nep-int New Economics Papers
on International Trade
Issue of 2023‒06‒19
53 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Are preferential agreements beneficial to EU trade? New evidence from the EU-South Korea treaty By Quintieri, Beniamino; Stamato, Giovanni
  2. Economic Disintegration and Multinational Production: Evidence from Brexit By HUANG Hanwei; SENGA Tatsuro; Catherine THOMAS; ZHANG Hongyong
  3. Trade and Infrastructure Integration in Africa By Lionel Fontagné; Mathilde Lebrand; Siobhan Murray; Michele Ruta; Gianluca Santoni
  4. The Empire Project: Trade Policy in Interwar Canada By Markus Lampe; Kevin Hjortshøj O'Rourke; Lorenz Reiter; Yoto V. Yotov
  5. Analyzing the Diversity and Inclusivity of Philippine Exports to the European Union Under the GSP+ By Julia, Brynn Jonsson R.
  6. Trade Disruptions Along the Global Supply Chain By Alejandro G. Graziano; Yuan Tian
  7. Neoclassical Growth in an Interdependent World By Benny Kleinman; Ernest Liu; Stephen J. Redding; Motohiro Yogo
  8. Assessing options for estimating carbon offshoring impacts of UK trade agreements in agriculture By Gobey, Will; O'Reilly, George; Franzoi, Marco; Giacomini, Francesco
  9. Foreign Direct Investment and Labor Market Flexibility in Host and Source Countries By KAMATA Isao
  10. Do digitalization spurs SMEs’ participation in foreign markets? By Dolores Añon Higón; Juan A. Daniel Bonvin
  11. The Effects of FDI Liberalization on Structural Transformation and Demographic Change: Evidence from China By Erten, Bilge; Leight, Jessica; Zhu, Lianming
  12. Input quality and skills are complementary and increase output quality: Causal evidence from Ecuador’s trade liberalization By Maria Bas; Caroline Paunov
  13. The impact of UK food and bioenergy imports on global land use under future socioeconomic scenarios (UK-SSPs) By Arendarczyk, Bart; Alexander, Peter; Brown, Calum; Rounsevell, Mark
  14. Sanctions and services trade: the neglected dimension By Anirudh Shingal
  15. We Are All in the Same Boat: Cross-Border Spillovers of Climate Shocks through International Trade and Supply Chain By Alan Feng; Haishi Li; Yulin Wang
  16. Minimum Global Tax: Winners and Losers in the Race for Mergers and Acquisitions By Amendolagine, Vito; Bruno, Randolph Luca; Cipollina, Maria; De Pascale, Gianluigi
  17. Natural Resource Dependence and Monopolized Imports By Rabah Arezki; Ha Nguyen; Tristan Reed; Ana Fernandes; Federico Merchán
  18. Trade Balances and International Competitiveness in Cyber-physical, Digital Task-intensive, ICT Capital-intensive and Traditional Industries By Alexandra Bykova; Roman Stöllinger
  19. Germany's role as a trader in services: Difficult factfinding and uncertain prospects By Langhammer, Rolf J.
  20. Neighborhoods, Perceived Immigration, and Preferences for Redistribution: Evidence from Barcelona By Gerard Domènech-Arumí
  21. Barbarians at the gate? FDI and target firms’ management quality By Beccari, Gabriele; Pisicoli, Beniamino; Vocalelli, Giorgio
  22. MATS Report: "Trade under War Conditions. Insecurity Decreases Ukrainian Revenues and Market Shares" By Häberli, Christian; Kostetsky, Bogdan
  23. Analysis of Trade Pattern Between the EAEU and South Korea By Podoba, Zoia
  24. On the Pass-Through of Large Devaluations By Carlos Casacuberta; Omar Licandro
  25. Testing an extended knowledge-capital model of foreign direct investment By Kox, Henk L.M.
  26. Le Brésil, soutient-il le développement en Afrique de l'Ouest ? L'exemple du Nigeria, du Ghana et du Sénégal By Kohnert, Dirk
  27. What Determines State Heterogeneity in Response to U.S. Tariff Changes By Ana Maria Santacreu; Michael Sposi; Jing Zhang
  28. “Export Destination and Firm Upgrading: Evidence from Spain” By Akin A. Cilekoglu
  29. ‘Good jobs’, training and skilled immigration By Mountford, Andrew; Wadsworth, Jonathan
  30. Vertical integration and patterns of divergence in European industries: A long-term input-output analysis By Fabio Ascione; Maria Enrica Virgillito
  31. Importing Automation and Wage Inequality through Foreign Acquisitions By Gardberg, Malin; Heyman, Fredrik; Tåg, Joacim
  32. The Aggregate Importance of Intermediate Input Substitutability By Alessandra Peter; Cian Ruane
  33. Inward Foreign Direct Investment, Transactions, and Domestic Firms' Performance: Evidence from firm-to-firm transaction linkage By ITO Tadashi; TANAKA Ayumu
  34. A new measure of aggregate trade restrictions- cyclical drivers and macro effects By Julia Estefania-Flores; Davide Furceri; Swarnali A. Hannan; Jonathan Ostry; Andrew K. Rose
  35. Two-Sided Market Power in Firm-to-Firm Trade By Vanessa I. Alviarez; Michele Fioretti; Ken Kikkawa; Monica Morlacco
  36. Can Evidence-Based Information Shift Preferences Towards Trade Policy? By Laura Alfaro; Maggie Chen; Davin Chor
  37. Bilateral Regional Trade Flows in Italy: an Origin-Destination-Commodity GWR-SAR approach By Alessio Baldassarre; Danilo Carullo; Paolo Di Caro; Elisa Fusco; Pasquale Giacobbe; Carlo Orecchia
  38. Retaliation through Temporary Trade Barriers By Davide Furceri; Mr. Jonathan David Ostry; Mr. Chris Papageorgiou; Pauline Wibaux
  39. Effects of Exchange Rate Volatility on Behaviors of Affliate Firms in a Foreign Oligopoly under the Revision of Supply Chains By Tetsuya Shinkai; Takao Ohkawa; Makoto Okamura; Ryoma Kitamura
  40. Economic globalisation and Africa’s quest for greener and more inclusive growth: The missing link By Isaac K. Ofori; Andreas Freytag; Simplice A. Asongu
  41. Trade-offs between international migration and agricultural commercialization: evidence frrom Kyrgyzstan By Kimsanova, Barchynai; Sanaev, Golib; Herzfeld, Thomas
  42. Intangible resources and cross-border acquisition decisions: The impact of reputation and the moderating effect of experiential knowledge By Olivier Lamotte; Ludivine Chalençon; Ulrike Mayrhofer; Ana Colovic
  43. Modeling Migration Dynamics in Stochastic Labor Supply Forecasting By Hellwagner, Timon; Söhnlein, Doris; Weber, Enzo
  44. Gendered Globalization: The Relationship between Globalization and Gender Gaps in Employment and Occupational Opportunities By Yoav Roll; Moshe Semyonov; Hadas Mandel
  45. Economic globalisation and Africa’s quest for greener and more inclusive growth: The missing link By Isaac K. Ofori; Andreas Freytag; Simplice A. Asongu
  46. Immigration, Household Production, and Native Women's Labor Market Outcomes: A Survey of a Global Phenomenon By Patricia Cortés
  47. The Effect of the Out of Africa Migration on Cultural Diversity By Daniel Crisóstomo Wainstock; Oded Galor; Marc Klemp
  49. A Unifying Theory of Foreign Intervention in Domestic Climate Policy By Moreno-Cruz, Juan; Harding, Anthony
  50. Can Small Economies Act Strategically? The Case of Consumption Pollution and Non-tradable Goods By Michael S. Michael; Panos Hatzipanayotou; Nikos Tsakiris
  51. Regional Productivity Network in the EU By Camilla Mastromarco; Laura Serlenga; Yongcheol Shin
  52. Impacts of Global Climate Policies on Middle Eastern Oil Exporters: A Review of Economic Implications and Mitigation Strategies. By Fakhri Hasanov; Muhammad Javid; Jeyhun Mikayilov; Rami Shabaneh; Abdulelah Darandary; Ryan Alyamani
  53. The Global Impact of the U.S. Inflation Reduction Act: Evidence from an International Expert Survey By Klaus Gründler; Philipp Heil; Potrafke Niklas; Timo Wochner

  1. By: Quintieri, Beniamino; Stamato, Giovanni
    Abstract: This paper empirically investigates the effect of the EU-South Korea free trade agreement (FTA) on manufacturing trade flows. By applying a state-of-the-art structural gravity model with intranational (i.e., domestic) trade and using disaggregated data, we quantify both the trade impact and the observed heterogeneity in the FTA estimates. In line with literature, we find that the FTA exerted asymmetric effects in bilateral exports across directions of trade. Compared to previous studies, our findings suggest a different explanation for the poor performances of Korean exports to the EU in the post-FTA period, namely offshoring patterns in electronics and a broad-based decline in the shipbuilding industry. When we drop these two export categories from the analysis, we show that the FTA exerted a large effect on trade in both directions, increasing bilateral exports by about 30 percent. We then investigate heterogeneity in pair-industry-specific estimates of the FTA. The main source of variation is represented by asymmetries in ex ante trade barriers across sectors, with a prominent role for non-tariff instruments. Stronger pre-FTA regulatory intensity is associated to a high liberalization potential, favouring larger FTA estimates. JEL Classification: F10, F13, F14
    Keywords: EU-South Korea FTA, heterogeneous trade effects, structural gravity models
    Date: 2023–05
  2. By: HUANG Hanwei; SENGA Tatsuro; Catherine THOMAS; ZHANG Hongyong
    Abstract: Using microdata on Japanese multinational enterprises (MNEs) from 2010 to 2019, we examine the impact of Brexit on global production networks and supply chains. Specifically, we conduct a difference-in-differences analysis and compare the performance of Japanese foreign affiliates in the United Kingdom (UK) and other European Union (EU) countries before and after the 2016 Brexit referendum. We obtained the following three findings. First, Brexit significantly decreased the total sales of Japanese affiliates in the UK by approximately 11%. Their sales dropped because of lower local sales in the UK and exports, especially to other European countries. The impact of Brexit on Japanese affiliates’ total sourcing in the UK was even larger (approximately 14%), especially for their local purchases and imports from the European market. Second, Japanese foreign affiliates in the UK decreased their employment, number of Japanese expatriates, and capital investment after Brexit. At the same time, the productivity and profitability of Japanese affiliates decreased and their probability of exiting the UK increased significantly. Third, the negative impact of Brexit was larger in non-manufacturing industries than in manufacturing industries, suggesting much higher trade costs in service trade. Our findings suggest that a substantial increase in (uncertainty over) trade costs due to institutional changes may reshape global production networks and supply chains.
    Date: 2023–06
  3. By: Lionel Fontagné; Mathilde Lebrand; Siobhan Murray; Michele Ruta; Gianluca Santoni
    Abstract: Economic integration of the African continent rests on two pillars: the ratification of an ambitious trade agreement and massive investment in transportation infrastructure. Leveraging a newly created city-level database on African exporters’ transport times and the latest techniques in general equilibrium modelling of international trade, the paper quantifies the impact of greater trade and transport integration for Africa. A pan-African agreement, such as the Continental Free Trade Area (AfCFTA), would increase African countries’ exports by an average of 3.4 percent and GDP by 0.6 percent. Additional investments in roads, ports and in land borders, as envisioned by the Program for Infrastructure Development in Africa (PIDA), would increase exports by 11.5 percent and GDP by 2.0 percent. Major transport investments are necessary to fully reap the benefits of the AfCFTA.
    Keywords: Infrastructure;Preferential Trade Agreements;Structural Gravity;General Equilibrium
    JEL: F14 F15
    Date: 2023–06
  4. By: Markus Lampe; Kevin Hjortshøj O'Rourke; Lorenz Reiter; Yoto V. Yotov
    Abstract: This paper uses a new dataset on the universe of Canadian imports and tariffs between 1924 and 1936, disaggregated into 1697 goods originating in 112 countries, to analyze the impact on Canadian imports of interwar Canadian trade policy, including the 1932 Ottawa trade agreements. Rather than use a dummy variable approach, we compute the impact of individual tariffs which varied substantially across goods, trade partners, and time. We develop a novel method of controlling for multilateral resistances in the context of a one-country dataset, and perform a variety of counterfactual exercises to determine the impact of tariffs on trade flows. The overall impact of post-1929 tariff shifts, including the 1932 agreements, was relatively small, reflecting the fact that Canadian trade policy was already highly protectionist: trade agreements can have heterogenous effects on participants because the shocks involved are different. Compared with a free trade counterfactual, the impact of the overall structure of protection on the level and composition of trade was large.
    JEL: F1 F13 F14 N72
    Date: 2023–05
  5. By: Julia, Brynn Jonsson R.
    Abstract: This study assesses the diversity and inclusivity of Philippine export activities to the European Union (EU) amid the country’s status as a beneficiary of the Generalised Scheme of Preferences Plus (GSP+), a trade agreement that removes EU tariffs in exchange for the compliance of developing countries with international conventions. It used official statistics, documents, open-ended questionnaires, and email correspondence with key informants from the government to analyze the economic incentives that the country gains from the GSP+. It suggests that while some sectors benefited from the GSP+, the scheme’s impacts on Philippine exports to the EU are limited.
    Keywords: Trade;Philippine exports;GSP+;European Union
    Date: 2022
  6. By: Alejandro G. Graziano (University of Nottingham); Yuan Tian (University of Nottingham)
    Abstract: In 2020, a pandemic generated by a novel virus caused a large and abrupt decline in world trade, only comparable within the last half-century to the Great Trade Collapse during the 2008-09 Financial Crisis. This collapse followed naturally from the difficulty of locally producing, transporting, and consuming goods in the affected regions worldwide. In this paper, we study the impact of these disruptive local shocks on international trade flows during the COVID-19 pandemic. Using rich product-level import data from Colombia, we first show that import collapse at the onset of the pandemic was due to a decrease in import quantities, and the import recovery in later periods was partially explained by a rise in both foreign export prices and shipping costs. Using smartphone data tracking local human mobility changes to identify local shocks, we decompose the trade effects into shocks originating from exporter cities, seaports, and importer cities. We find that while the decline in quantity was driven by both changes in exporter and importer shocks, the increase in price was entirely driven by exporter shocks. Using data on port calls made by container ships, we document a decline inport productivity during the pandemic. We show that mobility changes at port locations induced a decline in port efficiency and a rise in freight costs. We also document a positive correlation between product-level domestic inflation and mobility shocks to foreign exporters.
    Keywords: International trade, local shocks, COVID-19 pandemic, shipping costs, mobility, supply chain, inflation.
    JEL: F10 F14 F16 I12 O18
    Date: 2023–05
  7. By: Benny Kleinman (Princeton University); Ernest Liu (Princeton University and NBER); Stephen J. Redding (Princeton University, CEPR, and NBER); Motohiro Yogo (Princeton University and NBER)
    Abstract: We generalize the closed-economy neoclassical growth model (CNGM) to allow for open goods and capital markets with imperfect substitutability between countries. We simultaneously model international trade, gross and net capital holdings at a point in time, and intertemporal savings decisions over time, and hence the current account. We show that our framework rationalizes the observed gravity equation relationships for trade and capital holdings in the data. We find a substantially slower speed of convergence to steady-state than in the CNGM. Furthermore, goods and capital market integration interact in non-trivial ways. With either free trade or free capital, convergence is faster than in CNGM. In contrast, under both free trade and free capital, convergence is slower than in CNGM. In response to counterfactual changes in bilateral trade frictions, reallocations of capital across countries lead to a substantially different incidence of static and dynamic welfare gains and losses than a world of capital market autarky.
    Keywords: Economic Growth, International Trade, Capital Flows
    JEL: F10 F21 F60
    Date: 2023–05
  8. By: Gobey, Will; O'Reilly, George; Franzoi, Marco; Giacomini, Francesco
    Abstract: The UK has signed significant Free Trade Agreements (FTAs) since leaving the European Union. In some cases, these FTAs have included liberalisation on UK agricultural products, notably beef. The UK Government’s published assessment of these agreements demonstrates that it expects some UK consumption to shift from domestic production to imports. Given the emissions associated with this sector, there is likely to be some offshoring of carbon emissions. This paper sets out a variety of options to estimate and monetise the emissions impacts of this agri-food liberalisation on both the UK and partner countries. We attempt to fully capture the range of global emissions sources, including both domestic and international production and international transport emissions. A recommended approach is set out. We test this approach on the UK’s FTAs with Australia and New Zealand.
    Keywords: International Relations/Trade, Environmental Economics and Policy
    Date: 2023–03
  9. By: KAMATA Isao
    Abstract: Recent studies have identified the tendency of host countries with flexible labor markets or lax employment protection to attract more foreign direct investment (FDI). However, most such studies have examined the relationship between the strictness of labor regulations in individual countries and their aggregated inward FDI. This study investigates the extent to which FDI is attracted by labor market flexibility, with a focus on host countries’ institutional flexibility in employment adjustment and their relative flexibility compared to investor firms’ home countries, through an empirical analysis using a unique dataset constructed with bilateral data on FDI between a large number of both developed and developing countries and various indicators concerning labor market regulations in those countries. The result suggests the following: (i) what primarily matters is the (absolute) flexibility in the host country, that is, a country with a greater degree of flexibility in labor regulations or employment adjustment tends to draw larger FDI inflow; (ii) the impact of a host country’s relative flexibility compared to the FDI source country may be secondary, particularly in the case of the stock of FDI; and (iii) there is some evidence of the “anchorage effect†of a source country’s labor market regulations, which implies that inflexibility in employment adjustment or strict labor regulations could discourage outward FDI from the country.
    Date: 2023–05
  10. By: Dolores Añon Higón (Department of Applied Economics II and ERI-CES, Faculty of Economics, Universitat de València, Avda. Tarongers, s/n, 46022 Valencia (Spain).); Juan A. Daniel Bonvin (Department of Applied Economics II, Faculty of Economics, Universitat de València, Avda. Tarongers, s/n, 46022 Valencia (Spain).)
    Abstract: This study aims to empirically examine the impact of the digital transformation on the participation of small and medium-sized enterprises (SMEs) in export and import activities. In this regard, empirical evidence at the firm level is very limited. Using a representative panel of Spanish SMEs from 2001 to 2014, we contribute to the literature by constructing a multidimensional index of digitization at the firm level and estimating a set of dynamic models analyzing the direct and indirect (via total factor productivity) effects of the digital transformation on SMEs’ export and import strategies. Overall, our results show that firm decisions to export and import are simultaneously determined. Moreover, the firms’ degree of digitalization positively influences the probability to export and import, both directly and indirectly through TFP. The direct effect seems to be larger for exports than for imports, while the opposite seems true for the indirect effect.
    Keywords: Exports, Imports, Digital transformation, SMEs, Productivity.
    JEL: D22 D24 F14 O33
    Date: 2023–05
  11. By: Erten, Bilge (Northeastern University); Leight, Jessica (International Food Policy Research Institute); Zhu, Lianming (Osaka University)
    Abstract: How does foreign direct investment (FDI) liberalization shape structural transformation and demographic change in developing countries? We provide new evidence on this question using five waves of Chinese census data between 1990 and 2015, exploiting quasi-exogenous variation in FDI liberalization induced by multiple waves of regulatory relaxation. We find that counties more exposed to liberalization experience a relative shift out of agricultural employment into manufacturing and services for both men and women. Exposure to FDI liberalization also reduces the probability of marriage, and induces a decline in the birth rate and the share of women with children.
    Keywords: foreign direct investment, structural transformation, demographic change, China
    JEL: F23 F63 J13
    Date: 2023–04
  12. By: Maria Bas (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Caroline Paunov (OCDE - Organisation de Coopération et de Développement Economiques = Organisation for Economic Co-operation and Development)
    Abstract: This paper tests for the production complementarity between firms' access to high-quality intermediate inputs and their skill composition and their joint impact on output quality. Using census data at firm-product level for Ecuador for 1997–2007, we exploit exogenous tariff changes at Ecuador's entry to the World Trade Organization to show that input tariff cuts allow firms to upgrade their input quality. Next, we demonstrate by means of within-firm instrumental variable estimations that firms' choices of imported input quality drive their relative demand for skilled labor and the skill premium. Imported input quality and firms' skill-composition jointly boost firms' output quality. Moreover, we show that firms that source domestic inputs produced by industries that import high-quality inputs also upgrade their skills and output quality. Our findings are not driven by our measures of quality, foreign demand shocks (export opportunities), Ecuador's financial crisis, real exchange rate variations, financial liberalization and other industry-level reforms.
    Keywords: Foreign input quality, Input-skill complementarity, Skill intensity and skill premium, Output product quality, Input tariff reductions, Firm-product-level data, Ecuador
    Date: 2021–06
  13. By: Arendarczyk, Bart; Alexander, Peter; Brown, Calum; Rounsevell, Mark
    Abstract: Food imports are a critical part of the UK’s food supply, accounting for nearly half of all food consumed domestically. Reliance on imports raises concerns about food security as well as environmental impacts due to land use associated with imported commodities (the land footprint). Previous studies estimate that approximately 10 Mha of agricultural land is used globally outside the UK to produce food destined for the UK. However, previous methods fail to account for marginal yield effects as well as present and future feedbacks between food prices, demand, production, and international trade. Using a global land use modelling framework, LandSyMM, we produce estimates of the global land use impact of UK food and bioenergy imports. We simulate food demand, agricultural production, and trade under a range of global and UK-specific socioeconomic and climate scenarios. We estimate that 42 Mha of agricultural land could be currently linked to UK food and bioenergy imports, trending towards 22-46 Mha by 2070-2079. Given 17 Mha of agricultural land in the UK, our results suggest that UK food imports could have a disproportionate impact on global land use compared to domestic production and should be an important focus for evaluating the environmental consequences of food production.
    Keywords: Resource /Energy Economics and Policy, International Relations/Trade
    Date: 2023–03
  14. By: Anirudh Shingal
    Abstract: Existing literature focuses on the effect of sanctions on merchandise trade and investment, neglecting the services trade dimension. We contribute by using the recent Global Sanctions Database (Felbermayr et al. 2020a, b) to examine the impact of sanctions on bilateral services trade in a structural gravity framework. Our results reveal considerable heterogeneity in sanctions-impact across sectors and depending upon sanctions-type. Trade sanctions are found to reduce sender-target services trade while military, financial and travel sanctions are found to enhance it. This positive effect contrasts with the largely insignificant effect of non-trade sanctions on merchandise trade in the literature and is driven by insurance, financial, ICT, business and maintenance and repair services. Our findings allude to the use of specific services to counter adverse effects of sanctions imposition or for sanctions-busting, suggesting a review of the instrument’s design, coverage and implementation to meet intended objectives.
    Keywords: Sanctions, services trade, heterogeneity, GSDB, structural gravity
    Date: 2023–01
  15. By: Alan Feng; Haishi Li; Yulin Wang
    Abstract: Are land locked countries subject to sea-level rise risk? We highlight a new mechanism by which physical climate shocks affects countries’ macro-financial performance: the cross-border spillover effects that propagate through international trade. Basing our findings on historical data between 1970 and 2019, we find that climate disasters that strike the transport infrastructure – ports – decrease the affected country’s imports and exports and reduce economic output in major trade partner (both upstream and downstream) countries. Climate disasters reduce stock market returns in the aggregate market and tradable sectors of the major trade partner countries. Exposures to foreign long-term climate change risks reduce the asset price valuations of the tradable sectors at home. As a result, climate adaptation efforts in one country can have a positive impact on macro-financial performance and stability in other countries through international trade.
    Keywords: climate risks, international trade, infrastructure, macro-financial stability
    JEL: F42 G14 Q54
    Date: 2023
  16. By: Amendolagine, Vito (University of Foggia); Bruno, Randolph Luca (University College London); Cipollina, Maria (University of Molise); De Pascale, Gianluigi (University of Foggia)
    Abstract: This study aims to quantify the impact of the global minimum corporate tax rate – a pillar of the OECD's reform of international taxation – on cross-border mergers and acquisitions (M&A) involving large multinational enterprises (MNEs). First, the influence of differences in capital taxation on bilateral cross-border M&A is assessed using a structural gravity model. The resulting estimated coefficients are then applied to evaluate the impact of a 15% global minimum tax rate on cross-border investments by firms whose revenue exceeds €750 million, whenever the target country's corporate tax rate is lower. The study exploits a large, disaggregated dataset of 13, 562 investor-firm M&A data points from 2001 to 2020 relating to 516 industries, defined at the 4-digit level of the NACE Rev. 2 classification, in 109 'source' countries, and 559 industries (defined at the same of detail) in 161 'target' countries. The empirical results suggest that M&A flows are higher when the source and target countries have similar tax rates, while the overall effect of the global minimum corporate tax on M&A flows would be negative (as expected), but small.
    Keywords: global tax rate, bilateral foreign direct investment, profit shifting, Structural Gravity model
    JEL: H2 H87 F23
    Date: 2023–05
  17. By: Rabah Arezki (Harvard Kennedy School - Harvard Kennedy School, CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne, FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Ha Nguyen (International Monetary Fund (IMF)); Tristan Reed (World Bank Group); Ana Fernandes (World Bank Group); Federico Merchán (Kiel University)
    Abstract: Countries with greater commodity export intensity have more concentrated markets for imported goods. Within countries over time, import market concentration is associated with higher domestic prices, suggesting that markups due to greater concentration outweigh any potential cost efficiency. Hydrocarbon fuel exporting economies especially have higher tariffs, tariff evasion, and non-tariff measures that concentrate markets. These results suggest a novel channel for the resource curse stemming from the monopolization of imports.
    Keywords: Imports, Market concentration, Natural resources, Resource curse
    Date: 2023–05–01
  18. By: Alexandra Bykova (The Vienna Institute for International Economic Studies, wiiw); Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: In this report, we analyse the international competitiveness of the EU in four industry groups over the period 1995-2018. The groups are delineated by specific factor intensities, where these intensities are assessed from digital tasks performed by labour services and ICT capital stocks. The EU’s positions relating to trade balances, revealed comparative advantages and unit value ratios are assessed relative to its main competitors, such as the US, China, Japan and South Korea. The trade specialisation patterns confirm EU advantages in traditional industries, which still represent the largest part of global trade, and in the group of digital task-intensive industries. In the cyber-physical group of industries, which are characterised by both high digital task and ICT capital intensities, the EU records a trade deficit, although this has been receding in recent years. Competitiveness indicators depict heterogeneity among EU countries. The loss of international competitiveness for some technology front-runners is a worrying sign. On the positive side, however, a reduction in trade deficits or an improvement in product quality and market shares is evident for certain EU countries, especially in the Central European region.
    Keywords: international competitiveness, EU, EU-CEE, trade balances, revealed comparative advantages, unit value ratios, digital tasks, ICT capital, digitalisation
    JEL: F14 L11 L60 O33
    Date: 2023–05
  19. By: Langhammer, Rolf J.
    Abstract: The author sheds a light on the overall importance of Germany's recorded service trade, in particular by pointing to the differences of various regions in goods and service trade for Germany. He reveals that German service trade comprises about a fifth of its total trade with no substantial change since 2009. Despite these supposedly low dynamics, Germany is among the world's leading traders of services whereby unreported trade is large. Travel accounts for a quarter of total German service imports thus driving the German trade deficit in services for a large part. It is furthermore analyzed that the EU goods market is of much higher importance than the EU service market for exports as well as for imports. The author also shows that there are strong trade links between Germany and the US in services, in particular when buying services from the US with a focus on services in the financial services and in the IT sector. In contrast, Asia has not yet emerged as a similarly important export and sourcing market for services as for goods. The author proposes to strengthen German competitiveness in services trade by completing the EU single market for services and providing incentives for foreign investors.
    Keywords: deutscher Dienstleistungshandel 2009-2021, Sektoral- und Regionalstruktur, Vergleich mit Güterhandel, statistische Erfassungsschwächen, German trade in services 2009-2021, sectoral and regional patterns of trade, comparison with German goods trade, shortcomings in service statistics
    Date: 2023
  20. By: Gerard Domènech-Arumí
    Abstract: I use registry data and an original survey recording exact addresses to study the effects of neighborhood immigration on perceptions and preferences for redistribution in Barcelona. Exposure to European or American migrants is associated with lower perceived immigration and more redistribution demand. The opposite is true for Asian or African migrants. Quasi-random variation in exposure to new immigrant inflows in the neighborhood largely confirms descriptive results and suggests that sizeable inflows increase the support for anti-immigration parties. Differences inincome, language, and skin tone between immigrants and natives are mechanisms at play. This work highlights new implications of racial segregation.
    Keywords: Neighborhood Characteristics, Migration, Redistribution
  21. By: Beccari, Gabriele; Pisicoli, Beniamino; Vocalelli, Giorgio
    Abstract: We analyse whether firms targeted by a foreign investor improve their management quality and practices after the acquisition, focusing on Foreign Direct Investments (FDI) occurring in Italy between 2010 and 2020. To proxy management quality, we resort to granular data on ISO certificates held by firms and find that those acquired by foreign investors experience an mprovement in management standards, regardless of the country from which the FDI originates. This is not the case for firms involved in domestic M&As. Our empirical strategy controls for ex ante selection, and our findings show that the positive effects of FDI documented in the literature can be partly attributed to improved managerial practices implemented in target firms.
    Keywords: FDI; M&As; Management quality; Foreign investors; Productivity.
    JEL: D2 F1 F2 M1
    Date: 2023–04
  22. By: Häberli, Christian; Kostetsky, Bogdan
    Abstract: The latest report on "Repairing Broken Food Trade Routes Ukraine – Africa” covers: handicaps of Ukrainian grain production, caused by the full scale invasion causes, circumstances and impact of restrictions of grain imports from Ukraine risk of loss of the MENA destination markets for Ukrainian grains This project has received funding from the European Union's Horizon 2020 research and innovation programme “Making Agricultural Trade Sustainable” (MATS) programme ( The role of MATS/WTI in this programme is to identify and explore “broken” Ukrainian - African food trade routes due to the Russian invasion of Ukraine. Starting with a food trade flow chart pre- and post-24 February 2022, it will assess, first, whether Ukrainian (or African) traders can again supply these products (Output 1). Failing that, whether the new EU-financed “Crisis Management” (or another) programme can possibly make up for lost Ukrainian agrifood exports (Output 2). It will also identify alternative exporters (if any) which might already have filled in agrifood demand in Africa (Output 3). Importantly, the Project also looks at the potential effect of these developments on competing farm production in Africa (Output 4). For further information and/or offer to assist in project implementation, please write to Christian Häberli ( or to Bogdan Kostetsky (
    Date: 2023–06–06
  23. By: Podoba, Zoia (Petersburg Polytechnic University)
    Abstract: The Eurasian Economic Union (EAEU) is a relatively newly-formed regional integration bloc. It evolved on the basis of the Customs Union of Russia, Kazakhstan, and Belarus in 2015 with Armenia and Kyrgyzstan joining the agreement. The foreign economic aspirations of the EAEU as a single market, in the context of tense relations with Western partners, are turned towards Asian countries. The pivot to the East is supported by the ideological concept of “Greater Eurasia” (sometimes translated as “Big Eurasia”), which implies more extensive cooperation with the economies of Central, East, and South Asia. At a time when political efforts to bring the Union and Korea closer together have been put on hold, the paper aims to provide a comprehensive description of the bilateral merchandise trade pattern between the EAEU and the Republic of Korea to verify if statistical evidence on bilateral trade provides ground for the development of guiding actual policy deliberations in the future. Trade Intensity Index (TII), the sectoral bilateral coefficient of revealed comparative advantages, and the standard Grubel-Lloyd index have been used in order to analyze the bilateral trade between the EAEU and the Republic of Korea.
    Keywords: Analysis of Trade Pattern; EAEU and South Korea
    Date: 2023–05–09
  24. By: Carlos Casacuberta; Omar Licandro
    Abstract: In 2002 Uruguay faced a sudden stop of international capital flows, inducing a deep financial crisis and a large devaluation of the peso. The real exchange rate depreciated and exports expanded. Paradoxically, export shares and real exchange rates negatively correlate among Uruguayan exporters around 2002. To unravel this paradox, we develop a small open economy model of heterogeneous firms. Domestic firms are price takers in the international market, operate under monopolistic competition in the domestic market, and face financial constraints when exporting. Confronted to a large nominal devaluation, financial constraints deepen. Financially constrained exporters cannot optimally expand in the export market and react by passing-through the devaluation to the domestic price only partially, expanding domestic sales. As a consequence, the more financially constrained exporters are, the less their export shares expand and the more their firm specific real exchange rates depreciate. As a result, export shares and real exchange rates of exporters are negatively correlated as in the data.
    Date: 2023–05
  25. By: Kox, Henk L.M.
    Abstract: The knowledge-capital model of foreign direct investment implies that countries with relatively large outward FDI stocks should also have a relative abundance of proprietary knowledge assets. Early versions of the knowledge-capital theory model these assets as if they were only the results of knowledge investments by private firms. We extend the theory by modelling the public-private interaction in knowledge development. This sheds light on the role of the origin country of multinationals. The paper extracts four testable predictions from the model. We to use the inter-country variation in national knowledge-creation systems and foreign-investment performance to test the model. After developing a new dataset that holds knowledge-creation indicators for about 200 countries over the period 2000-2020, we apply a range of non-parametric tests to test the model predictions. Our findings confirm the basic tenet of the knowledge-capital model and show the important role of public knowledge production for outward FDI.
    Keywords: business innovation; public knowledge creation; foreign direct investment; knowledge capital; empirical test; worldwide scope
    JEL: D21 D83 F23 O31 O34
    Date: 2023–05–10
  26. By: Kohnert, Dirk
    Abstract: Brazil’s foreign and trade relations with Sub-Sahara Africa (SSA) date back to the Portuguese slave trade. Of the 9.5 million people captured in Africa and brought to the New World between the 16th and 19th centuries, nearly 4 million landed in Rio de Janeiro, i.e. ten times more than all those sent to the United States. Still today, about 51 % of the population see themselves as black or mixed. Racial inequality remains deeply engrained in many respects, notably concerning persistent inequality. Nonetheless, oppression and marginalization of black Brazilians have been largely ignored in modern Brazilian-African relations. Instead, a pronounced nationalism suffused Brazil’s political life. It guided Brazil’s foreign and trade relations and defined how Brazilians interpreted the opportunities of African independence movements. Only Brazil’s President Lula da Silva acknowledged the common historical roots during his first time as president from 2003 to 2011. In fact, his election was driven by the overwhelming support of Afro-Brazilians. Trade relations in the first half of the 20th century were largely limited to South Africa, which accounted for 90 % of Brazil’s African trade. Brasilia’s foreign and trade policy since the 1960s focussed on Nigeria, an important oil supplier, and the five Portuguese-speaking former Portuguese African colonies (PALOP) and the Lusophone Commonwealth (CPLP), founded in 1996. Up to date, Brazilian’s trade relations in West Africa, apart from Nigeria (34 % of Brazil’s African trade) remained fairly modest. Nevertheless, Ghana and Senegal played a decisive role in shaping Brazil-African relations in the early stages of African independence since the 1960s. Because Brazil has meanwhile considerable energy and commodity resources of its own, its approach concerning African trade is less commodity driven than the Chinese or European, but orientated at resource diversification, sustainable development and cooperation to develop these resources, e.g. bioethanol plants in Ghana and other African countries. Therefore, African governments see a greater sense of mutual partnership and reciprocity in their relationship with Brazil. However, corrupt political African elites themselves urged the Brazilian government and companies often into informal political and business norms, with controversial and corrupt investment in commodity extraction, infrastructure and land-grabbing. Apart from that, Brazil tried to create a niche for Brazilian management services, knowledge and technology transfer, suited supposedly exceptionally well for tropical markets.
    Keywords: Brésil; Atlantique Sud; Afrique subsaharienne; Afrique de l'Ouest; Nigeria; Ghana; Sénégal; Côte d'Ivoire; commerce international; migration; développement durable; démocratisation; post-colonialisme; secteur informel; nationalisme; BRICS; Chine; France; Grande-Bretagne; APD; ONG; études africaines;
    JEL: E26 F22 F24 F35 F52 F54 F63 I31 J46 J61 L31 N16 N17 N37 N47 O17 O35 O55 Z13
    Date: 2023–05–22
  27. By: Ana Maria Santacreu; Michael Sposi; Jing Zhang
    Abstract: We develop a structural framework to identify the sources of cross-state heterogeneity in response to U.S. tariff changes. We quantify the effects of unilaterally increasing U.S. tariffs by 25 percentage points across sectors. Welfare changes range from –0.8 percent in Oregon to 2.1 percent in Montana. States gain more when their sectoral comparative advantage covaries negatively with that of the aggregate U.S. Consequently, “preferred” changes in tariffs vary systematically across states, indicating the importance of transfers in aligning state preferences over trade policy. Foreign retaliation substantially reduces the gains across states while perpetuating the cross-state variation.
    Keywords: Interstate trade; Gains from Trade; Customs Union
    JEL: F11 F62
    Date: 2023–03–08
  28. By: Akin A. Cilekoglu (University of Barcelona)
    Abstract: This paper examines the role of export destinations on firm upgrading. I exploit the real effective exchange rate devaluation in Spain during the Great Recession to identify the unusual export performance of manufacturing firms. Using directly observable measures of firm upgrading, I find that increased share of exports to low-income destinations in sales reduced productivity and upgrading efforts of firms. However, real effective exchange rate devaluation did not affect the share of exports to high-income destinations in sales as well as productivity and upgrading efforts. The results are consistent with the quality sorting hypothesis that suggests a positive relationship between firm productivity and product quality. The findings in this paper emphasize that export market destination is an important determinant in analysing the gains from exporting.
    Keywords: Exports, Firm upgrading, Market destination, Exchange rate. JEL classification: D22, F14, O14, F31
    Date: 2023–05
  29. By: Mountford, Andrew; Wadsworth, Jonathan
    Abstract: Has skilled immigration into the UK led to a reduction in the training of native-born workers? To address this concern, this paper describes a theoretical model where immigration can affect the training of native-born workers both positively and negatively, and where its effects may differ according to the characteristics of the migrant and of the training firm's sector. It then investigates this issue empirically using UK Labour Force Survey data from 1995 to 2018. At the aggregate level, there is a small positive association between skilled immigration and native training rates. However, a more disaggregated analysis finds that the relationship between immigration and native training depends on the skill level of the immigrant, the skill level of trainees, and the sector into which immigration occurs. In particular, traded goods sectors show a positive association between training of UK-born workers and both unskilled and skilled immigration. In non-traded high-wage sectors, the association between skilled immigration and UK-born training is negative. These findings highlight the importance of allowing for heterogeneous effects from immigration when formulating policy or when modelling immigration's effects across the wider economy.
    JEL: N0
    Date: 2023–04–17
  30. By: Fabio Ascione; Maria Enrica Virgillito
    Abstract: Against a theoretical background which recognizes the gains from trade liberalization, this paper asks whether, and if so to what extent, economic integration as directly measured through vertically integrated value-added has increased or reduced convergence among European industries and related countries. To answer this question, we draw upon new input-output tables and sectoral divergence measures for 14 European countries and 19 sectors since 1970. Our novel database provides consistent long-run measures of international input–output linkages and sectoral dispersion in labor productivity and wages. We use these measures to study the timing and mechanisms that govern the relationship between economic integration and sectoral gaps, taking a European perspective and focusing on the role of international production fragmentation via input-output linkages. According to our findings, higher vertical integration has fostered divergence rather than convergence within industries. Lock-in effects in laggard positions coupled with positive feedback loops and increasing returns for leading positions are potential mechanisms to explain why the fruits of rising vertical integration are shared unequally between poor-performing industries and frontier industries.
    Keywords: input-output analysis; divergence; economic integration; Europe; trade liberalization.
    Date: 2023–06–04
  31. By: Gardberg, Malin (Research Institute of Industrial Economics (IFN)); Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Tåg, Joacim (Research Institute of Industrial Economics (IFN))
    Abstract: Is technology or trade driving increases in wage inequality? We propose that technology interacts with trade in the form of foreign direct investments to widen domestic wage inequality. We show that foreign acquisitions of domestic firms disproportionately affect wages for workers who perform tasks sensitive to the technology specialization (software or robotics) of the acquiring firm. Based on Swedish matched employer-employee data covering two decades and staggered difference-in-differences methods we find wages to decline by up to 5.2% annually over an eight-year post period. Our results suggest that a trade policy aimed at attracting foreign companies with high technological capabilities can help countries advance technologically, but this may come at the cost of increased domestic wage inequality.
    Keywords: Acquisitions; AI; Automation; Inequality; Robots; Technology; Trade; Mergers and Acquisitions; Multinational firms; Wages
    JEL: F23 G34 J30 R10
    Date: 2023–04–05
  32. By: Alessandra Peter; Cian Ruane
    Abstract: We estimate long-run elasticities of substitution between intermediate inputs for Indian manufacturing plants. India's trade liberalization in the early 1990s provides an ideal natural policy experiment, with permanent and heterogeneous tariff reductions inducing changes in relative prices which we use for identification. We find a high degree of substitutability at the plant-level between 8 broad categories of material inputs, significantly above the Cobb-Douglas benchmark of 1. In contrast, we find elasticities less than 1 between energy, materials, and services as well as between value added and intermediates. We embed our elasticities in a general equilibrium model with a rich input-output structure to quantify their importance. Relative to a Cobb-Douglas benchmark, the aggregate gains from trade are 9% larger when intermediate inputs are substitutes, and come hand in hand with 40% more reallocation of labor across sectors. Furthermore, the aggregate gains from closing the India-U.S. TFP gap in any one sector are on average 29% larger with our estimated elasticities; losses from misallocation of intermediate inputs are more than 3 times larger.
    JEL: E23 O11 O47
    Date: 2023–05
  33. By: ITO Tadashi; TANAKA Ayumu
    Abstract: Many studies have attempted to use industry-level variations in the presence of foreign firms to estimate the impact of foreign firms on domestic firms. However, owing to the limitations of industry-level data, the channels through which foreign firms influence domestic firms are unclear. Our study used a large set of Japanese firm-to-firm transaction data to test whether domestic firms’ performance improves through firm-to-firm transactions with foreign-affiliated firms. Our empirical analyses using the state-of-the-art technique of causal inference, such as event study design and staggered difference-in-differences estimator, show no evidence of positive spillover effects of MNEs on domestic firms through business transactions.
    Date: 2023–03
  34. By: Julia Estefania-Flores; Davide Furceri; Swarnali A. Hannan; Jonathan Ostry; Andrew K. Rose
    Abstract: In this paper, we present a new measure of aggregate trade restrictions.
    Date: 2023–06
  35. By: Vanessa I. Alviarez; Michele Fioretti; Ken Kikkawa; Monica Morlacco
    Abstract: We develop a quantitative theory of prices in firm-to-firm trade with bilateral negotiations and two-sided market power. Markups reflect oligopoly and oligopsony forces, with relative bargaining power as weight. Cost pass-through elasticities into import prices can be incomplete or complete, depending on the exporter's and importer's bargaining power and market shares. In U.S. import data, we find that U.S. importers have substantial market power and disproportionate leverage in price negotiations. The estimated model produces accurate predictions of the impact of Trump tariffs on pair-level prices. At the aggregate level, ignoring two-sided market power could exaggerate tariff pass-through by about 60%.
    JEL: F12 L14
    Date: 2023–05
  36. By: Laura Alfaro; Maggie Chen; Davin Chor
    Abstract: We investigate the role of evidence-based information in shaping individuals' preferences for trade policies through a series of survey experiments that contain randomized information treatments. Each treatment provides a concise statement of economics research findings on how openness to trade has affected labor market outcomes or goods prices. Across annual surveys from 2018-2022, each administered to a representative sample of the U.S. general population, we find that information influences trade policy preferences in complex ways. Information highlighting the link between trade and manufacturing job losses significantly raises expressed preferences for more limits on trade. Strikingly, information on the price benefits of trade (or the cost of tariffs) also induces protectionist policy choices, indicating that these preferences do not respond symmetrically to information on the gains versus losses from trade. We find evidence that these expressed preferences are driven in part by how the received information interacts with one's political identity, resulting in prior-biased belief updating, as well as by pre-existing concerns over the impact on American jobs and over trade with China. Information that solely communicates the benefits of trade is thus unlikely to succeed unless it addresses these prior beliefs and concerns.
    JEL: D8 F1 F6
    Date: 2023–05
  37. By: Alessio Baldassarre (Ministry of Economy and Finance); Danilo Carullo (Ministry of Economy and Finance); Paolo Di Caro (University of Catania); Elisa Fusco (Sogei SpA Italy); Pasquale Giacobbe (University of Calabria); Carlo Orecchia (Ministry of Economy and Finance)
    Abstract: The main purpose of this paper is to present an innovative approach to estimate the Italian inter-regional trade flows in terms of final and intermediate consumption. It contributes to the literature in several ways. The first innovative feature concerns the data used in the analysis. We reconstruct the flow of households’ final consumption by using administrative data from the Italian VAT returns. The result is then used for estimating a traditional gravity model for final consumption trade; the estimated coefficients are furtherly exploited to compute the flows of intermediate consumption. The second contribution relates to the modeling approach: we combine the literature on gravity models with a spatial autoregressive specification, to take into account spatial dependence in the bilateral flows, and a geographically weighted regression estimator, to control for behavioral instability of data over space. In addition to that, our model controls for commodity dependence by including them as a fixed effect in a pseudo-panel view, where the time dimension captures the commodities dynamics. Therefore, the strategy here introduced is useful to consider both local level economic relations and spillovers, existing between regions, and the link among different types of products.
    Keywords: Inter-regional flows; Gravity models; O-D Spatial autoregressive models; Geographically Weighted Regression
    JEL: C21 D57 R15
    Date: 2023–05
  38. By: Davide Furceri; Mr. Jonathan David Ostry; Mr. Chris Papageorgiou; Pauline Wibaux
    Abstract: Are Temporary Trade Barriers (TTBs) introduced for strategic reasons? To answer this question, we construct a novel sectoral measure of retaliation using daily bilateral data on TTB responses in 1220 subsectors across a panel of 25 advanced and emerging market economies over 1989-2019. Stylized facts and econometric analysis suggest that within-year responses are more important in terms of intensity and frequency than commonly understood from the existing literature, which has tended to ignore them. We find that retaliation often consists of responses across many sectors and that same-sector retaliation is far from being the norm. In addition, we find that larger countries tend to retaliate more, and that retaliation is larger during periods of higher unemployment and when the trading partner targeted a domestic comparative advantage sector.
    Keywords: Trade retaliation; Protectionism; Antidumping; Temporary Trade Barriers
    Date: 2023–05–12
  39. By: Tetsuya Shinkai (School of Economics, Kwansei Gakuin University); Takao Ohkawa (Faculty of Economics, Ritsumeikan University); Makoto Okamura (Faculty of Economics, Gakushuin University); Ryoma Kitamura (Faculty of Economics, Otemon Gakuin University)
    Abstract: This paper investigates the changes in exchange rate volatility on an international oligopolistic market in a foreign country that accepts n affiliate firms through foreign direct investment (FDI) from a home country. Under the revision of the supply chains of essential products such as high-tech products, the affiliate firms are forced to procure their essential intermediate products from firms in their home country, even though they are expensive. We derive a Cournot equilibrium of the oligopolistic foreign market, in which affiliate firms compete with foreign firms under foreign exchange rate uncertainty when the number of affiliates, n, is exogenously given. In the equilibrium, we show the affiliate firms/the foreign firms aggressively expand their outputs when the relative risk aversion coefficient is large /small at equilibrium. Affiliate firms may earn ex-post expected profits less than the expected profits of the foreign firms even when the relative risk aversion coefficient is small at equilibrium. However, whether the change in the foreign exchange rate may be profitable for the ex-post profits of the affiliate and parent firms is indeterminate.
    Keywords: risk aversion, exchange rate volatility, affiliate firms, foreign oligopolistic market, revision of supply chains
    JEL: G32 L13 L12
    Date: 2023–05
  40. By: Isaac K. Ofori (University of Insubria, Italy); Andreas Freytag (Friedrich Schiller University, Jena, Germany); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This study examines the contingency and threshold effects of economic freedom in the economic globalisation (EG) and inclusive green growth (IGG) relationship in Africa. Based on macro data for 22 African countries and the Driscoll-Kraay standard errors with fixed effects instrumental variable regression, the following findings are established. First, Africa’s mostly unfree economic setting, conditions EG to reduce IGG. Second, when we disaggregate EG into its financial and trade globalisation components, we find that the IGG-impeding net effect of the latter is rather striking. Third evidence from our threshold analysis suggests that by improving Africa’s mostly unfree economic architecture to 60% (moderately free)or 80% (free), the IGG-deteriorating net effects of EG are mitigated (but not nullified). We conclude that unless effort is made to improve Africa’s economic architecture level, the envisaged IGG gains of economic globalisation might prove elusive.
    Keywords: Africa; Economic freedom; Economic globalisation; Inclusive green growth
    JEL: F14 F4 O56 Q01
    Date: 2023–01
  41. By: Kimsanova, Barchynai; Sanaev, Golib; Herzfeld, Thomas
    Abstract: This paper analyzes the relationship between international migration, labor, remittances, and agricultural commercialization in Kyrgyzstan using nationally representative household panel surveys covering eight years from 2013 to 2020. Unlike other studies, we focus on evaluating the impact of international migration on total farm commercialization, including crop, livestock, and live animals. We use quantile regression via moments and a three-stage least squares method to overcome the potential endogeneity of migration, labor, and remittances. Overall results show that sending household members abroad has a significant labor-loss effect on households with a consequent impact on farm commercialization. Remittances only partially compensate for losses for households with the lowest level of commercialization. Furthermore, the quantile regressions show little heterogeneity between the selected quantiles, except for the number of migrants, which is detrimental to the lowest level of commercialization
    Keywords: Agribusiness, International Development
    Date: 2023–03
  42. By: Olivier Lamotte (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie); Ludivine Chalençon (Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon); Ulrike Mayrhofer (GRM - Groupe de Recherche en Management - EA 4711 - UNS - Université Nice Sophia Antipolis (1965 - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - UCA - Université Côte d'Azur); Ana Colovic (NEOMA - Neoma Business School)
    Abstract: Drawing from the resource-based view, signaling theory, and internationalization literatures, we argue that a key intangible resource – reputation – influences the decision to engage in cross-border acquisitions (CBAs). Reputation facilitates foreign market entry by reducing the risks and costs inherent in such strategic moves, while acting to curb potentially risky decisions. Based on a longitudinal sample of 869 acquisitions conducted by European and US firms, our study confirms the inverted U-shaped relationship between a firm's reputation and the likelihood of undertaking CBAs. We also find that international experiential knowledge moderates the relationship between reputation and the likelihood of additional CBAs. Our research contributes to the growing literature on the influence of intangible strategic resources, especially that of reputation, on foreign market entry strategies.
    Keywords: Cross-border acquisitions, information asymmetry, signal, reputation, international experiential knowledge
    Date: 2021–07
  43. By: Hellwagner, Timon (Institute for Employment Research (IAB), Nuremberg, Germany); Söhnlein, Doris (Institute for Employment Research (IAB), Nuremberg, Germany); Weber, Enzo (Institute for Employment Research (IAB), Nuremberg, Germany ; Univ. Regensburg)
    Abstract: "Population size and structure in conjunction with the participation behavior are the determinants of labor supply. Thereby, among the demographic components, migration is the one shaping both the size and the structure of a population the strongest in the short to medium term while simultaneously exhibiting high uncertainty, with migration patterns varying between origin-destination-pairs depending on a range of economic and other determinants. Yet, existing stochastic forecasting approaches that jointly address population and labor force participation are sparse and do neither account for differences in future immigration flows across origin countries nor for the interdependencies of immigration and emigration in the destination country. Addressing this shortcoming, we propose an augmentation of an integrated stochastic population and labor force participation forecasting framework by a gravity-equation component to model future immigration and emigration, their interaction, and their determinants more appropriately. By conducting a stochastic forecast, we find that until 2060 the potential labor supply in Germany is declining by 11.7 percent, strongly driven by the even more distinct decline of the working-age population and only partially cushioned by rising participation rates. Thereby, increasing immigration to Germany is highly probable, yet its net effect is limited due to simultaneously rising emigration figures." (Author's abstract, IAB-Doku) ((en))
    Keywords: IAB-Open-Access-Publikation
    JEL: F22 J11 J21
    Date: 2023–05–05
  44. By: Yoav Roll; Moshe Semyonov; Hadas Mandel
    Abstract: Despite the steady increase in the number of women who join the labor force, there are still substantial cross-country variations in both women’s labor force participation and gender-linked occupational inequality. Utilizing micro-data from 47 countries (circa 2013) obtained from the Luxembourg Income Study, we examine the extent to which globalization and each of its three components (economic, social and political) affect gender-based economic inequality. In particular, we investigate the effect of globalization on two outcomes: women’s labor force participation and women’s relative odds of obtaining high-income, high-status jobs. The findings show, first, that social globalization is more consequential for gender inequality in the labor market than either economic or political globalization. Second, while social globalization increases women’s labor force participation, it reduces women’s relative odds of obtaining lucrative, high-status jobs. The findings are discussed in light of the comparative literature on gender-based inequality.
    Date: 2022–03
  45. By: Isaac K. Ofori (University of Insubria, Italy); Andreas Freytag (Friedrich Schiller University, Jena, Germany); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This study examines the contingency and threshold effects of economic freedom in the economic globalisation (EG) and inclusive green growth (IGG) relationship in Africa. Based on macro data for 22 African countries and the Driscoll-Kraay standard errors with fixed effects instrumental variable regression, the following findings are established. First, Africa’s mostly unfree economic setting, conditions EG to reduce IGG. Second, when we disaggregate EG into its financial and trade globalisation components, we find that the IGG-impeding net effect of the latter is rather striking. Third evidence from our threshold analysis suggests that by improving Africa’s mostly unfree economic architecture to 60% (moderately free)or 80% (free), the IGG-deteriorating net effects of EG are mitigated (but not nullified). We conclude that unless effort is made to improve Africa’s economic architecture level, the envisaged IGG gains of economic globalisation might prove elusive.
    Keywords: F14; F4; O56; Q01
    Date: 2023–01
  46. By: Patricia Cortés
    Abstract: Most of the literature on how immigration affects the labor market focuses on the outcomes of natives in direct competition with immigrants. This paper reviews a growing literature on an alternative channel. Immigrants, particularly low-skilled women, are disproportionately represented in the household services sector, a global phenomenon that is seen to some extent in most regions. A simple time-use model suggests that by lowering the price of market-provided household services, immigrant workers allow high-skilled native women to reduce their unpaid household production and increase their participation in the labor market. I review existing evidence that the presence of foreign domestic workers has increased the labor supply of high-skilled native women, has helped narrow the gender earnings gap in high-paying powered occupations, and that these advances have not come at the cost of native women investing less time in their children or having lower birth rates. I discuss the policy implications of these results, as well as some ethical considerations.
    JEL: J16 J22
    Date: 2023–05
  47. By: Daniel Crisóstomo Wainstock; Oded Galor; Marc Klemp
    Abstract: Evidence suggests that the Out of Africa Migration has impacted the degree of intra-population genetic and phenotypic diversity across the globe. This paper provides the first evidence that this migration has shaped cultural diversity. Leveraging a folklore catalogue of 958 oral traditions across the world, we show that ethnic groups further away from East Africa along the migratory routes have lower folkloric diversity. This pattern is consistent with the compression of genetic, phenotypic, and phonemic traits along the Out of Africa migration routes, setting conditions for the emergence and proliferation of differential cultural diversity and economic development across the world.
    Keywords: diversity, Out of Africa, culture
    JEL: Z10 O10
    Date: 2023
  48. By: Morales Meoqui, Jorge
    Abstract: The paper offers the first interpretation of David Ricardo’s famous numerical example fully compatible with the primary source. It claims that the sole purpose of the four numbers was to illustrate that the relative value of commodities made in different countries is not determined by the respective quantities of labour devoted to their production. This exception results from unequal ordinary profit rates between countries because capital does not move across national borders as easily as it does within the same country. Likewise, the paper also debunks some entrenched myths about the numerical example. It shows that Ricardo did not leave the terms of trade indeterminate; that the purpose of the four numbers was not about measuring the gains from trade; and lastly, that Portugal had no productivity advantage over England. All of this contradicts the way scholars have interpreted Ricardo’s numerical example since the mid-nineteenth century.
    Date: 2023–04–29
  49. By: Moreno-Cruz, Juan; Harding, Anthony
    Abstract: Strategic interventions among nations are likely to differ across the portfolio of possible climate change policies, including mitigation, adaptation, and solar geoengineering. With this in mind, we propose a theory of climate policy-motivated foreign intervention to study different forms of international climate governance in the presence of power imbalance. Foreign countries have at least three options to intervene in another country’s domestic climate policy: a) agreements with extraction, b) agreements with transfers, and c) agreements with sanctions. We distill the fundamental properties of different climate-policy options into a simple parameterization and examine the incentives and preferences for each type of foreign intervention. We find that the preference for the type of intervention depends critically on the policy externality of different domestic climate policies.
    Date: 2023–05–30
  50. By: Michael S. Michael; Panos Hatzipanayotou (Athens University of Economics and Business); Nikos Tsakiris
    Abstract: We develop a model of two small open asymmetric economies with two tradable and one non-tradable goods, capital mobility and consumption generated cross border pollution. We show that the Nash equilibrium calls for a consumption tax and capital tax (subsidy) when the consumption of the tradable (non-tradable) good pollutes. In this model, the consumption tax causes pollution leakages between the two countries which is partly offset by the capital tax or subsidy. Thus, the existence of non-tradable goods and international capital mobility induce the small countries to act strategically. In the absence of capital taxes, consumption taxes are lower to their rates when capital taxes are also present since are used strategically to mitigate the pollution leakage.
    Keywords: Pollution Leakage, Non-tradable Goods, Capital Mobility, Capital and Consumption Taxes, Consumption-generated Cross-border Pollution
    JEL: F15 F18 F20 H20
    Date: 2023–05–08
  51. By: Camilla Mastromarco; Laura Serlenga; Yongcheol Shin
    Abstract: We develop a unified stochastic frontier model which controls for the local spatial correlation and the global factor dependence as well as parameter heterogeneity, simultaneously. We then propose the regional productivity network analysis to examine the diffusion impacts of the capital intensity on the labour productivity in the EU. We apply the proposed approach to the dataset consisting of 202 regions in the EU15 countries over 1980-2019, and convincingly unveil that the technological shock diffuses from efficient regions operating on or near the frontier to inefficient regions. This suggests that policies to enhance domestic absorption capacity appear better suited to net receivers of technological shocks whilst policies to attract more R&D investments are appropriate to their transmitters. In this regard we stress the importance of investing European funds in peripheral regions to address regional inequality and polarisation.
    Keywords: spatial stochastic frontier model with factors and heterogeneity, CCEX-IV estimator, regional productivity network analysis in the EU, efficiency clusters
    JEL: C13 C33 D24 O47
    Date: 2023
  52. By: Fakhri Hasanov; Muhammad Javid; Jeyhun Mikayilov; Rami Shabaneh; Abdulelah Darandary; Ryan Alyamani (King Abdullah Petroleum Studies and Research Center)
    Abstract: Macroeconomic and sectoral assessment of the energy price reform (EPR) can provide policymakers with useful insights regarding price deregulation options. A key feature of this research that differentiates it from many other studies is its modeling framework. The framework first estimates how theoretically articulated determinants (e.g., income and price) historically shaped natural gas demand. Then, this estimated equation is integrated into a macroeconometric model called KGEMM to simulate the impact of natural gas prices on key macroeconomic and sectoral indicators that are of policy interest for the coming years.
    Keywords: Agent based modeling, Analytics, Applied research, Autometrics
    Date: 2023–10–04
  53. By: Klaus Gründler; Philipp Heil; Potrafke Niklas; Timo Wochner
    Abstract: The US Inflation Reduction Act (IRA) promotes renewable energy and contributes to climate protection, but also offers generous tax credits and subsidies to incentivize production in the United States. While the planned generosity of the program has sparked an intense debate about potential negative spillover effects on the global economy, little is known about the quantity of potential adverse effects. We conduct a large-scale international survey among leading economic experts worldwide to quantify the effect of the US Inflation reduction act on the global economy. On a global scale, experts are little concerned about negative effects of the IRA on their domestic economy, estimating both the impact on national output and the risk of business outflows to be low. However, we uncover large heterogeneity in the potential impact of the IRA across countries and regions. In Europe, particularly in France and Germany, economic experts are highly concerned about the IRA and expect a significant effect of the IRA on the domestic economy. In terms of economic policy reactions, roughly 41% of the respondents support economic countermeasures. We elicit experts’ views about policy measures in open-ended text questions to prevent any priming of the respondents. The respondents propose active industrial policy, including subsidies, but also advocate for increased investment in infrastructure and green sectors. The call for subsidies is particularly strong in Europe.
    Date: 2023

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