Economic Effects for Germany of a Stop of Energy Imports from Russia By Rüdiger Bachmann; David Baqaee; Christian Bayer; Moritz Kuhn; Andreas Löschel; Benjamin Moll; Andreas Peichl; Karen Pittel; Moritz Schularick
  43. Epidemics and rapacity of multinational companies By Sonno, Tommaso; Zufacchi, Davide
  44. Benefits and costs of the ETS in the EU, a lesson learned for the CBAM design By Böning, Justus; Di Nino, Virginia; Folger, Till

  1. By: Mondal, Supriyo
    Abstract: This paper attempts to explore the theoretical relations between existing trade literature and converge through it to recent trade evidence i.e. fragmentation of production processes into tasks and thus trade in tasks rather than a final marketable produce. Through its fallacies, we also try to address the problem of growth and development by the channels of international linkages. This paper does not suggest reverse globalisation, but believes in 'internal development' to gain the most out of the global economy. A special emphasis has been laid on India.
    Keywords: Global Value Chain; Trade in intermediate commodities; Development; Regional Mobility of Factors; Multinational Corporations
    JEL: F10 F20 F23 F6 F63
    Date: 2023–01–01
  2. By: Juan de Lucio (Universidad de Alcalá. Pza. San Diego, s/n, 28801, Alcalá de Henares (Spain).); Silviano Raúl Mínguez (Cámara de Comercio de España and Universidad Antonio de Nebrija. Calle de Santa Cruz de Marcenado, 27, 28015, Madrid (Spain).); Vicente Asier Minondo (Deusto Business School, University of Deusto, Camino de Mundaiz 50, 20012 Donostia - San Sebastián (Spain).); Vicente Francisco Requena (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: Using firm-level export and import transactions and by applying an event-study methodology, we quantify the impact of the UK's withdrawal from the EU's single market and customs union on Spain-UK trade flows. We find that Spanish exports and imports to the UK decreased by 23% and 27%, respectively, relative to the period before the Brexit referendum. Spanish exporters and importers entry into the UK declined and the probability of ending a trade relationship with the UK increased. Products affected by sanitary and phytosanitary measures, and more stringent rules of origin experienced a stronger decline in trade flows. Large firms faced a more severe decrease in exports than small ones after disintegration.
    Keywords: Brexit, trade costs, trade policy uncertainty, Spanish rms, rules of origin, European Union.
    JEL: F10 F14
    Date: 2023–01
  3. By: Haas, Ralph$cde; Kirschenmann, Karolin; Schultz, Alison
    Abstract: We exploit proprietary information on severed correspondent banking relationships - due to the stricter enforcement of financial crime regulation - to assess how payment disruptions impede cross-border trade. Using firm-level export data from emerging Europe, we show that when local respondent banks lose access to correspondent banking services, their corporate borrowers start to export less. This trade decline occurs on both the extensive and intensive margins and firms do not substitute foregone exports with higher domestic sales. As a result, total firm revenues and employment shrink. These findings highlight an often overlooked function of global banks: providing the payment infrastructure that enables firms in less-developed countries to export to richer parts of the world.
    Keywords: Correspondent banking, payment infrastructure, global banks, international trade, anti-money laundering
    JEL: F14 F15 F36 G21 G28
    Date: 2022
  4. By: Kossi Messanh Agbekponou; Angela Cheptea; Karine Latouche
    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 between 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 endogeneity and the use of alternative estimation techniques.
    Keywords: global value chains, retailers, private standards
    JEL: F14 F23
    Date: 2022
  5. By: Aksel Erbahar (Erasmus School of Economics - Erasmus University Rotterdam); Vincent Rebeyrol (TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: This paper shows that manufacturing exporters export goods that they have not produced and thus also act as trade intermediaries. The geographical dimension of the data reveals that almost half of these exports of "sourced" products are purely intermediated: to many destinations, firms export sourced products only. We find that this type of intermediation is ubiquitous across firms, products, and destinations, and is robust to a battery of alternative definitions. These findings show that trade intermediation by producers (TIP) is not solely driven by carry-along trade, where produced and sourced products are bundled when exported. Our decomposition of TIP highlights that trade intermediation should be identified at the firm-product-destination level. The prevalence of pure intermediation for all manufacturing exporters, including the largest ones, suggests that intermediation plays an important role in firms' participation and success in international markets.
    Keywords: trade intermediation, intermediaries, carry-along trade, multi-product firms
    Date: 2023
  6. By: Robert M. Feinberg; Kjersti Nes; Kara Reynolds; Aleks Schaefer
    Abstract: The World Trade Organization’s dispute settlement body (DSB) was initially seen as promoting the stability of the global trading system, limiting the unilateral retaliation widespread throughout the 1980s. In this paper, we explore the degree to which countries may be increasingly engaging in unilateral action in response to trade policy disputes as confidence in the WTO DSB falls, with a focus on antidumping, sanitary and phytosanitary measures (SPS), and technical barriers to trade (TBT). Previous studies have found evidence that countries may choose to retaliate against countries for certain trade actions, but what has not been empirically examined is the use of multi-modal retaliation in trade policy. Using an exporter-importer-product panel of antidumping, SPS and TBT actions between 1995 and 2019, we find that the likelihood of a country initiating both an SPS and an AD action significantly increases when they have an ongoing SPS concern against that country, and countries are also more likely to file AD actions against those countries that have filed an AD petition against them during the same year. Moreover, the use of retaliation through both SPS and TBT actions seems to have increased since 2016, but primarily by emerging markets against high-income partners.
    Keywords: Retaliation, WTO Dispute Settlement, SPS Standards, TBT Standards, Antidumping
    JEL: F14
    Date: 2023
  7. By: Mahmood, Asif; Zahoor, Muhammad Awais
    Abstract: Pakistan’s economy has a history of facing continuous external sector shocks that often resulted in large exchange rate depreciations. Whether these depreciations have supported growth in exports from Pakistan or do more harm than providing any benefit to the economy is always a matter of domestic debate with inconclusive results. One major apprehension sighted in this regard is the role of intermediate imported goods that become expensive after depreciations and thus offset any competitive gains expected to be achieved from the exchange rate adjustment. To empirically investigate this argument, we evaluate that whether and how the Global Value Chains (GVCs) participation, i.e. the export and import of intermediate goods, affects the REER elasticity for exports in Pakistan using input-output model techniques. We find that, like elsewhere, REER elasticity of exports has declined in Pakistan overtime. However, only around 16 percent of this decline in REER elasticity is explained by the role of GVCs participation. One major reason for this lower impact could be coming from the fact that, unlike other emerging economies and in contrast to general perception, role of backward participation (i.e. use of imported inputs to produce exports) is one of the lowest in Pakistan. While the results still signify the role of PKR exchange rate in external adjustment, the low backward participation is not helping the exports to become competitive overtime.
    Keywords: Real Exchange Rate, Export Growth, Global Value Chains
    JEL: F14 F31 F41
    Date: 2021–10–10
  8. By: Vincent Chatellier (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: This paper focuses on the evolution of world, European and French oilseed trade over the last twenty years (since 2000). The statistical information used comes from three complementary databases, namely BACI for international trade, Comext for European Union (EU-27) trade and French Customs for French trade. World trade in oilseeds amount to 161 billion euros in 2020 (excluding intra-EU trade), or nearly 15% of international trade in agri-food products. These are dominated by soya (51% of the total in value), in its various forms (soya beans, soya meal, soya oil), ahead of palm oil (17%), sunflower (8%) and rapeseed (8%). In 2020, the top three oilseed exporters are Brazil (19% of world exports in value), the United States (18%) and Indonesia (11%). While the first two countries export exclusively soya, the third is specialized in palm oil. China has become the world's largest importer of oilseeds (28% of the total in 2020), ahead of the EU-27 (15%), whose deficit for these products (-21.3 billion euros in 2021) is sometimes linked to its large surplus in animal production (47.5 billion euros). France has a deficit in oilseeds (-1.83 billion euros in 2021), mainly due to its purchases of soya meal from the American continent; the latter, which is the subject of controversy because of the deforestation induced in the Amazon, has however decreased by 31% in volume between 2000 and 2021.
    Abstract: Cette communication présente l'évolution, sur une vingtaine d'années (depuis 2000), des échanges mondiaux, européens et français d'oléagineux. Les informations statistiques utilisées sont issues de trois bases de données complémentaires, à savoir BACI pour les échanges internationaux, Comext pour ceux de l'Union européenne (UE-27) et les douanes françaises pour ceux de la France. Les échanges mondiaux d'oléagineux représentent un montant de 161 milliards d'euros en 2020 (hors commerce intra-UE), soit près de 15% du commerce international des produits agroalimentaires. Ceuxci sont dominés par le soja (51% du total en valeur), sous ses différentes formes (graines, tourteaux et huile), devant l'huile de palme (17%), le tournesol (8%) et le colza (8%). En 2020, les trois premiers exportateurs d'oléagineux sont le Brésil (19% des exportations mondiales en valeur), les Etats-Unis (18%) et l'Indonésie (11%). Si les deux premiers pays exportent exclusivement du soja, le troisième est spécialisé en huile de palme. La Chine est devenue le premier importateur mondial d'oléagineux (28% du total en 2020) devant l'UE-27 (15%), dont le déficit pour ces produits (-21, 3 milliards d'euros en 2021) est parfois mis en relation avec son fort excédent en productions animales (47, 5 milliards d'euros). La France est déficitaire en oléagineux (-1, 83 milliard d'euros en 2021), en raison surtout de ses achats de tourteaux de soja sur le continent américain ; ces derniers, qui font l'objet de controverses en raison de la déforestation induite en Amazonie, ont cependant baissé de 31% en volume entre 2000 et 2021.
    Keywords: Oilseeds, Soybeans, Vegetable oils, International trade, EU trade, Oléagineux, Soja, Huiles végétales, Commerce international, Echanges de l’UE
    Date: 2022–12–15
  9. By: ANDO Mitsuyo; URATA Shujiro; YAMANOUCHI Kenta
    Abstract: This paper investigates the trade restrictiveness of product-specific rules of origin (PSRs) in the comprehensive sets of free trade agreements (FTAs) for Japan and the U.S, focusing on their similarities and dissimilarities. The most distinctive dissimilarities are the major PSR types and the variation in PSR types among FTAs. Japan’s FTAs use the selective type (“change in tariff classification (CTC) or regional value content (RVC)†) most intensively. In contrast, a few U.S. FTAs use RVC and others use CTC most intensively, and the distribution of simplified PSR types appears to be almost the same among FTAs in each group. The detailed PSR types, however, are likely to be more heterogeneous and complicated in U.S. FTAs than those in Japan’s FTAs. Such dissimilar features are more salient in machinery sectors with dense global value chains (GVCs)/international production networks (IPNs). The quantitative estimates suggest that the selective types utilized by Japan for most machinery products are much less trade-restrictive, while certain complicated types adopted by the U.S. for many machinery products are substantially trade-restrictive. Our detailed investigation revealed the two countries’ contrasting strategies, namely, Japan appears to utilize FTAs with less restrictive PSRs to enhance GVCs/IPNs, while the U.S. tends to make PSRs more restrictive and complicated in detail as a sort of disguised protection tool.
    Date: 2023–01
  10. By: Sahakyan, Mher
    Abstract: Yerevan needs to create concrete and real road map for developing its relations with Beijing. China is a young, eastern superpower of the World, which provides tremendous investments. It is already in the neighborhood of Armenia, but Armenian diplomacy still was not able to bring any Chinese serous investment to Armenia. Armenia is also a member of EAEU, which provides an opportunity to Yerevan to implement its policy towards Beijing in multilateral level as well, using the fact that Russia and China decided in 2015 to conjunct EAEU and China’s BRI and that the Agreement on Trade and Economic Cooperation between the Eurasian Economic Union and the People’s Republic of China was signed on May 17, 2018 in Astana. According to this document, the Parties agreed to develop cooperation in agriculture, energy, transport, industrial cooperation, information and communication infrastructure, technology and innovation, finance, and environment. Thus, Armenia needs to investigate the opportunities that this agreement provides to boost the Sino-Armenian relations bilaterally as well as multilaterally. Statistics provided by China’s General Administration of Customs shows that the volume of trade between the two economies totaled US $994 million in 2020, of which US $222 million was Armenia’s export to China and US $772 was its import from that country. Therefore, Armenia has a negative balance with its bilateral trade with China. The other worrying moment in this trade relations is also that, as the Ministry of Foreign Affairs of Armenia, China’s imports from Armenia are mostly minerals, while China exports clothes, shoes, machinery, chemicals, equipment, construction materials and food to Armenia. To conclude, Yerevan needs to find ways and negotiate with China so that the latter increases purchases of different goods already produced in Armenia, not only minerals.
    Date: 2021–11–10
  11. By: Impullitti, Giammario; Kazmi, Syed
    Abstract: Economic theory suggests that the markup is a key measure of market power and that its relationship with trade is rich and complex. Trade liberalisation can reduce markups via a decline in the residual domestic demand but also increase it via several channels. Trade-induced increases in competition leads to more concentrated markets via entry and exit, putting upward pressure on markups. Market shares reallocation toward larger, more powerful firms, increase the aggregate markup. We use a large episode of trade liberalisation in Spain to test this rich set of transmission mechanisms linking trade and markups. The overall effect of reductions in Spanish import tariffs on firm-level and aggregate markups is pro-competitive but we find evidence of offsetting effects via the other channels. In particular, we show that firms with high intangible investment experience a weaker reduction in markups. Sup-porting the theoretical insight that the feedback effect via concentration is stronger with higher barriers to entry. Increases in markups are also produced by reallocations effects but the results are weaker, suggesting that the link between trade and markups is mostly driven by changes at the intensive margin.
    Keywords: internationl trade; markups; oligopoly
    JEL: F12 F13 F14
    Date: 2022–08–26
  12. By: Feng, Fan; Jia, Ningyuan; Lin, Faqin
    Abstract: Purpose: Considering the importance of Russia and Ukraine in agriculture, the authors quantify the potential impact of the Russia–Ukraine conflict on food output, trade, prices and food security for the world. Design/methodology/approach: The authors mainly use the quantitative and structural multi-country and multi-sector general equilibrium trade model to analyze the potential impacts of the conflict on the global food trade pattern and security. Findings: First, the authors found that the conflict would lead to soaring agricultural prices, decreasing trade volume and severe food insecurity especially for countries that rely heavily on grain imports from Ukraine and Russia, such as Egypt and Turkey. Second, major production countries such as the United States and Canada may even benefit from the conflict. Third, restrictions on upstream energy and fertilizer will amplify the negative effects of food insecurity. Originality/value: This study analyzed the effect of Russia–Ukraine conflict on global food security based on sector linkages and the quantitative general equilibrium trade framework. With a clearer demonstration of the influence about the inherent mechanism based on fewer parameters compared with traditional Global Trade Analysis Project (GTAP) models, the authors showed integrated impacts of the conflict on food output, trade, prices and welfare across sectors and countries.
    Keywords: agriculture commodity price; agriculture trade; food security; Russia–Ukraine conflict; welfare; 72261147471; 72073128 and 72061147002
    JEL: J1 L81
    Date: 2023–01–05
  13. By: Bee Yan Aw; Yi Lee; Hylke Vandenbussche
    Abstract: This paper develops an empirical model of consumer taste in twenty-nine Belgium food industries for the period from 1998-2005 to generate a “taste distance” measure of over 1, 800 firm-product exports to 53 country destinations. We estimate consumer taste using a control function approach and perform a decomposition of export revenues of firm-products to establish the importance of representative consumer taste relative to quality and marginal cost in export success. We find substantial taste heterogeneity in food exports across destination countries. Overall, in the large majority of food exports, consumer taste is an important and separate demand determinant to explain export revenues. Depending on the product, taste for a product explains between 4-30% of export revenues. Thus, any taste shock due to events such as pandemics or climate change, may induce substantial changes in export profitability of firms.
    Keywords: Consumer taste, quality, productivity, exports, firm-product, food
    JEL: F12 F14
    Date: 2023
  14. By: Ryu, Haneol (Korea Institute for Industrial Economics and Trade)
    Abstract: Technical barriers to trade (TBTs) refer to regulations or systems that build unnecessary obstacles to international trade in terms of technical requirements for goods to be traded and comprise the largest proportion of NTMs in terms WTO notifications. The TBTs erected by Korea’s trading partners increase the export costs of Korean firms, and thereby function much as classical trade barriers. Since the Korean economy depends highly on trade, there is a need for the Korean government to understand TBTs and to find a way to cope with its trading partners’ TBTs. The technology gap is a critical issue in vertical-norm TBTs. The vertical-norm TBTs erected by technologically advanced countries make it difficult for less-advanced countries to penetrate advanced countries’ markets, since many of them do not have the technology to satisfy TBT requirements, causing international disputes. In addition, vertical-norm TBTs are established predominately in developed countries, such as the U.S. and the EU, for purposes of safety, health, environmental protection, and so on. Our analysis thus focuses on vertical-norm TBTs set by developed countries. There are two kinds of vertical-norm TBTs: barriers that limit the maximum values, such as emission standards, and others that establish minimum values, such as fuel economy standards. We concentrate on Minimum Quality Standards (MQS). In view of the above-mentioned characteristics of TBTs, we employ a two-country, vertically-differentiated duopoly model in which a technologically advanced firm competes against a less-advanced firm in quality and price in the domestic market. The government of the technologically advanced country chooses its MQS policy endogenously. Under this structure, we examine the economic effects of MQS and drive the optimal MQS policy of the technologically advanced country considering technological differences. To gain further insight, using the obtained optimal MQS policy of the technologically advanced country, we examine what strategies the government of the less advanced country might employ in response.
    Keywords: technical barriers to trade; TBT; FTA
    JEL: F13 F14 F18 L52
    Date: 2023–01–08
  15. By: Sampson, Thomas
    Abstract: Firm-to-firm relationships in global value chains create opportunities for North-South technology diffusion. This paper studies technology transfer in value chains when contracts are incomplete and in-put production technologies are imperfectly excludable. The paper introduces a new taxonomy of value chains based on whether or not the headquarters firm benefits from imitation of its supplier's technology. In inclusive value chains, where imitation is beneficial, the headquarters firm promotes technology diffusion. By contrast, in exclusive value chains headquarters seeks to limit supplier imitation. The paper analyzes how this distinction affects the returns to offshoring, the welfare effects of technical change and the social efficiency of knowledge sharing. Weaker intellectual property rights over input production technologies raise welfare when value chains are inclusive, but have the opposite effect under exclusive value chains.
    Keywords: technology transfer; global value chains; incomplete contracts; intellectual property rights; imitation
    JEL: D23 F10 F23 O34
    Date: 2022–02–01
  16. By: Marczinek, Max; Maurer, Stephan; Rauch, Ferdinand
    Abstract: How do trade networks persist following disruptions of political networks? We study different types of persistence following the decline of the Hanseatic League using a panel of 21, 590 city-level trade flows over 190 years, covering 1, 425 cities. We use the Sound Toll data, a dataset collected by the Danish crown until 1857 that registered every ship entering or leaving the Baltic Sea, forming one of the most granular and extensive trade data sets. We measure trade flows by counting the number of ships sailing on a particular route in a given year and estimate gravity equations using PPML and an appropriate set of fixed effects. Bilateral gravity estimation results show that trade among former Hansa cities only shows persistence after its dissolution in 1669 for about 30 years, but this persistence is not robust across different regression specifications. However, when we incorporate the flag under which a ship is sailing and consider trilateral trade (where an observation is a combination of origin, destination, and flag), we find that trade persistently exceeds the gravity benchmark: Hansa cities continued to trade more with each other, but only on ships that were owned in another former Hansa city and thus sailed under a Hansa flag. Similar effects are found for trade among former Hansa cities and their trading posts abroad, yet again only conditional on the ship sailing under a former Hanseatic flag. Trade flows among the same pair of origin and destination cities, but under a different flag, do not show this persistence. Our main result shows that the identity of traders persists longer and more strongly than other forms of trading relationships we can measure. Apart from these new quantitative and qualitative insights on the persistence of trade flows, our paper is also of historic interest, as it provides new and detailed information on the speed of decline of trade amongst members of the Hanseatic League.
    Keywords: Hanseatic League; Hansa; gravity
    JEL: F14 N73 N93
    Date: 2022–02–02
  17. By: Leone, Fabrizio
    Abstract: This paper shows that multinational enterprises (MNEs) spur the adoption of industrial robots. First, I document a positive and robust correlation between multinational production and robot adoption using a new cross-country industry-level panel. Second, using detailed data about Spanish manufacturing, I combine a difference-in-differences approach with a propensity score reweighing estimator and provide evidence that firms switching from domestic to foreign ownership become about 10% more likely to employ robots. The ability of expanding into foreign markets via the parental network is the key driver of the adoption choice. An empirical model of firm investment reveals that MNEs generate significant industry-level productivity gains but decreases the labor share by boosting robot adoption. However, the first effect is one order of magnitude larger than the second. These results provide new evidence about the efficiency versus equity trade-off that policymakers face when attracting MNEs.
    Keywords: foreign ownership; industrial robots; total factor productivity; factor-biased productivity; labor share
    JEL: F23 O33
    Date: 2022–06–08
  18. By: Vincenzo Merella; Josef Tauser
    Abstract: In the last two decades, initiatives promoted by the media and national public o¢ cials of several European former centrally planned (FCP) countries have induced the EU to produce inquiries, re- ports, and directives regarding products’price and quality di¤erentials between FCP and non-FCP markets. We investigate this issue empirically by examining custom data. We …nd that such di¤eren- tials exist and can be rationalized by standard international trade theories in the presence of quality di¤erentiation. Analogous evidence obtains by inspecting intra-EU trade and when the analysis is extended to exporters worldwide, showing that the matter is global and does not pertain solely to EU producers. Therefore, our …ndings suggest that the FCP countries’concerns may be unwarranted.
    Keywords: EU, Former Centrally Planned Countries, Import Composition, International Trade, Market Segmentation, Pricing-to-market.
    Date: 2022
  19. By: Ornelas, Emanuel; Turner, John L.
    Abstract: We study the welfare impact of rules of origin in free trade agreements where final-good producers source customized inputs from suppliers within the trading bloc. We employ a property-rights framework that features hold-up problems in suppliers' decisions to invest, and where underinvestment is more severe for higher productivity firms. A rule of origin offers preferred market access for final goods if a sufficiently high fraction of inputs used in the production process is sourced within the trading bloc. Such a rule alters behavior for only a subset of suppliers, as some (very-high-productivity) suppliers comply with the rule in an unconstrained way and some (very-low-productivity) suppliers choose not to comply. For those suppliers it does affect, the rule increases investment, but it also induces excessive sourcing (for given investment) within the trading bloc. From a social standpoint, it is best to have a rule that affects high-productivity suppliers. The reason is that the marginal net welfare gain from tightening the rule increases with productivity. Therefore, when industry productivity is high, a strict rule of origin is socially desirable; in contrast, when industry productivity is low, no rule of origin is likely to help. Regardless of the case, a sufficiently strict rule can (weakly) ensure welfare gains.
    Keywords: hold-up problem; sourcing; incomplete contracts; regionalism
    JEL: F13 F15 L22 D23
    Date: 2022–08–31
  20. By: JU, Jiandong; LU, Bing; YU, Xinding
    Abstract: Based on the product-country level trade data from 2004 to 2017, as well as the High-Tech Products Catalog from the US Census Bureau, this paper examines empirically the current phenomenon of “national concentration” in high-tech exports. The results show that the phenomenon of “national concentration” not only exists but also tends to be self-reinforcing. Compared with other products, the exports of high-tech products tend to be concentrated in certain countries, and this concentration trends were further strengthened after the global financial crisis of 2008–2009. The national concentration of R&D activities may be one of the important causes of the national concentration of high-tech products. This pattern remains robust when we further use the value-added export data and different definitions of high-tech products. We argue that the phenomenon of “national concentration” of high-tech exports may herald the arrival of the “Second Great Divergence” – the divergence between innovative and manufacturing activities – in the global economy.
    Keywords: high-tech products, national concentration, R&D, second great divergence
    JEL: F14
    Date: 2023–01–01
  21. By: Ariel Dvoskin (Central Bank of Argentina); Gabriel Brondino (Università Cattolica del Sacro Cuore, Piacenza)
    Abstract: A prevalent feature of the global economy is the relevance of trade in intermediates due to production fragmentation. This phenomenon has led to the revival and development of trade models that include inter-industry relations. A wide variety of Ricardian trade models cope with this feature. In this article, we develop a Sraffa-Leontief framework to compare and appraise these models. The models are distinguished by their underlying theory of distribution and the assumptions about the degree of international capital mobility. We compare the predicted effects on employment and the distribution of national income. Moreover, we assess if the model assures the existence of a complete trade pattern, i.e. if it can assure that all countries engage in trade (like the principle of comparative advantage predicts). It follows from our appraisal that it is not warranted that all countries can engage in international trade, even if they want to. In other words, if allowed to work, the “strong balancing forces†may not make a country internationally competitive when there is production fragmentation.
    Keywords: Ricardian trade models, comparative advantages, desertification
    JEL: B27 B51 F11
    Date: 2022–11
  22. By: Kym Anderson
    Abstract: Structural transformations in growing economies focus on sectoral shares of national output (GDP) and employment but typically give little attention to exports. This paper compares and contrasts evidence of trends in sectoral shares of GDP, employment and exports in Australia over the past two centuries with those of other advanced economies. Australia’s experience is unusual in several respects, explanations for which suggest lessons for less-advanced resource rich economies. The paper concludes by questioning how societies’ evolving environmental objectives, and recent influences on globalization, might alter in coming decades the structure of Australia’s economy and its policies and institutions.
    Keywords: agricultural and industrial development, trade costs, manufacturing protection, mining booms
    JEL: F13 F63 O13 Q17
    Date: 2022
  23. By: Manaresi, Francesco; Palma, Alessandro; Salvatici, Luca; Scrutinio, Vincenzo
    Abstract: We study the effects of a subsidy program designed to boost small and medium enterprises' export capabilities through a Temporary Export Manager (TEM), hired for at least 6 months to provide consulting on how to reach foreign markets. Firms applied online for the subsidy and vouchers to hire TEMs were allocated on a first-come, first-served basis. We use a difference-in-differences design to compare the performances of firms that nearly got the subsidy with those that barely did not. Eligible firms experienced a large increase in revenues, return on equity, profits and value added per employee, accompanied by a significant growth in export in extra-EU markets four years after receiving the subsidy. The gains were larger for the least productive and smaller firms and effects were heterogeneous across TEM providers. TEMs were also effective in stimulating 'good' labor demand: besides intensifying exports, firms increased their workforce by nearly 13%, mainly in full-time and permanent employees. Results of a survey conducted on TEM providers confirm our econometric results and revealed that the benefits of voucher extended beyond the initial subsidized service.
    Keywords: SMEs; export subsidy; labor demand; natural experiment; click-day
    JEL: L20 O40 F14 H20 F20
    Date: 2022–10–05
  24. By: Sim, Soonhyung (Korea Institute for Industrial Economics and Trade)
    Abstract: On February 24, Russia launched an all-out invasion of Ukraine. Contrary to initial expectations that the war would end early, strong resistance by the Ukrainian army and the incompetence of the Russian army overlapped, and the war is showing signs of prolongation. A long war seems inevitable as Ukraine’s resistance, backed by Western military support, intensifies and the armistice agreement faces difficulties. This paper explores the threats faced the Korean defense industry as well as opportunities for export growth amid a rapidly evolving global security order. A review of relevant defense data finds that, in order for Korean defense exports to take a leap forward, it is necessary to take full advantage of security gaps in Europe that the war in Ukraine has exposed. Especially, it is crucial to establish an export strategy that takes advantage of Europe’s common security and defense policy.
    Keywords: defense; defense industry; defense exports; Russia-Ukraine war; weapons exports; weapons manufacturing; arms exports; arms manufacturing; EU; Russia; Ukraine; United States; Korea
    JEL: F13 L64
    Date: 2023–01–11
  25. By: Berlingieri, Giuseppe; Pisch, Frank
    Abstract: Exporting involves sunk and fixed costs in the form of service inputs, and whether such services are 'made' in-house or 'bought' from external agencies is a key organizational margin: it is not a core-competence of manufacturing companies and has far-reaching implications for the costs of exporting. We study such outsourcing decisions both conceptually and empirically. For guidance, we propose a theoretical framework in which firms trade off managerial strain (internal provision) and ex-post adaptation costs (external provision). Using confidential firm-level data from France and a novel instrumental variables strategy, we document the precise service inputs needed to access foreign markets and provide empirical evidence that these are typically outsourced. In line with the model, this pattern is strong for services with high costs of adaptation, and when firms have little managerial capability available. Finally, we discuss the implications of our findings for servitization and inequality.
    Keywords: adaptation; complexity; core competencies; firm boundaries; firm capabilities; sunk and fixed export costs; professional and business services; structural transformation
    JEL: D23 F10 L22 L23 L24 L84
    Date: 2022–04–06
  26. By: Gregor Schwerhoff; Jean Chateau; Ms. Florence Jaumotte
    Abstract: We use a global computable general equilibrium model to compare the economic performance of alternative climate policies along multiple dimensions, including macroeconomic outcomes, energy prices, and trade competitiveness. Carbon pricing which keeps the aggregate cost lower and preserves better the overall competitiveness than across-the-board regulation is the first-best policy, especially in energy intensive and trade exposed industries. Regulations and feebates are good alternatives in the power sector, where technological substitution is possible. Feed-in subsidies, if used alone, are not cost effective.
    Keywords: Climate policy; policy coordination; carbon leakage; carbon tax; regulation.; climate policy option; Policy stringency; EITE sectors scenario; ambition level; Policy instrument; Greenhouse gas emissions; Non-renewable resources; Global
    Date: 2022–12–09
  27. By: Kang, Bada (Korea Institute for Industrial Economics and Trade)
    Abstract: This report examines the place of China’s automobile industry in the global market and analyzes the recent, rapid increase in Chinese automobile exports. In addition, the implications carried by the rise of Chinese auto exports for the Korean automobile industry are identified and analyzed.
    Keywords: China; manufacturing; auto industry; automotive industry; vehicle manufacturing; Korea; exports; automotive exports; vehicle exports; cars; trucks; autos
    JEL: F10 F23 L11 L16 L22 L25 L52 L60 L62
    Date: 2022–12–01
  28. By: Andres, Pia-Katharina
    Abstract: Countries around the world increase the downstream cost of low carbon technologies using anti-dumping duties and local content requirements, while simultaneously blaming inadequate efforts to address climate change on the economic cost of doing so. This paper presents a 2-country, 2-period strategic model of trade in a clean technology in the presence of differential country-level production costs and imperfect competition. If the difference in production cost is large enough and learning-by-doing allows the laggard country to catch up, then in the absence of production subsidies remaining in autarky during Stage 1 of the game can be welfare-improving for both countries. This result is strengthened when both countries use consumer subsidies. When countries choose their policy mixes, the Nash Equilibrium involves both trade and production subsidies on the part of the laggard country. The analysis suggests that an environmental trade agreement is most likely to be beneficial if production subsidies for clean technology are explicitly permitted.
    JEL: R14 J01 J1
    Date: 2023–01–09
  29. By: Glauber, Joseph
    Abstract: Recent attention has focused on "repurposing" and redirecting agricultural support programs towards achieving environmental, climate and nutritional outcomes. Under these proposals, typically equivalent levels of subsidies and other forms of government support would be focused on the reducing GHG emissions, environmental externalities and other broader public policy objectives such as improving nutrition. But questions arise as to whether new support programs would necessarily be consistent with WTO disciplines. This paper examines various measures aimed at reducing GHG emissions including imposition of carbon standards and taxes, border measures to reduce slippage, and so-called "Climate Smart" domestic support measures and considers how such measures comport with WTO trade rules.
    Keywords: agriculture; climate change; climate change adaptation; greenhouse gas emissions; nutrition; subsidies; WTO; agricultural support programs; carbon border adjustment measures; product standards
    Date: 2022
  30. By: Ohnishi, Kazuhiro
    Abstract: This paper examines privatization in an international mixed triopoly model with a state-owned firm, a domestic firm and a foreign private firm to reassess the welfare effect of production subsidies. The main result of the paper is that if optimal domestic subsidies are used before and after privatization, then privatization improves domestic social welfare. The paper finds that this result is quite different from that of the existing domestic mixed oligopoly model.
    Keywords: International mixed triopoly; Privatization; Subsidy
    JEL: C72 D21 F23 L32
    Date: 2023–01–22
  31. By: Felix Montag (Tuck School at Dartmouth)
    Abstract: Policy choices often entail trade-offs between workers and consumers. I assess how foreign competition changes the consumer welfare and domestic employment effects of a merger. I construct a model accounting for demand responses, endogenous product portfolios, and employment. I apply this model to the acquisition of Maytag by Whirlpool in the household appliance industry. I compare the observed acquisition to one with a foreign buyer. While a Whirlpool acquisition decreased consumer welfare by $250 million, it led to 1, 300 fewer domestic jobs lost. Jobs need to be worth above $220, 000 annually for domestic employment effects to offset consumer harm.
    JEL: F61 L13 L40
    Date: 2023–01–27
  32. By: Jerónimo Carballo; Ignacio Marra De Artinano; Christian Volpe Martincus
    Abstract: While countries make use of a wide range of policies to attract multinational firms, identifying the effect of such policies is difficult. Combining firm-level data on both the location of these firms’ foreign affiliates and detailed service-specific information from Costa Rica’s investment promotion agency (IPA) over time, we find that IPA support significantly increases the probability that a multinational firm establishes its first affiliate in the country. Using existing theory and data, we estimate that the associated welfare gains are between 0.2%-0.4%. We then show that the effect is primarily driven by the resolution of information asymmetries. It is stronger for IPA information services and on multinational firms from countries and in sectors facing more severe information frictions.
    Keywords: Information Frictions, Investment Promotion, Multinational Production
    Date: 2023–01
  33. By: Evdokia Moïsé; Stela Rubínová
    Abstract: Affordable and sustainable lithium-ion batteries are key to the development of electric vehicles markets and to the green energy transition. Circular economy solutions for end-of-life batteries can help address primary inputs disruptions, while reducing environmental costs associated with the mining of these inputs or with battery production. Circular value chains would also help address waste and disposal problems as Li-ion batteries reach end of life. These chains are in their infancy, as complex battery designs, material chemistries and insufficient waste stocks hamper their viability, but the projected growth should support profitability. International trade in Li-ion batteries waste will remain essential in markets where domestic waste streams are insufficient to achieve the scale necessary for economically viable recycling, or where inadequate infrastructure imposes reliance on recycling capacities abroad. Promoting circular value chains for Li-ion batteries would require greater clarity on the status of these batteries as waste, consistency of transport and storage safety regulations, trade facilitation and harmonisation of standards for battery design, and regulatory targets for waste collection and recycling rates, coupled with stewardship and take-back schemes.
    Keywords: Critical raw materials, Electric vehicles, Green transition, Hazardous waste
    JEL: F18 F53 F68 K32 O34 Q38 Q53 Q56
    Date: 2023–01–30
  34. By: Yannay Spitzer; Ariell Zimran
    Abstract: Why were the poorer countries of the European periphery latecomers to the Age of Mass Migration? We test the diffusion hypothesis, which argues that mass emigration was delayed because it was primarily governed by a gradual process of spatial diffusion of migration networks. We propose a model of migration within a spatial network to formalize this hypothesis and to derive its testable predictions. Focusing on post-unification Italy, we construct a comprehensive municipality- and district-level panel of emigration data over four decades, and use it to show that the testable predictions of the diffusion hypothesis are validated by the data. The emerging picture is that Italian mass migration began in a few separate epicenters from which it expanded over time in an orderly pattern of spatial expansion, and that the epidemiological characteristics of this expansion match those underlying our model. These findings strongly support the diffusion hypothesis, and call for a revision of our understanding of one of the most important features of the Age of Mass Migration--the delayed migration puzzle.
    JEL: F22 J61 N33 N34
    Date: 2023–01
  35. By: Alfred V Guender; Hamish McHugh-Smith
    Abstract: In a model comprising a bank and goods-producing firm, this paper advances the hypothesis that financial openness should be inversely related to the rate of inflation. Our empirical analysis reveals a strong and robust inverse link between financial openness and CPI inflation in over 100 countries over the 1997-2016 period, adding weight to the argument that inflation in financially open economies is indeed lower. This result obtains for OECD countries as well as non-OECD countries. Trade openness in contrast bears no systematic relationship to inflation.
    Keywords: Financial Openness, Trade Openness, Inflation, Bank Loans, Deposits, Nominal Price Rigidity
    JEL: E3 E5 F3
    Date: 2023–01
  36. By: Leone, Fabrizio; Macchiavello, Rocco; Reed, Tristan
    Abstract: Prices for several intermediate inputs, including cement, are higher in developing economies - particularly in Africa. Combining data from the International Comparison Program with a global directory of cement plants we estimate an industry equilibrium model to distinguish between drivers of international price dispersion: demand, costs, conduct, and entry. Developing economies feature both higher marginal costs and higher markups. African markets are not characterized by higher barriers to entry and, if anything, feature relatively more competitive conduct. The small size of many national markets, however, limits entry and competition and explains most of the higher markups. Policy implications are discussed.
    Keywords: international price dispersion; market power; market size; markup; cement; Africa
    JEL: E31 L13 L61 O12
    Date: 2022–07–19
  37. By: Ahir, Hites; Furceri, Davide; Bloom, Nicholas
    Abstract: We construct the World Uncertainty Index (WUI) for an unbalanced panel of 143 individual countries on a quarterly basis from 1952. This is the frequency of the word "uncertainty" in the quarterly Economist Intelligence Unit country reports. Globally, the Index spikes around major events like the Gulf War, the Euro debt crisis, the Brexit vote and the COVID pandemic. The level of uncertainty is higher in developing countries but is more synchronized across advanced economies with their tighter trade and financial linkages. In a panel vector autoregressive setting we find that innovations in the WUI foreshadow significant declines in output. This effect is larger and more persistent in countries with lower institutional quality, and in sectors with greater financial constraints.
    JEL: E00
    Date: 2022–04–05
  38. By: Hélène Benveniste (Harvard University [Cambridge]); Michael Oppenheimer (Princeton University); Marc Fleurbaey (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: Migration is a widely used adaptation strategy to climate change impacts. Yet resource constraints caused by such impacts may limit the ability to migrate, thereby leading to immobility. Here we provide a quantitative, global analysis of reduced international mobility due to resource deprivation caused by climate change. We incorporate both migration dynamics and within-region income distributions in an integrated assessment model. We show that climate change induces decreases in emigration of lowest-income levels by over 10% in 2100 for medium development and climate scenarios compared with no climate change and by up to 35% for more pessimistic scenarios including catastrophic damages. This effect would leave resource-constrained populations extremely vulnerable to both subsequent climate change impacts and increased poverty.
    Date: 2022–07
  39. By: Fotis Delis (European Commission, Joint Research Centre); Manthos D. Delis (Audencia Business School); Luc Laeven (European Central Bank (ECB); Centre for Economic Policy Research (CEPR)); Steven Ongena (University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR))
    Abstract: We provide the first global estimates of profit shifting at the subsidiary-year level. Employing nonparametric estimation techniques within a mainstay model of profit shifting, we examine the subsidiary-year responses of earnings to the composite tax indicator faced by all subsidiaries of a multinational firm. Our panel includes 26, 593 subsidiaries across 95 countries for the period 2009 2017. We extensively validate our results against aggregate estimates of previous studies and evidence from specific cases. We find that profit shifting decreased over this period in advanced economies but increased in other parts of the world where taxation policies are less stringent on average, consistent with tax arbitrage strategies. We also examine correlates of profit shifting, identifying that a key determinant is the subsidiaries’ ratio of intangible assets, and this channel is stronger in countries with weaker institutions. Both our new database and correlates open important avenues to analyze the sources and effects of profit shifting.
    Keywords: Profit shifting, multinational enterprises, nonparametric estimation, intangible assets, institutional quality, global sample
    JEL: F23 H25 H26 H32 M41
    Date: 2022–12
  40. By: Lynda Sanderson (Productivity Commission); Garrick Wright-McNaughton (FNZ Group); Naomitsu Yashiro (International Monetary Fund)
    Abstract: This paper examines the links between uptake of high-speed internet and entry into exporting among New Zealand firms. The analysis draws on rich, longitudinal information about firms' use of ICT captured in Stats NZ's Business Operations Survey to both identify firms which shifted to UFB and infer differences across firms in their capability to exploit the faster internet connections. It shows that firms that shifted to fibre broadband in the early years of New Zealand's Ultra-Fast Broadband rollout were subsequently more likely than otherwise similar firms to start exporting, and that the strength of this relationship depends upon both the industry in which firms operate and their pre-existing use of the internet for core business activities. To explore the causality lying behind this relationship, the paper makes use of a policy choice to prioritise schools in the rollout of the new fibre broadband infrastructure as an instrument for early uptake. While the results are consistent with a positive effect of UFB uptake on export entry, the instruments are not strong enough to draw firm conclusions on causality.
    Keywords: high-speed internet, UFB, export propensity, digital capability
    JEL: F14 O33 H54
    Date: 2022–12
  41. By: Tomoo Kikuchi; Satoshi Tobe
    Abstract: We investigate the elasticity of portfolio investment to geographical distance in a gravity model utilizing a bilateral panel of 86 reporting and 241 counterparty countries/territories for 2007-2017. We find that the elasticity is more negative for ASEAN than OECD members. The difference is larger if we exclude Singapore. This indicates that Singapore's behavior is very different from other ASEAN members. While Singapore tends to invest in faraway OECD countries, other ASEAN members tend to invest in nearby countries. Our study also shows the emergence of China as a significant investment destination for ASEAN members.
    Date: 2023–01
  42. By: Rüdiger Bachmann (University of Notre Dame); David Baqaee (University of California, Los Angeles); Christian Bayer (University of Bonn); Moritz Kuhn (University of Bonn); Andreas Löschel (Ruhr University Bochum); Benjamin Moll (London School of Economics); Andreas Peichl (Ifo Institute for Economic Research, University of Munich); Karen Pittel (Ifo Institute for Economic Research, University of Munich); Moritz Schularick (Sciences Po Paris, University of Bonn)
    Abstract: This article discusses the economic effects of a potential cut-off of the German economy from Russian energy imports. We show that the effects are likely to be substantial but manageable. In the short run, a stop of Russian energy imports would lead to a GDP decline in range between 0.5% and 3% (cf. the GDP decline in 2020 during the pandemic was 4.5%).
    Date: 2022–03
  43. By: Sonno, Tommaso; Zufacchi, Davide
    Abstract: Do multinationals engage in rent-seeking behaviour in developing countries during crises? With a difference in discontinuity approach, we use the Ebola epidemic in Liberia as a natural experiment on the sharp increase in deforestation, which produced a dramatic growth in newly planted palm oil trees and a 1428% increase in palm oil exports. We show that the probability of forest fire - the fastest way to clear forests and start new production - increased by 125% in the same period. Both effects are amplified in areas populated by ethnic minorities.
    Keywords: epidemics; multinational enterprises; land grabbing; palm oil
    JEL: C23 F23 O13
    Date: 2022–03–01
  44. By: Böning, Justus; Di Nino, Virginia; Folger, Till
    Abstract: The EU is revising its emissions trading system (ETS) and plans to impose a carbon border adjustment mechanism (CBAM) on imports. We evaluate the efficacy of the ETS retrospectively and its anti-competitive effects. We find that the ETS contributed to cut greenhouse gas (GHG) emissions in the EU by 2-2.5 percentage points per year; pricier emissions and more stringent caps accelerated the EU greening process. However, some carbon leakages occurred as declining emissions in regulated industries within the EU were counterbalanced by an intensification elsewhere. Moreover, it burdened companies in regulated industries. For a comparable rise in the emission intensity of production, gross output of companies located in the EU drops more than output of companies outside the EU. In addition, the choice of purchasing high-emission inputs from within the EU translates into a competitive disadvantage for companies located within the EU. The large drop in F-type output when emissions intensity rises might signal their enhanced ability to relocate the production of high-carbon footprints intermediates to non-regulated regions. Outsourcing helps dodging the EU green regulation and the strategy becomes increasingly appealing as the sectoral coverage of the ETS is extended. A careful joint design of the CBAM and the ETS becomes thus crucial to avoid that applying the CBAM to a restricted list of imports while expanding the ETS coverage puts the EU at greater risk of carbon leakages without concretely reducing global emissions. JEL Classification: Q52, Q58
    Keywords: Carbon leakages, CBAM, ETS, GHG emissions
    Date: 2023–01

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