nep-int New Economics Papers
on International Trade
Issue of 2023‒06‒26
47 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Deep Trade Agreements and Heterogeneous Firms Exports By Matteo Neri-Lainé; Gianluca Orefice; Michele Ruta
  2. The shift in Russian trade during a year of war By Simola, Heli
  3. Who Pays for the Tariffs and Why? A Tale of Two Countries By Chaonan Feng; Liyan Han; Lei Li
  4. The Empire Project: Trade Policy in Interwar Canada By Markus Lampe; Kevin Hjortshøj O'Rourke; Lorenz Reiter; Yoto V. Yotov
  5. Services Trade Policy and Industry Performance in African Economies By Bernard Hoekman; Matteo Fiorini; Dennis Quinn
  6. South African market access challenges in the European Union: a case of regulatory compliance and non-tariff measures By Hlungwani, Khanimamba
  7. Characteristics of Colombian inward foreign direct investment By Abreo, Carlos; Carrillo, Eduardo; Pédussel Wu, Jennifer
  8. Agricultural transformation and market integration in the ASEAN region: Responding to food security and inclusiveness concerns By Roy, Devesh; Kamar, Abul; Pradhan, Mamata; Saroj, Sunil; Ajmani, Manmeet
  9. Reassessing the Safeguards Mess By Bernard Hoekman; Petros Mavroidis
  10. Geopolitical Competition, Globalization and WTO Reform By Bernard Hoekman; Petros Mavroidis; Douglas Nelson
  11. Reducing regulatory trade costs: why and how? By Jacques Pelkmans
  12. Revisiting the impact of per-unit duties on agricultural export prices By Fabio Santeramo; Dela-Dem Fiankor
  13. An Investigation into the Effects of Border Carbon Adjustments on the Canadian Economy By Y.-H. Henry Chen; Hossein Hosseini Jebeli; Craig Johnston; Sergey Paltsev; Marie-Christine Tremblay
  14. The Macroeconomic Stabilization of Tariff Shocks: What is the Optimal Monetary Response? By Giancarlo Corsetti; Paul Bergin
  15. To Russia with love? The impact of sanctions on regime support By Gold, Robert; Hinz, Julian; Valsecchi, Michele
  16. Pursuing Environmental and Social Objectives through Trade Agreements By Bernard Hoekman; Filippo Santi; Joseph Francois
  17. Navigating the New Normal: The European Union's Changing Stance on Globalization in the Era of Trade Conflicts By Sjöholm, Fredrik
  18. A (more) systematic exploration of the trade effect of product-specific rules of origin By Julien Gourdon; Karin Gourdon; Jaime de Melo
  19. Global Livestock Trade and Infectious Diseases By Cosimo Beverelli; Rohit Ticku
  20. Who is to suffer? Quantifying the impact of sanctions on German firms By Görg, Holger; Jacobs, Anna; Meuchelböck, Saskia
  21. Managing Externalities in the WTO: The Agreement on Fisheries Subsidies By Bernard Hoekman; Petros Mavroidis; Sunayana Sasmal
  22. Global trends in countries' perceptions of the Belt and Road Initiative By García-Herrero, Alicia; Schindowski, Robin
  23. Foreign Direct Investment and Structural Transformation in Africa By Bernard Hoekman; Marco Sanfilippo; Margherita Tambussi
  24. Does the risk of carbon leakage justify the CBAM? By Håkan Nordström
  25. The Least developed countries' TRIPS Waiver and the Strength of Intellectual Property Protection By Gnangnon, Sèna Kimm
  26. Africa under a Warming Climate: The Role of Trade Towards Building Resilient Adaptation in Agriculture By Henri Casella; Jaime de Melo
  27. Asia’s Low-Carbon Transition: Opportunities and Challenges for Trade By Kang, Sung Jin; Park, Donghyun
  28. Does Foreign Direct Investment Promote Political Stability? Evidence from Developing Economies By Assi Okara
  29. Skill-Biased Imports, Skill Acquisition, and Migration By Jingting Fan; Lei Li
  30. Climate equivalence and international trade By Emily Lydgate
  31. How Far Goods Travel: Global Transport and Supply Chains from 1965-2020 By Sharat Ganapati; Woan Foong Wong
  32. Brinks model of international trade of the Visegrad four countries in 2011-2020 By Yekimov, Sergey
  33. How does globalisation affect social cohesion? By Vrolijk, Kasper
  34. On the Pass-Through of Large Devaluations By Carlos Casacuberta; Omar Licandro
  35. What the literature says about the effects of sanctions on Russia By Simola, Heli
  36. Public Opinion and Immigration in Europe: Can Regional Migration Flows Predict Public Attitudes to Immigration? By Lenka Dražanová; Jérôme Gonnot
  37. Synchronisation cyclique globale entre les économies subsahariennes et les économies avancées By Menounga, François Patrick; Manga Akoa, Armand
  38. Exchange rate pass-around By Crozet, Matthieu; Hinz, Julian; Trionfetti, Federico
  39. Is using trade policy for foreign policy a “SNO job”? On linkage, friend-shoring and the challenges for multilateralism By Robert Wolfe
  40. Export impact on dividend policy for big Colombian exporting firms, 2006-2014 By Merchan Alvarez, Federico Alberto
  41. Brothers in arms: The value of coalitions in sanctions regimes By Sonali Chowdhry; Julian Hinz; Katrin Kamin
  42. Resilience of Japanese Multinational Enterprises' Production Networks during the COVID-19 Pandemic By LICHENG, Liang
  44. The impact of the Ukraine conflict on world grains prices By Gilbert, Christopher L.
  45. The Quality of Aid for Trade Flows and Economic Complexity By Gnangnon, Sèna Kimm
  46. What determines the shape of migrant and non-migrant populations’ attitudes toward immigration in Europe? By Michaela Šedovič; Lenka Dražanová
  47. From legacy to the future: Incentivising demand migration through access fees By Eltges, Fabian; Fourberg, Niklas; Wiewiorra, Lukas

  1. By: Matteo Neri-Lainé; Gianluca Orefice; Michele Ruta
    Abstract: This paper studies the effect of regional trade agreements on firms’ exports. Using detailed information on the content of trade agreements and firm-level exports for 31 developing countries between 2000 and 2020, the analysis shows that the depth of trade agreements matters for the export performance of firms. Moving from shallow to deep trade agreements boosts firms’ exports, on average, by 3.6 percent. In line with models of trade with heterogeneous firms and mark-ups, the trade impact of deep trade agreements depends on the firm’s characteristics. The impact is stronger for large firms and firms involved in global value chains and is negative for small firms. Robustness tests, an event study approach and an Instrumental Variable strategy confirm the causal interpretation of the results. These heterogeneous impacts on firms’ exports imply a selection (pro-competitive) effect of deep trade agreements with significant welfare consequences for signatory countries.
    Keywords: deep trade agreements, exports, firm heterogeneity, developing countries
    JEL: F13 F14 F15
    Date: 2023
  2. By: Simola, Heli
    Abstract: This note examines changes in Russia's foreign trade during the past year. We discuss general trends in Russia's trade based on estimates constructed from mirror statistics and developments in EU-Russia trade. The detailed analysis of Russia's technology imports includes a selection of goods subject to EU export restrictions. We find substantial fluctuations in Russia's trade flows and changes in its geographical structure. EU trade with Russia has generally declined substantially and Russia is not an important export market for most EU countries. Our findings suggest that Russia has been unable to find viable substitutes for many EU imports at the aggregate level and most individual technology goods subject to EU export restrictions. Other countries have stepped into the breach and increased their exports to Russia, and in the case of certain products, their exports even exceed the comparable imports lost from the EU.
    Keywords: Russia, Ukraine, trade, sanctions
    Date: 2023
  3. By: Chaonan Feng; Liyan Han; Lei Li
    Abstract: During the U.S.-China trade war, the U.S. punitive tariffs were almost entirely borne by U.S. importers. In contrast, only 68% of China’s retaliatory tariffs were paid by Chinese importers. The puzzling difference between the U.S. and China is mainly driven by their different import structures and product heterogeneity in tariff pass-through. China mainly imported products with lower tariff pass-through from the U.S., such as agricultural products and aircraft, while the U.S. primarily imported products with higher tariff pass-through from China, such as electronics. Furthermore, we decompose the product-level tariff pass-through and show that a higher ratio of import demand elasticity over export supply elasticity leads to lower tariff pass-through under perfect competition.
    Keywords: trade war, tariff pass-through, import structure, product heterogeneity, demand elasticity, supply elasticity
    JEL: F13 F14 F61
    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 analyse 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.
    Keywords: trade policy, trade agreements, interwar tariffs, multilateral resistance, trade elasticities, Canada, empire
    JEL: F10 F13 F14 N72
    Date: 2023
  5. By: Bernard Hoekman; Matteo Fiorini; Dennis Quinn
    Abstract: This paper assesses the potential impacts of services trade liberalization for a sample of African countries. The focus is on the relationship between labour productivity of manufacturing sectors and two types of services trade-related policies – restrictions on foreign direct investment (FDI) in services and restrictions on international payments for invisibles. The analysis takes in account differences across manufacturing sectors in the intensity of use of different services as inputs into production as well as difference in the quality of economic governance across countries. We find that services trade liberalization may have substantial positive impacts on the performance of manufacturing sectors, and increase with services input intensity and the quality of governance.
    Keywords: Services trade policy, services input use, manufacturing productivity, Africa, regional integration
    Date: 2022–12
  6. By: Hlungwani, Khanimamba
    Abstract: The World Trade Organization (WTO) was formed in 1995. Since then, trade liberalisation has been on the agenda, resulting in diverse trade agreements and a subsequent decline in import tariffs. With the decrease in import tariffs, trade is expected to increase. However, despite this trend as well as a great increase in global trade since the 1990s, certain developing countries still struggle to participate in global trade. South Africa and the European Union (EU) trade agreements have existed since 2000. This is through the Trade, Development and Cooperation Agreement (TDCA)—later replaced by the Southern African Development Community-European Union Economic Partnership Agreement (SADC-EU EPA) in 2016. The expected result of such agreements is an improvement in trade relations and flows between the partners. Thus, it can be expected that South Africa would export more orientated products to the EU. South Africa became a net beef exporter in 2014. Trade flows for beef between South Africa and the EU, however, reveal the opposite of what was expected. Beef exports from South Africa to the EU have declined since the early 2000s. Trade patterns demonstrate that South Africa increasingly traded with countries with which it had no formal trade agreements, such as in the Middle East and East Asia. South African beef exports to the EU rapidly declined despite trade liberalisation between the two trading partners and South Africa becoming a net beef exporter. Thus, this research investigates South Africa’s market access challenges in the EU. vi Since the decrease in beef import tariffs did not result in the expected increase in trade between South Africa and the EU, this study focused on investigating whether the observed trends relate to non-tariff measures applied. It further investigated whether the lack of market access concerns non-compliance with EU Non-tariff measures (NTMs) regulations and requirements. The gravity model of international trade assessed the effects of EU NTMs and South Africa’s compliance with these regulations on its beef exports to the EU. This model involved data between 1995 and 2018. Beef exports from South Africa destined for the EU were the dependent variable. Gross domestic product (GDP) per capita in South Africa and the EU, NTMs applied by the EU, beef production in South Africa, tariffs, and a compliance variable functioned as explanatory variables. A compliance index variable was developed to evaluate South Africa’s compliance with EU NTM regulations and requirements. This index was developed from South Africa’s policies complying with EU NTMs in a specific year, and NTMs enforced by the EU. The policies and NTMs focused on animal products, particularly red meat products, between 1995 and 2018. This study established that NTMs applied on beef imports by the EU have harmed South Africa’s beef exports to the EU. Furthermore, although trade agreements between South Africa and the EU have reduced tariffs applied in the beef industry, tariffs continue to negatively affect South Africa’s beef exports to the EU. In evaluating South Africa’s compliance with EU NTM regulations, a divergence was established between EU NTM regulations and requirements on animal products and South Africa’s policies on the same products. During the period when South Africa’s beef exports to the EU declined, NTMs applied by the EU increased quicker than South Africa’s response to them. The divergence between EU NTM regulations and requirements and South Africa’s policy response and thus compliance was prevalent between 2010 and 2018. Thus, the study recommends an evaluation of South Africa’s policies, affecting beef trade and other animal products such that they respond to the changing trade environment, particularly with respect to the use of NTMs.
    Keywords: International Relations/Trade, Livestock Production/Industries
    Date: 2023–01
  7. By: Abreo, Carlos; Carrillo, Eduardo; Pédussel Wu, Jennifer
    Abstract: The research delves into the determinants of inward FDI to Colombia in the context of economic integration promoted by recent governments. Colombia's trade liberalisation, in addition to seeking to boost its trade flow, has focused on making the country more attractive to foreign direct investment (FDI), in a framework of fiscal discipline and a stable economic environment for economic growth, albeit characterised by complex institutional conditions. Government reforms have revitalized FDI inflows to Colombia, with the oil and mining sectors receiving the largest influx of new capital investments. Accordingly, this paper contributes to the literature with an analysis of the characteristics of FDI inflows to Colombia between 2007 and 2020 using an augmented gravity model approach. We find that stable government policies and the rule of law are key components in increasing FDI in Colombia and, more importantly, a bilateral investment treaty (BIT) significantly drives FDI into the country.
    Keywords: FDI, Gravity Model, BITs, Colombia, Institutional quality, Labour competitiveness
    JEL: F21 F36 O16 O54 C10
    Date: 2023
  8. By: Roy, Devesh; Kamar, Abul; Pradhan, Mamata; Saroj, Sunil; Ajmani, Manmeet
    Abstract: In this paper, we address the question of the agricultural market integration of Cambodia, Lao, Myanmar, Vietnam, and Philippines (CLMVP) countries within the Association of Southeast Asian Nations (ASEAN), and its other top trading partners. Using “Trade Potential†and “Competition Indices†indicators in this paper we assess the nature and extent of the agricultural market integration. We identify the exports of CLMVP countries with high export potential and comparatively low competition in export markets. Higher trade potential with lower competition (value or volume) indicates an opportunity of higher returns for agricultural producers. CLMVP countries are characterized by low diversity in agricultural exports. Nearly half of the total agricultural exports from all of them except Laos is contributed by only one commodity. It is found that market integration is an effective way of linking CLMVP smallholders to ASEAN agricultural markets. In addition to that this paper also discusses on tariff and non-tariff policy of CLMVP countries and found that the average tariffs on agri-food imports in CLMVP is 11.8% while it is 9.5% in non-CLMVP among the ASEAN countries. In non-tariff policy, among the CLMVP countries, Philippines shares the maximum number of SPS measures implemented on agricultural goods while Cambodia and Lao PDR did not report any SPS measures implemented by them between 2006 to 2020. Finally, to demonstrate the upward movement in the value chain, possibly due to quality upgradation, we present the dynamics of the unit values of CLMVP’s agricultural exports.
    Keywords: CAMBODIA; LAO PEOPLE'S DEMOCRATIC REPUBLIC; INDOCHINA; MYANMAR; BURMA; VIET NAM; PHILIPPINES; SOUTH EAST ASIA; ASIA; trade; trade associations; agriculture; markets; exports; competition; returns; commodities; tariffs; policies; imports; value chains; agricultural markets; market integration; trade potential; unit value; competition indices
    Date: 2023
  9. By: Bernard Hoekman; Petros Mavroidis
    Abstract: The WTO Agreement on Safeguards was hailed as an important achievement of the Uruguay round, rightly so, given that it managed to outlaw the use of voluntary export restraints. Intended to facilitatethe use of transparent, temporary, and non-discriminatory instruments to assist domestic industriesinjured by import competition, World Trade Organization (WTO) jurisprudence undermined therealization of this objective. Worse, erratic case law created negative externalities, ranging fromgreater recourse to more discriminatory trade practices and use by the United States (US) of thetypes of managed trade that the Agreement of Safeguards was meant to abolish. As in the classicbootlegger-Baptist metaphor in the literature on regulation, the unintended consequence of WTOjurisprudence on safeguards has been more rather than less selective protection (discriminatorytrade policies). As, if not more important, it made it more difficult for WTO members to use aninstrument intended to assist governments in sustaining political support for an open trade regime.In this paper, we describe the source of discomfort and suggest ways to address it in a meaningfulmanner.
    Keywords: Emergency protection, safeguards, trade agreements, WTO, Appellate Body
    Date: 2023–02
  10. By: Bernard Hoekman; Petros Mavroidis; Douglas Nelson
    Abstract: Global trade and investment is increasingly characterized by systemic conflicts, giving rise to unilateral policies to attain competitiveness, national security and other noneconomic objectives. Disparate national measures motivated by all these objectives targeting the global value chains that have helped drive globalization create policy uncertainty, increase political risk and potentially distort trade and investment decisions. Sustaining an open, rules-based trade system calls for deliberation to help clarify underlying policy objectives, assess effectiveness and spillover effects of domestic measures. Policy dialogue centered on the use of specific trade concerns, already used in some WTO agreements, offers a path forward for such dialogue, one that may be more effective than formal dispute settlement, assuming a functioning dispute resolution system can be re-established, in coping with the return of geopolitical rivalry. Plurilateral cooperation among like-minded nations on the use of trade policies to pursue noneconomic objectives, and between the large trade powers on economic policies that generate competitiveness concerns, are both a pragmatic and efficient path forward in addressing spillovers associated with the rise of unilateral trade action motivated by security considerations and domestic nontrade objectives.
    Keywords: Globalization, geopolitics, national security, values, noneconomic objectives, WTO
    Date: 2022–11
  11. By: Jacques Pelkmans
    Abstract: Regulatory trade costs matter. They consist of the costs incurred by A exporters of effective marketaccess to B due to different regulation and enforcement, in particular of ‘risk regulation’ (health, safety, environment). Stronger, negotiations for ‘deeper’ bilateral and regional trade agreementsas well as estimates of tariff equivalents of ‘regulatory trade costs’ have increased the awarenessthat lowering of regulatory trade costs is quintessential for world trade. For middle-income anddeveloping countries, these costs are rising secularly. This paper critically reviews the three principalways of reducing such costs to the world economy – trade agreements, international regulatorycooperation, and global technical standardisation – and discusses how to render these moreeffective. Key challenges are to reduce national standards setting and to promote more effectivelyworld standards. The European Union plays a frontrunner role in this regard, including for informationand communications technology standards.
    Keywords: Regulatory trade costs, risk regulation, mutual recognition agreements, international regulatory cooperation, the Vienna and Frankfurt Agreements, global ICT standardization
    Date: 2023–04
  12. By: Fabio Santeramo; Dela-Dem Fiankor
    Abstract: We replicate the findings of Emlinger and Guimbardr (ERAE, 2020) on the heterogeneous effects of per-unit tariffs on trade patterns for developed and developing countries. Analysing import and export data from 2001 to 2013, they confirm the Alchian-Allen conjecture that per-unit trade costs induce higher export unit values. However, the effects are more pronounced for developed country exporters.. Understanding the effects of per-unit trade costs vis-a-vis ad-valorem tariffs is important to level the playing field of trade negotiations that involve pricing and non-pricing policies. We extend the original study with data for 191 exporting (190 importing) countries, and 670 HS6 digit products, covering the period 2001-2019 period.The general findings of the original study hold, with remarkable differences. First, using a data set that is constructed in a replicable way and introducing highly relevant bilateral fixed effects reduce effect sizes and the level of statistical significance. Second, the Alchian-Allen effect is not clearly separated by the economic development dimension of the exporter, but rather dependent on the price levels of the traded goods. These results have important policy implications as they call for deeper investigation on countries’ industrial structures of exports to better shape the international debate on trade negotiations.
    Keywords: gravity, replication, trade, per-unit, ad-valorem
    JEL: F13 Q17 Q18
    Date: 2023–03
  13. By: Y.-H. Henry Chen; Hossein Hosseini Jebeli; Craig Johnston; Sergey Paltsev; Marie-Christine Tremblay
    Abstract: This paper examines how border carbon adjustments (BCAs) may address the unintended consequences of uncoordinated global climate action, focusing on the economic implications for Canada. We investigate these implications under different BCA design features and by considering a coalition of countries and regions that adopt BCAs. We find that BCAs, in the form of import tariffs, reduce Canada’s carbon leakage to the rest of the world and improve its domestic and foreign competitiveness when Canada is part of a coalition of countries and regions that implement BCAs that includes the United States. We show that these results may change if Canada imposes BCAs on a different set of sectors than the rest of the coalition or includes export rebates and free emissions allowances to firms. When the United States is not part of the coalition, we show that Canada’s carbon leakage increases, domestic competitiveness dampens and foreign competitiveness improves. Compared with a case where no countries have BCAs, welfare improves in Canada if revenues from BCAs, in the form of import tariffs, are transferred to households. This finding holds regardless of the United States’ participation in the coalition.
    Keywords: Climate change; International topics; Trade integration
    JEL: C68 F1 H2 Q5 Q37
    Date: 2023–05
  14. By: Giancarlo Corsetti; Paul Bergin
    Abstract: In the wake of Brexit and Trump trade war, central banks face the need to reconsider the role ofmonetary policy in managing the inflationary-recessionary effects of hikes in tariffs. Using a NewKeynesian model enriched with global value chains and firm dynamics, we show that the optimalmonetary response is expansionary. It supports activity and producer prices at the expense ofaggravating short-run headline inflation---contrary to the prescription of the standard Taylor rule. Thisholds all the more when the home currency is dominant in pricing of international trade.
    Keywords: Tariff shock, tariff war, optimal monetary policy, production chains
    Date: 2023–03
  15. By: Gold, Robert; Hinz, Julian; Valsecchi, Michele
    Abstract: Do economic sanctions affect internal support of sanctioned countries' governments? To answer this question, we focus on the sanctions imposed on Russia in 2014 and identify their effect on voting behavior in both presidential and parliamentary elections. On the economic side, the sanctions significantly hurt Russia's foreign trade - with regional-level variation. We use trade losses caused by the sanctions as measure for regional sanction exposure. For identification, we rely on a structural gravity model that allows us to compare observed trade flows to counterfactual flows in the absence of sanctions. Difference-in-differences estimations reveal that regime support significantly increases in response to the sanctions, at the expense of voting support of Communist parties. For the average Russian district, sanction exposure increases the vote share gained by president Putin and his party by 13 percent. Event studies and placebo estimations confirm the validity of our results.
    Keywords: Economic sanctions, voting behavior, gravity estimation, rally-around-the-flag
    JEL: F12 F14 F15
    Date: 2023
  16. By: Bernard Hoekman; Filippo Santi; Joseph Francois
    Abstract: Using a large dataset covering more than 180 countries and spanning several decades, we employ a SDID estimator to identify the extent to which trade agreements incorporating non-trade provisions (labor standards, environmental protection and civil and political rights) are associated with improvements in corresponding non-trade performance indicators. We distinguish between binding (enforceable) and non-binding provisions in trade agreements, and also control for the allocation of official development assistance targeting these three non-trade policy areas. Overall, the results suggest that efforts made to date to include non-trade provisions in trade agreements have not resulted in consistent desired (better) non-trade outcomes.
    Keywords: Non-trade policy objectives, trade agreements, trade and environment, trade and human rights, trade and labour rights
    Date: 2022–11
  17. By: Sjöholm, Fredrik (Research Institute of Industrial Economics (IFN))
    Abstract: The European Union (EU) is becoming more inward looking and more hesitant towards globalization. This paper examines recent transformations in EU's economic policies, with a focus on international trade and industrial policy. It argues that these changes reflect the EU's response to the evolving global economic and political landscape, driven by factors such as China's rise and the US's protectionist policies. By analyzing the potential consequences of these policy adjustments on EU industries' competitiveness and trade relations, the paper offers insights into the future prospects of EU economic policies and their role in shaping the global economy.
    Keywords: Globalization; European Union; Trade War; Industrial Policy
    JEL: F02 F15 F51
    Date: 2023–05–31
  18. By: Julien Gourdon; Karin Gourdon; Jaime de Melo
    Abstract: Rules of Origin (RoO) are critical components of Preferential Trade Agreements (PTAs). They are designed to stop products coming into a PTA through the partner that applies the lowest tariff – a phenomenon known as trade deflection. While RoO are necessary, complex RoO may undo the benefits of trade agreements. Using a novel database of RoO, this paper evaluates the incidence and restrictiveness of different types of Product-Specific Rules of Origin (PSRs) across 128 reciprocal PTAs for the period 1990 - 2015. Results, based on a structural gravity model controlling for confounding factors, display wide heterogeneity across different categories of PSRs attached to preferential margins, with more flexible PSRs associated with a significantly stronger trade effect compared to more restrictive ones where exporters do not have a choice among PSRs or have to satisfy multiple PSRs. A simulation exercise reveals that a radical simplification reform leading to the adoption of flexible PSRs providing alternative choices to prove origin would have increased global trade under PTAs on average by between 2.7 and 4 percent during the sample period.
    Keywords: Rules of origin, Product-specific rules of origin, Regime-wide rules of origin, compliance costs
    JEL: F1 F14 F15
    Date: 2023–04
  19. By: Cosimo Beverelli; Rohit Ticku
    Abstract: Large-scale movement of animals through trade can spread diseases to places where they arenot endemic. In this paper, we identify the causal effect of global livestock trade on the spread ofinfectious animal diseases through an exogenous increase in the demand for imported livestock. Theinstrumental variable approach exploits an increase in halal livestock imports in Muslim countriesduring Eid-al-Adha to determine the effect of livestock imports on related infections. Using a datasetthat covers 123 countries and five livestock categories in the months between 2004 and 2019, wefind an imports-to-infections elasticity of about 0.75. The relationship is stronger for countries that arelikely to import infected livestock from their partners. There is also evidence that infections spreadthrough interaction between imported livestock, some of which might be infected, and domesticlivestock. These results highlight transmission-through-trade from the origin to the destination.
    Keywords: International trade, Livestock diseases, Religious festivals, Eid-al-Adha
    Date: 2023–02
  20. By: Görg, Holger; Jacobs, Anna; Meuchelböck, Saskia
    Abstract: In this paper, we use a novel firm level dataset for Germany to investigate the effect of sanctions on export behaviour and performance of German firms. More specifically, we study the sanctions imposed by the EU against Russia in 2014 in response to the annexation of Crimea and Russia's countermeasures. We find a substantial negative effect on both the extensive and intensive margin of German exports. While the negative effects are strongest for firms exporting products subject to trade restrictions, we provide further evidence on the indirect effects of sanctions. Analysing the impact on broader measures of firm performance, we document that the cost of sanctions is heterogeneous across firms but overall modest. Our results reveal that the negative impact of the shock was concentrated primarily among a small number of firms that were highly dependent on Russia as an export market and those directly affected by the sanctions.
    Keywords: sanctions, foreign policy, trade, firm behaviour, Germany
    JEL: F1 F14 F51 L25
    Date: 2023
  21. By: Bernard Hoekman; Petros Mavroidis; Sunayana Sasmal
    Abstract: By prohibiting subsidies that support illegal, unregulated or unreported fishing activities and contribute to unsustainable depletion of marine resources, the 2022 Agreement on Fisheries Subsidies (AFS) is the first WTO treaty to recognize that a specific trade policy instrument can have adverse consequences for the global commons. We assess the AFS as such, and through the lens of the broader challenge confronting WTO members in determining how to address subsidy spillovers and adapt trade policy rules to protect the global commons. While the AFS is a step forward for the WTO, definitions of what constitutes a subsidy and the approach taken to ensure transparency are those that have been part of the WTO since 1995 and have become cause for contestation and calls for reform. We suggest ways in which birth defects can be addressed in the course of implementing and expanding the coverage of the agreement.
    Keywords: Subsidies, environmental spillovers, transparency, international cooperation, WTO
    Date: 2022–12
  22. By: García-Herrero, Alicia; Schindowski, Robin
    Abstract: Since China's Belt and Road Initiative (BRI) was announced almost a decade ago, circumstances in global politics have changed radically. The trade war between the United States and China, and most recently the Covid-19 pandemic have caused a partial reshuffling of the international economic architecture. At the same time, China has become stronger and more self-confident, more innovative and more embedded in global value chains. Under the framework of the BRI it has become the world's largest official creditor in 2017. As of recently, an increasing number of countries have fallen into debt distress, some of which have received substantial investment from China. The question is then how the image of the BRI has evolved as these conditions have shifted. Drawing on global media reports, we conduct an analysis of the sentiment towards China's Belt and Road Initiative across geographies and of how this sentiment has evolved over time.
    Keywords: China, Belt and Road Initiative, sentiments
    Date: 2023
  23. By: Bernard Hoekman; Marco Sanfilippo; Margherita Tambussi
    Abstract: This paper analyzes the relationship between inward FDI and structural transformation of local labour markets in Africa. We combine geolocalized information on the distribution of FDI with a noveldatabase that provides information from 40, 665, 627 individuals in 2, 570 subnational units over the period 1987-2019. Results are suggestive of a positive effect of FDI on structural transformation.FDI contributes to an increase in employment, and shifts of workers towards modern industries and higher-skilled occupations. No effects are found on self-employment. Results are heterogeneous, reflecting the characteristics of the foreign investor and of the business activity undertaken by foreign firms in the local market. Geospatial analysis of changes in performance of domestic firms exposed to nearby FDI projects provides evidence of horizontal spillovers and inter-industry linkages, suggesting a complementary mechanism through which FDI drives structural change.
    Keywords: FDI, Jobs, Structural Transformation, Africa
    Date: 2023–01
  24. By: Håkan Nordström
    Abstract: The Paris Agreement calls on developed countries to take the lead in global efforts to stop climate change. The drawback with differentiated commitments is carbon leakage, that is, that emission- intensive industries migrate to countries with lower carbon prices. This risk has prompted the EU to introduce a Carbon Border Adjustment Mechanism as part of the “fit-for-55” agenda with the goal of reducing emissions by 55 percent by 2030. In practical terms, the CBAM will equalize the carbon price paid by domestic and foreign producers in the internal market. Other OECD countries are considering similar measures, which will primarily affect developing countries. The issue thus has a north-south dimension that may increase tensions in global trade and climate negotiations. This paper reviews the empirical evidence of carbon leakage from 1995 to 2018, finding that it has played a marginal role for global emissions. Yet, the perceived risk must be managed to allow the EU and other leading parties to lead the way to decarbonize the global economy without risking their own industrial base. The practical solution would be to negotiate new rules on trade-related climate measures that balance the interests of all parties, as proposed by the Secretary-General of the OECD.
    Keywords: Climate change, the European Union, carbon border adjustments, WTO, the Paris agreement, traderelated climate-measures
    Date: 2023–02
  25. By: Gnangnon, Sèna Kimm
    Abstract: Members of the World Trade Organization (WTO) have accorded many flexibilities to the least developed countries (LDCs) in the WTO's Trade-Related Intellectual Property (TRIPS) Agreement. A major LDC-specific flexibility in this Agreement that other developing country Members of the WTO do not enjoy has been the general transition period for the implementation of the Agreement, in view, inter alia, of their need for flexibility to create a viable technological base. The present article investigated whether this LDC-specific Waiver in the TRIPS Agreement genuinely helped LDCs reduce the strength of their Intellectual Property Protection (IPR), as expected. The analysis was carried out using the Difference-in-Difference framework, along with the within fixed effects and the 'Quantile via Moments' estimators. The panel dataset contains 24 LDCs (treatment group) and two control groups, over the period from 1970 to 2015. The first control group (the main one in the analysis) included 15 countries that had not been in the LDC category, but would not have met the criteria for graduating from the category of LDCs if they were included in the category. The second control group, used for robustness check, included 9 low-income countries that yet, were not LDCs, but were eligible to the Poverty Reduction and Growth Facility of the International Monetary Fund. The empirical analysis has established that the TRIPS Waiver was instrumental in reducing the IPR levels in LDCs, and LDCs that had lower IPR levels (i.e., those located in the lower quantiles) enjoy larger reductions in IPR levels, thanks to this Waiver. Moreover, the effect of the TRIPS Waiver on LDCs' IPR levels depended on LDCs' duration of the membership in the WTO, as well as on their level of innovation-driven export variety, measured by their level of export product concentration or alternatively their degree of economic complexity.
    Keywords: Least developed countries, TRIPS Waiver, World Trade Organization
    JEL: F13 O34
    Date: 2023
  26. By: Henri Casella; Jaime de Melo
    Abstract: The paper reports on evidence on how trade can help Africa adapt to Climate Change (CC) along three dimensions: (i) fast-onset events from short-lived extreme occurrences (floods, extreme temperatures); (ii) slow-onset events (rise in average temperatures and sea-level rise); (iii) trade facilitation policies.• Fast onset events. Trade reduces the amplitude of extreme events like a drought. But policy reactions to large shocks can increase the amplitude of the shock. During the South African drought of 2015-6, policies had spillovers in neighboring countries. Following the 2008-09 financial crisis, export restrictions by major crop exporters and reduction in tariffs by importers amplified the shock. Policy coordination is needed to control spillover effects.• Slow-onset events. Modelling efforts have concentrated on exploring the ‘margins’ of adjustment to CC: changes in production levels of existing crops; switches in crops; changes in land utilization; labor relocating to urban areas/migration; adjustments in the volume of trade at different scales (regional or international). All reviewed models show that enlarging the channels of adjustment mitigate the amplitude of the loss in welfare from expected CC over the 21st Century. Decomposing the welfare changes suggests two conclusions. First adjustments in crop selection and in bilateral trade partners contribute approximately equally to reducing the costs of adjustments. Second, the expected sharp increase in food prices resulting from warming is likely to hit SSA most strongly.• Trade facilitation. A functioning global trading system is a public good to become more valuable under CC. Free and unfettered access to global food (and other key) supplies must be ensured, especially for Africa. This requires a rapprochement between the trade and climate regimes. As an entry point, besides dealing with harmful subsidies (fossil fuels, fisheries), developed countries could conclude a plurilateral Environmental Goods Agreement (EGA) that would be a triple win for trade, for the environment, and for African agriculture that needs tariff-free access to climate-Adaptation related EGs (AEGs). The paper documents the magnitude of tariffs on Environmental Goods.The paper concludes that African countries could improve the functioning of the continental policy architecture by several measures. First by excluding AEGs from exclusion lists on the AfCFTA while simultaneously reducing their barriers to trade on AEGs and EPPs. Second, preserving the environment should be mainstreamed in the African trade architecture by including environmental provisions.
    Keywords: Climate change, adaptation, Africa, Environmental goods
    JEL: Q50 Q56 F18 F64
    Date: 2022–07
  27. By: Kang, Sung Jin (Department of Economics, Korea University); Park, Donghyun (Asian Development Bank)
    Abstract: The central objective of our paper is to assess the opportunities and challenges for trade for Asian economies during the low-carbon transition. To do so, we examine the green trade patterns of Asian Development Bank member economies in the Asia and Pacific region between 1990 and 2019 based on three widely used green industry classifications, namely US BLS GGS, OECD ENV-TECH, and OECD CLEG classifications. Our analysis yields three key findings. First, the share of green goods in the exports of Asian economies has consistently increased since the early 2010s. Second, the share of Asian economies in global green exports has grown rapidly in recent years. Third, manufacturing products, especially machinery and electric equipment, account for the largest share of green trade. In fact, since the early 2010s, the shares of Asian economies in world manufacturing green exports and imports have increased. However, the green imports share showed faster growth than the exports share. Finally, the pattern of green trade differs depending on green industry definition, pointing to a need for international consensus on defining green trade in order to measure and analyze green trade patterns more accurately.
    Keywords: low-carbon transition; green; trade; environment; Asia
    JEL: F18
    Date: 2023–06–07
  28. By: Assi Okara (African Development Bank Group, 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)
    Abstract: Socio-political instability remains a threat to development. While concerns are often raised regarding the role foreign investors play in perpetuating this threat, empirical evidence on FDI's internal political effects is scarce and presents mixed results. In line with the literature on the determinants of political risk, this paper posits that by generating economic opportunities, FDI promotes political stability. Unlike the extant literature, which considers overall FDI, I test this hypothesis by focusing on greenfield FDI, given its greater socioeconomic externalities resulting from directly generated new economic activity and jobs. While this literature focuses on armed conflicts, socio-political stability in this paper is approached from an institutional perspective. Based on a large sample of developing countries and instrumental variable techniques, the results show that FDI fosters socio-political stability. Accounting for political repression, the results also highlight that FDIinduced stability is compatible with governmental respect for human rights, thus preserving individual well-being.
    Keywords: Greenfield FDI, institutions, political stability, developing countries
    Date: 2023–02–27
  29. By: Jingting Fan; Lei Li
    Abstract: Imported capital goods, which embody skill-complementary technologies, can increase the supply of skills in developing countries. Focusing on China and using a shift-share design, we show that city-level capital goods import growth increases the local skill share and that both skill acquisition and migration play a role. We develop and quantify a spatial equilibrium model with these two mechanisms to examine the aggregate effects of capital goods imports, accounting for trade and migration linkages between cities. Counterfactual experiments suggest that the growth in capital goods imports in China between 2000 and 2010 led to a 3.7-8.9 million increase in the stock of college graduates, representing 5.7-13% of the total increase over this period. However, this growth disproportionately favored coastal regions, exacerbating existing spatial disparities.
    Keywords: Imported capital goods, capital-skill complementarity, skill acquisition, migration
    JEL: F14 F16 F66 J24 J61
    Date: 2023–06
  30. By: Emily Lydgate
    Abstract: This article examines a significant question in navigating trade and climate tension: how to recognise another country as having equivalent climate regulation. Such equivalence forms the foundation of many proposed models of so-called climate clubs. Establishing equivalence between distinct national climate regulation regimes poses a unique challenge that draws upon both trade and environmental international cooperation. Drawing on existing proposals, I examine prospects for country-based cooperation through three models: ETS-linking, benchmarking of shared methods and minimum standards, and benchmarking of outcome duties. The analysis concludes that all models necessitate some trade-offs between the goals of rigorous oversight of climate objectives, inclusivity, and WTO-compliance. Benchmarking of shared methods and minimum standards seems most feasible, and would provide a deeper level of integration between trade and climate cooperation, but necessitates a shift in how countries, particularly the EU, oversee regulatory compliance.
    Keywords: Climate Equivalence, Climate Clubs, Border Carbon Adjustment
    Date: 2022–10
  31. By: Sharat Ganapati; Woan Foong Wong
    Abstract: This paper considers the evolution of global transportation usage over the past half century and its implications for supply chains. Transportation usage per unit of real output has more than doubled as costs decreased by a third. Participation of emerging economies in world trade and longer-distance trade between countries contribute to this usage increase, thereby encouraging longer supply chains. We discuss technological advances over this period, and their interactions with endogenous responses from transportation costs and supply chain linkages. Supply chains involving more countries and longer distances are reflective of reliable and efficient transportation, but are also more exposed to disruptions, highlighting the importance of considering the interconnectedness of transportation and supply chains in policymaking and future work.
    JEL: F01 F15 R4 R40
    Date: 2023
  32. By: Yekimov, Sergey
    Abstract: Interpolation of time series by the sum of exponents of the function of a complex variable makes it possible to achieve an approximation accuracy no worse than using regression analysis. Despite the fact that time series are interpolated by functions of a complex variable, the values of these functions under certain conditions are real numbers. To calculate the interpolating function, the author used standard procedures used in the MATHLAB software. The absence of extremum points for exponents is the main advantage when using exponent sums for interpolation purposes compared to interpolation by polynomials.Numerical series characterizing the volume of exports and imports within the Visegrad four were approximated as a sum of sixteen exponents , which are functions of a complex variable .
    Keywords: BRINKS model of international trade, functions of a complex variable , interpolation, economic and mathematical modeling, BRINKS model
    JEL: A10 F12
    Date: 2023–04–12
  33. By: Vrolijk, Kasper
    Abstract: This paper explores the effects of globalisation on social cohesion outcomes and the underlying mechanisms. A framework for reviewing the literature is offered, in which labour earnings, household expenditures and firm productivity are identified as the main channels through which economic globalisation affects cohesion, trust and pro-social behaviour. Evidence points towards substantial losses in cohesion following negative globalisation changes, altering cohesion through absolute and relative changes in employment and expenditure (and people's perception thereof). However, evidence is thin and inconsistent; studies are limited to effects of trade (and not foreign direct investment), cover some dimensions of cohesion but not others, and often evaluate the effect of negative trade events on cohesion (while trade and foreign direct investment may offer gains to workers, households and firms, which boosts cohesion). From the available evidence, it is determined that when setting policy, it is important to address relative losses from globalisation (between groups), incorporate economic costs of social repercussions, and take on market distortions and underlying cyclical or secular trends that may amplify the effects of globalisation on cohesion.
    Keywords: Globalisation, social cohesion
    Date: 2023
  34. 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
  35. By: Simola, Heli
    Abstract: This policy brief frames the discussion of sanctions imposed on Russia since the invasion of Ukraine in a wider international and historical perspective. We present a brief review of recent literature related to the macroeconomic effects of sanctions in Russia and other countries. Our analysis suggests that the general economic effects of the war and sanctions on Russia are neither unprecedented nor insignificant in comparison to previous sanction episodes. The literature also suggests that while the overall economic effects of sanctions on Russia have been diluted by various factors, they have strongly affected the parts of the Russian economy they target.
    Keywords: Russia, war, sanctions, trade, FDI
    Date: 2023
  36. By: Lenka Dražanová; Jérôme Gonnot
    Abstract: This article investigates how European public opinion has responded to short-term variations inregional foreign-born immigration over the past decade (2010-2019). Combining data from theEuropean Social Survey and the European Union Labour Force Survey, we test how natives’opinions over migration policy and the contribution of immigrants to society have changed with thenet rate of international migrants in 183 EU regions from 21 countries. We find that while EuropeanUnion natives living in regions with a higher share of foreign-born populations are generally less antiimmigrant, a short-term increase in the number of immigrants within a given region is associated withmore negative attitudes in Western Europe only. Moreover, our gender and origin decompositionindicate that male immigrants and those born outside of the European Union are driving most ofthe negative association between public opinion and changes in the level of immigration in WesternEuropean countries, while the educational attainment of migrants makes little difference. The scopeof our analysis for Central and Eastern Europe is more limited due to the smaller share of foreignbornimmigrants living in those regions. Despite this caveat, our analysis suggests that inflows ofEuropean migrants in Central and Eastern Europe are generally associated with more positiveviews towards immigration, regardless of their skill level. Our findings demonstrate the importanceof temporal dynamics for attitudes to immigration. They also point to the need to analyse not onlycross-country differences but also regional differences in those attitudes.
    Keywords: Attitudes to immigration, migration flows, public opinion, regions
    Date: 2023–03
  37. By: Menounga, François Patrick; Manga Akoa, Armand
    Abstract: The intensification of international trade, reinforced by the interconnection of financial markets and the appearance of common economic shocks are the elements that contribute to explaining the co-movements of advanced and sub-Saharan economies. In this study, it is a question of measuring the global cyclical synchronization of the economies referred to above, over the period going from 1981.T1 to 2021.T1, from the concordance index of Harding and Pagan (2006). Overall, this analysis shows that the level of cyclical synchronization between the economies of sub-saharan and advanced countries is high enough to justify the strong economic dependence between these two groups of countries.
    Keywords: Synchronization, concordance index, economic dependence.
    JEL: E32 E39 F15 F19
    Date: 2023–05–30
  38. By: Crozet, Matthieu; Hinz, Julian; Trionfetti, Federico
    Abstract: In January 2015, The Swiss Franc (CHF) appreciated unexpectedly against the Euro by approximately 15%. We document a new fact: French firms that exported to both the Swiss market and the Eurozone also exhibited a sudden change in their export prices to the Eurozone. We coin this the 'exchange rate pass-around' effect. We rationalise this fact with a simple model based on the endogenous decision of some firms to give up pricing-to-market and opt for single-pricing to all markets. An important implication of this finding is that single-pricing may be one of the causes of the incomplete pass-through. This mechanism has so far remained unexplored in the literature, which may have led to overestimating the importance of other factors. Based on monthly French export data, our empirical analysis confirms the existence of the pass-around. Firms directly affected by the CHF exchange rate shock increased their prices in neighboring markets by 0.8% compared to other exporters. The effect was stronger for firms with lower ex-ante price heterogeneity across markets and for firms with smaller trade costs to Switzerland. However, the effect was short-lived. As time passed, exporters tended to decouple the prices they set on the Swiss market from those for the Eurozone, and the pass-around effect faded.
    Keywords: Exchange rate pass-through, International trade, Pricing-to-market
    JEL: F14 F31 D61 D62
    Date: 2023
  39. By: Robert Wolfe
    Abstract: Using trade policy to achieve foreign policy objectives has a long history. Punishing enemies and rewarding friends by granting or withholding market access, sanctions or blockades are venerable forms of trade policy used as foreign policy. A more recent form is the inclusion of noncommercial provisions in trade agreements. All these tools are based on linkage, premised on the assumption that a desired outcome can be achieved by interventions that would increase or decrease trade. The latest instance is so-called “friend-shoring”, which would in principle isolate enemies, although it will be difficult in practice and risks undermining multilateralism. The cost of these interventions is susceptible to economic analysis, even if the conclusion is that it is worth paying. Influenced by Alan Winters who called national security as a motivation for agriculture protection a “so-called non-economic objective” or SNO, I argue that using a trade policy tool for a foreign policy purpose as if there is no cost is a SNO job, an attempt to justify an intervention aimed at one objective by framing it as being valuable for another.
    Keywords: Noneconomic objectives, trade policy, foreign policy, linkage, multilateralism
    Date: 2022–11
  40. By: Merchan Alvarez, Federico Alberto
    Abstract: This paper studies the impact of exogenous export demand shocks on firms' dividend policy using firm specific real exchange rate variation as instrumental variable. IV exclusion restriction is plausibly satisfied because real exchange rate shocks were unanticipated -partly explained because of international oil price fluctuation-, and first stage results confirm relevance condition fulfillment. The results indicate that big private Colombian exporting firms decree dividends as a way to mitigate the agency cost generated by exogeneous exports variation via higher free cash flow and cash flow volatility, especially in poor managerial quality firms. Evidence supports agency cost theory and denies signaling.
    Keywords: dividends, exports, agency cost, free cash flow, volatility
    JEL: F14 F10 G30 G32 G14 G35
    Date: 2023
  41. By: Sonali Chowdhry; Julian Hinz; Katrin Kamin
    Abstract: This paper examines the impact of coalitions on the economic costs of the 2012 Iran and 2014 Russia sanctions. By estimating and simulating a quantitative general equilibrium trade model under different coalition set-ups, we (i) dissect welfare losses for sanction-senders and target; (ii) compare prospective coalition partners and; (iii) provide bounds for the sanctions potential — the maximum welfare change attainable — when sanctions are scaled vertically, i.e. across sectors up to an embargo, or horizontally, i.e. across countries up to a global regime. To gauge the significance of simulation outcomes, we implement a Bayesian bootstrap procedure that generates confidence bands. We find that the implemented measures against Iran and Russia inflicted considerable economic harm, yielding 32 – 37% of the vertical sanctions potential. Our key finding is that coalitions lower the average welfare loss incurred from sanctions relative to unilateral implementation. They also increase the welfare loss imposed on Iran and Russia. Adding China to the coalition further amplifies the welfare loss by 79% for Iran and 22% for Russia. Finally, we quantify transfers that would equalize losses across coalition members. These hypothetical transfers can be seen as a sanctions-equivalent of NATO spending goals and provide a measure of the relative burden borne by coalition countries.
    Keywords: Sanctions, Embargoes, Alliances, Sectoral linkages
    Date: 2022–10
  42. By: LICHENG, Liang
    Abstract: We use COVID-19 as an exogenous shock to analyze the impact of Covid-19 pandemic on Japanese multinational affiliates’ performance, determining that the pandemic adversely impacted performance in general, but severe disruptions did not last longer than one year. The COVID-19 shock also affected global transaction networks, and affiliates’ total sales were severely affected by procurement challenges. Regarding heterogeneous effects, affiliates actively engaged in trade experienced worse conditions than localoriented firms. Finally, we explore whether and which local backward linkages could mitigate such shocks, concluding that affiliates’ local procurement from companies beyond only Japanese firms could gain resilience.
    Keywords: COVID-19, Multinational enterprises (MNEs), Affiliates, International production network, Resilience
    JEL: F14 F23
    Date: 2023–06
  43. By: Arnita Rishanty (Bank Indonesia); Maxensius Tri Sambodo (Badan Riset dan Inovasi Nasional); Retno Puspita K. Wicaksono (Bank Indonesia)
    Abstract: Transition risks include market and reputational risks, if materialized, can result in loss of markets. This study pictures the dynamics of potential export market movement and transition as the consumer preference for green products grows globally. We find that the export market for Indonesia’s superior commodities increased due to past global growth and past increase in global demand for particular products, while still lacking in real product competitiveness. Under the scenario that illustrates the green agenda only arise mostly from developed countries and still limited from developing countries, it is estimated that the export market transition towards the new balance would find an equilibrium. Subsequently, this study exploratively discusses undergoing efforts in the exporting industry to make a green transition. We elaborate opportunities and challenges to circular economy adoption for the exporting industry. It is suggested for Indonesia' s trade diplomacy to not only maintaining market position in traditional markets, but also in seizing non-traditional markets, including markets that reject Indonesian products by improving the competitiveness of Indonesia's export products via circular economy adoption.
    Keywords: Circular economy, Markov Model, competitiveness, green taxonomy
    JEL: C5 O1
    Date: 2022
  44. By: Gilbert, Christopher L.
    Abstract: The war in Ukraine, which started in February 2022, has disrupted the important Black Sea grain trade. At the same time, and partly as a consequence of the war and of Western sanctions, both energy and fertilizer prices have soared. Many commentators have attributed rises in food prices on world marketsto the Ukraine conflict. The paper reports an analysis of the impact of the war on wheat and corn prices in the world market. The estimates are obtained from an empirical implementation of the competitive storage model. The model links the prices of hard wheat and corn to grain availability, grain stocks and crude oil and fertilizer prices taking into account the Black Sea Grains Initiative (BSGI). Three counterfactuals are analyzed – “no war”, “no BSGI” and “no sanctions”.
    Keywords: International Relations/Trade, Demand and Price Analysis
    Date: 2023–03
  45. By: Gnangnon, Sèna Kimm
    Abstract: The few existing studies on the effect of Aid for Trade (AfT) flows on economic complexity have reached inconclusive outcomes. The present analysis re-examines this issue through the lens of the concept of 'quality of AfT flows' that takes into account not only the amount of AfT flows, but also the predictability and volatility of these capital inflows. A country enjoys a better quality of AfT flows if it receives higher AfT flows in a predictable and less volatiles fashions. We investigate the effect of the quality of AfT flows on economic complexity, over a set of 86 countries and the period from 2004 to 2019, and using the within fixed effects estimator and the Method of Moments Quantile Regression with fixed effects approach. The findings suggest that not only does a better quality of AfT flows fosters economic complexity in recipient countries, but its positive effect is larger in less complex economies (including poorest countries) than in relatively more complex economies among recipient countries. These findings reveal that what really matters for the enhancement of economic complexity in developing countries may not be only the amounts of the total AfT flows, but more importantly the predictability and the stability of these resource inflows. Improving the quality of AfT flows by increasing AfT amounts in a predictable and stable fashions would be beneficial to developing countries, and particularly to a greater extent to poorest countries among them.
    Keywords: Aid for Trade, Predictability of Aid for Trade, Volatility of Aid for Trade, Economic complexity
    JEL: O11 O14 F14 F35
    Date: 2023
  46. By: Michaela Šedovič; Lenka Dražanová
    Abstract: Attitudes toward immigration are usually investigated from the non-migrant residents’ perspective. Much less is known about how perceptions of immigration policy and immigrants vary across immigration background lines, especially in the wider European context, and whether migrants´ attitudes toward immigration are affected by the same factors and in the same way as those of the nonmigrant population. With still-growing populations of migrants and their descendants in Europe, it is, however, crucial to study interethnic relations not only between migrant and non-migrant populations but also among different immigrant groups. Firstly, we investigate whether immigration attitudes among European migrants are based on intergroup solidarity or, rather, an intergroup threat toward new immigrants and whether minority-specific characteristics have differential effects across the (non-)migrant populations. Employing nine rounds of the European Social Survey from 20 European countries and by estimating multilevel regression models of individual factors affecting (non-)migrants’ attitudes we uncover that first- and second-generation immigrants’ attitudes toward immigration are mostly guided by intergroup solidarity with other immigrants. We further show that minority-specific characteristics work differently across our three sub-samples and that first-generation immigrants’ attitudes become more negative the longer they stay in the host country. The findings contribute to our broader understanding of social cohesion, social inclusion, and intergroup conflict.
    Keywords: attitudes toward immigration, interethnic relations, group membership, diversity, immigrants’ integration
    Date: 2023–01
  47. By: Eltges, Fabian; Fourberg, Niklas; Wiewiorra, Lukas
    Abstract: In this paper, we analyze how wholesale access fees of a crucial input can be utilized to influence demands for products of different technologies and the deployment sequence between an incumbent and entrant firm. In a setting of multi-product competition with horizontally differentiated products we find that the access fee gives rise to asymmetric pricing incentives for the entrant firm if she offers a legacy and new product in parallel. The entrant's price for the new product decreases in the access fee while its legacy price increases with the aim to induce intra-brand legacy-to-new migration of demand. Fur- thermore, a regulator can depart from the socially optimal access fee and use this entrant's pricing channel to effectively promote demand side take-up of the new technology. Lastly, it is welfare beneficial in a sequential deployment process, that the entrant moves first to introduce the new technology while such a move can be fostered by a strategic use of the access fee that lowers profits from competition based on legacy products.
    Keywords: Access pricing, Multi-product competition, Product differentiation, Next generation networks
    JEL: L13 L51 L96 D4
    Date: 2022

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