nep-int New Economics Papers
on International Trade
Issue of 2023‒07‒24
thirty-two papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Tapping the Untapped Potential: India-Ireland Trade & Investment Opportunities Post-Brexit By Nisha Taneja; Tanu Goyal; Sanya Dua; Isha Dayal
  2. Who Pays for the Tariffs and Why? A Tale of Two Countries By Chaonan Feng; Liyan Han; Lei Li
  3. Foreign Direct Investment, Global Value Chains, and Labor Rights: No Race-to-the-Bottom? By Hyejoon Im; John McLaren
  4. Women and Trade: Towards an Enabling Ecosystem in India By Nisha Taneja; Sanjana Joshi; Shravani Prakash
  5. Multilateral Comparative Advantage By Henry Thompson
  6. Statistical Overview and Empirical Literature on Foreign Direct Investment in Developing Countries WP326 By Edouard Mien
  7. Food Can’t Be Traded: Civil Society’s Discursive Power in the Context of Agricultural Liberalisation in India By Camille Parguel; Jean-Christophe Graz
  8. The Return of Borders in the World Economy: An EU-Perspective By Sjöholm, Fredrik
  9. Global Value Chains and Labor Standards: The Race-to-the-Bottom Problem. By Hyejoon Im; John McLaren
  10. The import effects of the Entry Price System By Santeramo, Fabio Gaetano; Martinez-Gomez, Victor; Márquez-Ramos, Laura; Lamonaca, Emilia
  11. Indirect FDI, Some Lessons Learned By Kálmán Kalotay
  12. Functional upgrading and downgrading in global value chains: Evidence from EU regions using a relatedness/complexity framework By Eduardo Hernandez-Rodriguez; Ron Boschma; Andrea Morrison; Xianjia Ye
  13. When Immigrants Meet Exporters: A Reassessment of the Immigrant Wage Gap By Léa Marchal; Guzmán Ourens; Giulia Sabbadini
  14. Skill-Biased Imports, Skill Acquisition, and Migration By Jingting Fan; Lei Li
  15. Supporting trade finance for trade expansion and diversification in West Africa B250 By Marc Auboin
  16. Trade Agreements and Sustainable Fisheries By Basak Bayramoglu; Estelle Gozlan; Clément Nedoncelle; Thibaut Tarabbia
  17. Globalization, Structural Change and International Comovement By Barthélémy Bonadio; Zhen Huo; Andrei A. Levchenko; Nitya Pandalai-Nayar
  18. The gravity of syndication ties in international equity underwriting By Milsom, Luke; Pažitka, Vladimír; Roland, Isabelle; Wójcik, Dariusz
  19. 포용적 무역을 위한 국내보완대책의 성과와 시사점(The Effects of South Korea’s Domestic Supplementary Measures for Trade Adjustment and Their Implications) By Koo, Kyong Hyun; Bae, Chankwon; Park, Hyeri; Ryu, Kirak
  20. Financial services trade restrictions and lending from an international financial centre By Lloyd, Simon; Reinhardt, Dennis; Sowerbutts , Rhiannon
  21. Impact of Environmental Regulation on Cross-Border MAs in high- and low-polluting sectors By Federico Carril-Caccia; Juliette Milgram Baleix
  22. The kindness of strangers: Brexit and bilateral financial linkages By Andreas M. Fischer; Pinar Yesin
  23. WTO Reform: Issues in Special and Differential Treatment (S&DT) By Anwarul Hoda
  24. Lobbying or Innovation: Who Does What Against Foreign Competition By Olimpia Cutinelli Rendina
  25. How US chip controls on China benefit and cost Korean firms By Martin Chorzempa
  26. Globalise to Localise: Exporting at Scale and Deepening the Ecosystem are Vital to Higher Domestic Value Addition in Electronics By Deepak Mishra; Neha Gupta; Sanya Dua; Sanjna Agarwal
  27. An illiberal economic order: commitment mechanisms become tools of authoritarian coercion By Kalyanpur, Nikhil
  28. Does official development assistance benefit the donor economy? New evidence from Japanese overseas infrastructure projects By Shuhei Nishitateno
  29. Cross-Country Performance in Social Integration of Older Migrants – A European Perspective By Caroline Berchet; Nicolas Sirven
  30. Understanding Investment, Trade, and Battery Waste Management Linkages for a Globally Competitive EV Manufacturing Sector By Amrita Goldar; Saon Ray; Sajal Jain; Tom Moerenhout
  31. Global Food Security Implications of Fertilizer Price Growth and Supply Restrictions By Gong, Ziqian; Baker, Justin S.
  32. Do immigrants benefit from selection? Migrant educational selectivity and its association with social networks, skills and health By Luthra, Renee Reichl; Platt, Lucinda

  1. By: Nisha Taneja (Indian Council for Research on International Economic Relations (ICRIER)); Tanu Goyal (Indian Council for Research on International Economic Relations (ICRIER)); Sanya Dua (Indian Council for Research on International Economic Relations (ICRIER)); Isha Dayal (Indian Council for Research on International Economic Relations (ICRIER)
    Abstract: Recent events, particularly Brexit, have propelled India to diversify its trade and investment markets in the European Union (EU). Within the EU, India has trade and investment synergy with Ireland. The paper explores business opportunities between India and Ireland, by analysing their bilateral trade in goods and services, and foreign direct investments. The paper analyses disaggregated bilateral trade data and uses the trade possibilities approach to estimate India’s goods trade with Ireland and India’s potential exports to Ireland.
    Keywords: India-Ireland trade, export potential, services trade, foreign direct investment, FDI
    Date: 2022–11
  2. 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
  3. By: Hyejoon Im; John McLaren
    Abstract: In a stylized model of multinational firms choosing host locations for their global value chains, host-country governments choose the strength of collective-bargaining rights that allow their workers to receive a share of the resulting quasi-rents. Each government must trade off the direct benefit of stronger bargaining rights against both the effect of chasing multinationals away to rival countries and general-equilibrium effects of discouraging investment in the industry altogether. We find that an increase in globalization in the sense of lower transaction costs has no effect on equilibrium workers' rights, but adding more countries to the global trading system tends, in the limit, to weaken them. Thus, as a matter of theory, the effect of globalization on labor rights is ambiguous. Empirically, we find little evidence that globalization drives movements in labor rights in either direction.
    JEL: F16 F66
    Date: 2023–06
  4. By: Nisha Taneja (Indian Council for Research on International Economic Relations (ICRIER)); Sanjana Joshi (Indian Council for Research on International Economic Relations (ICRIER)); Shravani Prakash
    Abstract: In recent years India has increasingly come to recognize the importance of empowering women and promoting gender equality in its growth story. However, the multitude of schemes and initiatives supporting entrepreneurship among women are primarily focussed on handholding early-stage development. The focus is on capacity building, mentoring and small value collateral free starting loans. Support for internationalization of women-owned enterprises through targeted measures to boost women’s participation in international trade has lagged. This policy brief identifies the key gaps and recommends an active affirmative strategy of gender mainstreaming across three composite elements of the enabling ecosystem for trade – a clear guiding vision, institutional set-up and international cooperation. It is recommended that the upcoming Foreign Trade Policy which is slated for 2021-2026 be used to mainstream gender in the national trade agenda. The recognition of the gender specific impediments and vulnerabilities that women entrepreneurs face should be reflected in both the vision and strategy, with a holistic focus on export promotion, integration in global value chains (GVCs), ease of doing business, and trade facilitation. Secondly, there is need for a robust institutional set-up underpinned by support programs and incentives, regular gender consultation, timely collection of gender disaggregated data and impact assessment. With gender equality considerations gaining traction in bilateral and multilateral trade discussions and agreements, India should also include women entrepreneurs as important stakeholders in domestic consultations on free trade agreements and their aspirations and concerns should be reflected in the final texts through gender responsive provisions.
    Keywords: creative economy, culture, employment, output, intellectual property, G20
    Date: 2022–03
  5. By: Henry Thompson
    Abstract: This paper shows relative price competition based on comparative advantage can lead to diversified production and complex trade for more than two countries and two goods. The present paper develops the trade patterns for three and four countries and goods based on trade between the extreme countries in each relative price ranking with the directions of trade for middle countries depending on the terms of trade. The possible trade patterns include diversified exports, nontraded goods, nontrading countries, two-way trade in the same good, and separate trade groups.
    Keywords: Comparative Advantage; Trade Patterns
    Date: 2023–07
  6. By: Edouard Mien (FERDI - Fondation pour les Etudes et Recherches sur le Développement International)
    Abstract: This note aims to provide an overview of Foreign Direct Investment (FDI) in developing countries. First, we present the recent trends of global FDI flows, and identify the main hosting areas as well as the variables promoting FDI inflows. Then, we briefly describe the empirical literature on the economic impacts of FDI on recipient countries. Finally, we present some recent changes in public policies implemented in developing countries aiming at attracting FDI inflows.
    Date: 2023–05–17
  7. By: Camille Parguel (Department of Social Sciences, Carlos III University of Madrid); Jean-Christophe Graz (Institute of Political Studies, University of Lausanne)
    Abstract: Bilateral and regional free trade agreements increasingly substitute for the World Trade Organization in trade negotiations. Accordingly, civil society organisations opposed to trade liberalisation target this new generation of trade agreements as well. This paper examines the case of activists concerned about agricultural and food issues in India who raised their voice against the Bilateral Trade and Investment Agreement (BTIA) and the Regional Comprehensive Economic Partnership (RCEP), negotiated by India with the European Union and Asian and Oceanian countries, respectively.
    Keywords: civil society actors, discourse, food security, free trade agreements, political economy
    Date: 2021–08
  8. By: Sjöholm, Fredrik (Research Institute of Industrial Economics (IFN))
    Abstract: This paper examines the European Union's changing perspective on globalization, reflecting a shift from its traditionally open, rules-based trade policy. The rise of internal protectionist measures, coupled with increasing economic insularity in the US and China, are challenging this policy. The study advocates revitalizing the EU's internal market and fostering robust international trade policies, contrasting this with the current trend of implementing various types of selective industry support. It further underscores the EU's heightened responsibility in global trade liberalization, emphasizing the urgency for new trade agreements, particularly with the US, and a reinvigorated role for the WTO.
    Keywords: Globalization; European Union; Protectionism; Industrial Policy
    JEL: F02 F15 F51
    Date: 2023–07–04
  9. By: Hyejoon Im; John McLaren
    Abstract: We ask how globalization affects a government's incentives to set labor standards for its workers. In a stylized equilibrium model of global value chains, we find two contrasting results. First, each country chooses stricter labor standards with globalization than it would under autarky, because labor standards are a normal good and the general increase in incomes from globalization increases demand for them. We call this the effect of `globalization in the large.' Second, if more countries join the world economy so that globalization increases at the margin, labor standards worsen (improve) at the margin if a country is competing with countries that are very similar to (different from) itself. We call this the effect of `globalization at the margin.' In equilibrium, labor standards are actually stricter than optimal because each country is able to pass some of the costs of its improved labor standards onto other countries (consumers of the final good, for example).
    JEL: F16 F66
    Date: 2023–06
  10. By: Santeramo, Fabio Gaetano; Martinez-Gomez, Victor; Márquez-Ramos, Laura; Lamonaca, Emilia
    Abstract: The complexity of the trade policy environment in the European fruit and vegetables (F&Vs) market is mostly due to the Entry Price System (EPS), a non-tariff measure that regulates imports. We investigate the trade effects of the EPS by estimating a structural gravity model of trade flows from major European suppliers of apples, lemons, oranges, peaches, pears, table grapes and tomatoes. We assess how imports react to EPS overshoots, difference between import price and entry price threshold, and to level and volatility in Standard Import Values (SIVs). The EPS limits imports of F&Vs, but differences exist across products. In particular, while the efficacy of the EPS is valid for all products, its effectiveness is greater for less perishable F&Vs.
    Keywords: Non-tariff measure; Price dynamics; Trade dynamics; EU agriculture; Fruit and vegetables
    JEL: F13 F14 Q17 Q18
    Date: 2023–05–01
  11. By: Kálmán Kalotay (Institute of World Economics, Centre for Economic and Regional Studies, Eötvös Loránd Research Centre)
    Abstract: This review presents some lessons learned about indirect foreign direct investment (FDI), mostly over the past decade. Indirect FDI denotes investment projects, in which the ultimate owner is different from the immediate investor. The reviewcategorizes the literature of the 2010s and early 2020s into three main threads: one focusing on the developmental aspects of the phenomenon, another one with a fiscal–legal–regulatory approach, and a third one raising questions about the quality and reliability of FDI data or special aspects such as the relationship between sanctions and outward FDI. This review also highlights improvements in FDI data collection on ultimate investors over the past decade, based on the example of three Visegrad countries. In this respect, important progress has been achieved. Prospects for future research on indirect FDI are quite promising, especially via interdisciplinary approaches and aiming at improving the coverage and the quality of relevant data.Ultimately, the quality of the evaluation of indirect FDI hinges, more than anything, on the availability of empirical evidence.
    Keywords: indirect FDI, round tripping, transhipped FDI, ultimate investors, taxation, investment treaties
    JEL: F21 F23 H26 H71
    Date: 2023–06
  12. By: Eduardo Hernandez-Rodriguez; Ron Boschma; Andrea Morrison; Xianjia Ye
    Abstract: This paper adopts a relatedness-complexity framework to assess the likelihood of functional upgrading and downgrading in global value chains in EU regions in the period 2000-2010. We use relatedness and economic complexity measures based on value added content of gross exports and labour structures at the regional level. We show how economic complexity metrics can be used as an alternative for value added data, to measure both functional upgrading and downgrading in GVCs. We find that relatedness between functions (industry-occupations) is a factor impacting both functional upgrading and downgrading. Regions tend to functionally upgrade their global value chains towards more complex functions that are related to functions in which they are specialised. And regions are more likely to functionally exit and downgrade in global value chains when they are not specialised in related functions.
    Keywords: Global value chains, upgrading, downgrading, economic complexity, relatedness, EU regions
    JEL: F14 F63 O19 R11 R12
    Date: 2023–07
  13. By: Léa Marchal (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, IC Migrations - Institut Convergences Migrations [Aubervilliers], UP1 - Université Paris 1 Panthéon-Sorbonne); Guzmán Ourens (Tilburg University [Tilburg] - Netspar); Giulia Sabbadini (DICE - Düsseldorf Institute for Competition Economics - Heinrich Heine Universität Düsseldorf = Heinrich Heine University [Düsseldorf])
    Abstract: This article shows that wage inequalities between native and immigrant workers depends on the export activity of the employing firm. We build a model with heterogeneous firms and workers showing that white-collar immigrants capture an informational rent in exporting firms that help them close the wage gap with natives. We use French employer-employee data for the manufacturing sector from 2005 to 2015 to support this mechanism. We show that wages react to changes in export intensity when the export destination coincides with the region of origin of immigrant workers.
    Keywords: Export, Firm, Immigrants, Wage inequality
    Date: 2023–05
  14. 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
  15. By: Marc Auboin (Organisation mondiale du commerce)
    Abstract: A joint study by the WTO and IFC established that the low share of trade supported by trade finance (25%) in the four largest economies of West Africa (Nigeria, Côte d'Ivoire, Ghana and Senegal) was a major constraint in further expanding and diversifying trade flows and trade integration. Raising trade finance use in the region to the African average of 40% of trade flows, would result in an increase in the region's trade flows of 8% annually, 80% in ten years.
    Date: 2023–06–12
  16. By: Basak Bayramoglu (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Estelle Gozlan (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Clément Nedoncelle (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Thibaut Tarabbia (ENPC - École des Ponts ParisTech)
    Abstract: This study examines the impact of trade agreements and their specific provisions on the decline of marine fisheries resources. Using global data on the status of fish stocks and a comprehensive dataset of environmental provisions from trade agreements signed between 1947 and 2018, the impact of signing a free trade agreement and of the presence of fishery-related provisions on the status of fish stocks is estimated. To address potential endogeneity problems associated with fisheries-related provisions, we use a difference-in-differences (DID) propensity score matching method. Our results show that while trade agreements tend to have a negative impact on the status of fish stocks, the inclusion of fisheries-related provisions offsets this negative impact among signatory countries. However, our results indicate that these provisions do not encourage the adoption of better resource management practices but rather tend to reduce trade opportunities.
    Abstract: Cette étude examine l'impact des accords commerciaux et de leurs dispositions spécifiques sur le déclin des ressources halieutiques marines. À l'aide de données mondiales sur l'état des stocks de poissons et d'un ensemble de données sur les dispositions environnementales des accords commerciaux signés entre 1947 et 2018, l'impact de la signature d'un accord de libre-échange et de la présence de dispositions liées à la pêche sur l'état des stocks de poissons sont estimés. Pour résoudre les problèmes d'endogénéité potentiels associés aux dispositions relatives à la pêche, nous utilisons une méthode d'appariement des scores de propension par différence dans les différences (DID). Nos résultats montrent que si les accords commerciaux ont tendance à avoir un impact négatif sur l'état des stocks de poissons, l'inclusion de dispositions relatives à la pêche compense cet impact négatif parmi les pays signataires. Cependant, nos résultats indiquent que ces dispositions n'encouragent pas l'adoption de meilleures pratiques de gestion des ressources mais tendent plutôt à réduire les opportunités commerciales.
    Keywords: Trade agreements, environmental provisions, natural resources, fisheries.
    Date: 2023–05–19
  17. By: Barthélémy Bonadio; Zhen Huo; Andrei A. Levchenko; Nitya Pandalai-Nayar
    Abstract: We study the roles of globalization and structural change in the evolution of international GDP comovement among industrialized countries over the period 1978-2007. In recent decades, trade integration between advanced economies increased rapidly while average GDP correlations remained stable. We show that structural change – trend reallocation of economic activity towards services – plays an important part in resolving this apparent puzzle. Business cycle shocks in the service sector are less internationally correlated than in manufacturing, and thus structural change lowers GDP comovement by increasing the share of less correlated sectors in GDP. Globalization – trend reductions in trade costs – exerts two opposing effects on cross-border GDP comovement. On the one hand, greater trade linkages increase international transmission of shocks and therefore comovement. On the other, globalization induces structural change towards services because it reduces the relative price of traded goods, and services and goods are complements. We use a multi-country, multi-sector model of international production and trade to quantify these effects. The two opposing effects of globalization on comovement largely cancel each other out, limiting the net contribution of globalization to increasing international comovement over this period.
    JEL: F41 F44 F62 L16
    Date: 2023–06
  18. By: Milsom, Luke (University of Oxford); Pažitka, Vladimír (University of Leeds); Roland, Isabelle (Bank of England); Wójcik, Dariusz (University of Oxford)
    Abstract: We examine how cross-border syndication ties reduce information frictions and positively impact exports of equity underwriting services. Using a panel data set from 2000–15, we develop a measure of information flows based on ‘core syndication ties’ where the lead underwriter is in either the importing or exporting country. We find that new core syndication ties have a significant and positive effect on exports. This finding is supported by evidence from ‘peripheral syndication ties’, which are associated with smaller information flows, and an instrumental variable approach which focuses on plausibly exogenous supply-side shocks. Furthermore, the effect of new core syndication ties is stronger when information frictions between trading partners are more severe and for more information-sensitive transactions like IPOs.
    Keywords: Gravity; international trade; international finance; equity securities underwriting; cross-border bank linkages; financial geography
    JEL: F14 F23 F36 F65 G15 G24
    Date: 2023–04–14
    Abstract: 본 연구는 ‘FTA 정책의 확대’나 ‘중국·베트남 중심의 무역구조 재편’과 같은 무역 충격으로 인해 피해를 입은 국내 기업과 근로자에게 무역조정지원제도나 고용보험제도 등 기존의 국내보완대책이 얼마나 효과적으로 작동했는지 실증적으로 평가하고, 주요국의 유사 제도ㆍ사례를 비교분석함으로써 국내 무역 피해 보완대책에 대한 개선방안을 도출하였다. Since the 2000s, South Korea has experienced significant changes in its industrial and employment structures as a result of trade shocks, including the expansion of Free Trade Agreement (FTA) policies and the restructuring of trade structures centered on China and Vietnam. Although these changes have contributed to South Korea’s relatively high economic growth rates, they have also widened the income and employment stability gap between workers (Koo and Kim 2020; Koo et al. 2021). In light of the profound impact of trade shocks on the economy, effective protection and support for firms and workers who have suffered relative losses in the adjustment process is considered an essential measure to maximize the net benefit of trade. Such a measure represents a crucial policy goal that requires prioritization in South Korea, given the country’s heavy reliance on international trade. To achieve this policy goal, South Korea has primarily implemented the Act on Trade Adjustment Assistance and the Employment Insurance Act as domestic supplementary measures. However, despite the significance of the policy objectives pursued by these two acts, the analysis of their trade adjustment support performance remains inadequate. Therefore, this study aims to investigate the effects of existing domestic supplementary measures, such as the trade adjustment assistance programs and the employment insurance programs, for domestic firms and workers affected by trade shocks. In addition, we also examine similar programs in the United States and European Union as benchmarks. Based on the results of the regression analyses and case studies, we discuss how to improve the Korean domestic supplementary measures for trade adjustment. The second chapter provides an overview of Korea’s trade adjustment assistance programs and the employment insurance system, which can be considered the two pillars of Korea’s trade damage countermeasures. In the third chapter, we analyze the support performance of the trade adjustment assistance program for trade-impacted firms and the employment insurance programs for trade-impacted workers using micro data. (the rest omitted)
    Keywords: Complementary Domestic Measures for Trade Policy; Labor Market; and Inclusive Trade
    Date: 2022–12–30
  20. By: Lloyd, Simon (Bank of England); Reinhardt, Dennis (Bank of England); Sowerbutts , Rhiannon (Bank of England)
    Abstract: This paper examines how international lending of UK-based banks is affected by services trade restrictions on commercial banks applied abroad. Exploiting heterogeneity in banks’ cross-border activities, we find evidence that banks without a local affiliate presence abroad cut back their non-bank lending to countries applying restrictions, and vice versa when restrictions are liberalised. On the other hand, banks with a local presence reduce their intragroup loans, but substitute for this by increasing direct cross-border lending to non-banks. These findings suggest that increasing services trade restrictiveness may lead global banks to reshape their business model for cross-border lending. Services trade restrictions that act on the intensive margin of lending, such as barriers to competition, appear to be the primary drivers of this substitution from ‘local’ to ‘global’ financial intermediation.
    Keywords: Services trade restrictions; commercial banking restrictions; cross-border bank lending; banks’ business models
    JEL: F13 F34 F42 G18 G21
    Date: 2023–04–21
  21. By: Federico Carril-Caccia (Universidad de Granada, Departamento de Economia Española e Internacional); Juliette Milgram Baleix
    Abstract: We test the influence of environmental regulation (ER) on the location decision of cross-border Mergers and Acquisitions (M&As) for a large sample of countries, sectors, and years using a structural gravity model. Our results confirm the pollution haven hypothesis in highly polluting sectors, according to which more stringent ER makes countries less attractive to foreign investors planning to invest through M&As compared with domestic investors. Policies that set quantitative limits on emissions discourage investments in dirty sectors, while taxes on emissions only have a negative impact on clean sectors. The impact of ER differs depending on the type of investors and investees, reflecting the fact that investments in developed countries and BRICS respond to different motivations. In emerging countries, lax ER could attract significantly more inward M&As. In developed countries, ER has a less discouraging effect.
    Keywords: Environmental stringency, pollution havens, M&As, structural gravity, polluting sectors.
    Date: 2023–06–13
  22. By: Andreas M. Fischer; Pinar Yesin
    Abstract: Bank of England governor Mark Carney warned after the 2016 Brexit vote that the UK is reliant on the "kindness of strangers" to fund its increasing current account deficit. In this paper, we examine whether firms in Switzerland attenuated their investments in the UK following the Brexit vote or whether British-controlled firms in Switzerland repatriated their foreign assets to the UK. Three empirical findings in the bilateral context suggest that Carney's warning was overly cautious. First, Carney focused strictly on the foreign willingness to invest in the UK; however, the alternative channel of repatriating British assets abroad is equally important. Second, capital inflows and outflows are positively correlated not only in the aggregate, but also across a range of subgroupings at the firm level. Third, the nonuniform firm response to the Brexit vote suggests that understanding aggregate capital waves is more complicated at the firm level.
    Keywords: Brexit, currency invoicing, cross-border flows, international firms
    JEL: F32 F41 G20 G28
    Date: 2023
  23. By: Anwarul Hoda (Indian Council for Research on International Economic Relations (ICRIER))
    Abstract: This paper evaluates the special and differential treatment provisions in the WTO Agreement and examines whether there is truth in the averment made by certain developed countries that special and differential treatment (S&DT) provisions have made the WTO framework of rules and disciplines asymmetrical.
    Keywords: Special and Differential Treatment, World Trade Organisation, WTO
    Date: 2021–10
  24. By: Olimpia Cutinelli Rendina (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: This paper studies the relationship between competition and firms' political influence. I use the China shock identification strategy to assess the impact of rising imports over the last two decades on US corporate lobbying. The empirical results are the following i) the increase in foreign competition has brought firms to increase their lobbying effort by approximately 35 percent per four-year period, ii) results are heterogeneous and the increase is focused on low productivity firms, iii) this increase does not target trade policies specifically but rather a variety of topics contributing to firms' competitiveness. I comment two mechanisms: First, firms for which innovation is too expensive naturally increase their lobbying effort in proportion to the threat of competition, and second differentiation (though innovation) and exit concentrate the lobbying effort on fewer firms, helping to decrease free-riding.
    Date: 2023–02
  25. By: Martin Chorzempa (Peterson Institute for International Economics)
    Abstract: Export controls have become one of the most contentious battlegrounds in US-China technology competition. US semiconductor export controls aimed at China, however, have also embroiled allies such as South Korea. These controls largely do not affect Korean firms' chip sales to China, but Korean firms are vulnerable because they have large chip production facilities in China, which make around 40 percent of the memory chips for these firms. Those facilities in China rely on access to semiconductor manufacturing equipment (SME) or servicing from not only the United States but also other countries that have imposed controls on exporting advanced SME to China. Although the United States is unlikely to shut off access to the technology needed to keep the plants running for the foreseeable future, it has signaled that it will not allow new technology needed to upgrade those facilities, so they will become uncompetitive over the next few years and will need to be shuttered or sold off. For future production, Korean firms will need to build new facilities at great (albeit subsidized) expense, amortizing the sunk costs of operations in China over the coming years. At the same time, the controls have created significant benefits for Korean firms by shutting off Chinese competition for their memory businesses. Yet benefiting from the tensions between superpowers comes with serious risks. Firms and governments must deal with much greater uncertainty and evaluate the risk of their dependence on both the United States and China.
    Date: 2023–07
  26. By: Deepak Mishra (Indian Council for Research on International Economic Relations (ICRIER)); Neha Gupta (Indian Council for Research on International Economic Relations (ICRIER)); Sanya Dua (Indian Council for Research on International Economic Relations (ICRIER)); Sanjna Agarwal
    Abstract: The study proposes that India should adopt the mantra of first globalise, then localise, a strategy also pursued by China and Vietnam. Implementing it will require two fundamental changes in the existing policy regime. First, the electronics sector should be able to source inputs from the lowest cost suppliers anywhere in the world until it achieves a global scale, which implies temporarily suspending localisation requirements, removing duties on intermediate items, and accelerating integration through bilateral and regional FTAs.Second, the priority of the industrial policy should be about creating a competitive domestic ecosystem of ancillary suppliers – by improving business climate, removing unnecessary regulations, helping with technology transfer and supporting services, training of workers, better sharing of market information, investment in R&D, and targeted fiscal incentives – through cooperative collaboration with the state governments and the private sector.
    Keywords: Electronics Trade, FTA, Global-Value-Chains, icrier, ICEA, digital India
    Date: 2022–08
  27. By: Kalyanpur, Nikhil
    Abstract: Globalization did not negate state power. It changed the toolkit. We expected the norms and incentives of the liberal economic order to push regimes in places like China and Russia to democratize. Instead, authoritarianism appears to be thriving. This article argues that authoritarians have learned how to take advantage of the institutions underpinning globalization for their own illiberal ends. They use courts in major economic powers to negate the effects of international institutions and to target their political competition. They subvert our expectations by repurposing the basic premises of liberalism–predictability and openness. The article demonstrates these claims by examining how the institutions of multiple international economic regimes, which were designed as constraints, have been turned into offensive tools. The findings illustrate that International Political Economy (IPE) scholars need to begin analyzing how governments learned these tactics and whether we can reconcile the contradictions they exploit.
    Keywords: International order; economic coercion; global governance; illiberalism; statecraft; transnational law; Taylor & Francis deal
    JEL: J1
    Date: 2023–06–13
  28. By: Shuhei Nishitateno
    Abstract: Given the growing pressure on donors to curtail foreign aid budgets, analyzing the effectiveness of bilateral official development assistance (ODA) in realizing national interests has become more significant than ever. From the viewpoint of economic interests, prior research has revealed that ODA can help expand donor exports and outward foreign direct investments. This study provides evidence that ODA can also help firms from donor countries to win infrastructure projects in recipient countries. Employing unique contract data on Japanese overseas infrastructure projects, I estimate a fixed effects Poisson model with a panel dataset for 158 recipients for the period between 1970 and 2020. The results suggest that 17% of the total number of overseas infrastructure projects contracted to Japanese firms during 1970–2020 were attributable to Japanese ODA disbursement. I also explore the potential mechanism, finding that the Japanese ODA-infrastructure link is strengthened when Japanese loans and grants are simultaneously provided to a recipient country. This finding is consistent with the view that pre-investment studies conducted as part of technical cooperation could generate goodwill effects on Japanese firms during their bidding for Japanese yen loan projects.
    Keywords: Official development assistance, overseas infrastructure projects, Poisson regression model, Japan
    JEL: F35 F21 O18
    Date: 2023
  29. By: Caroline Berchet (Legos - Laboratoire d'Economie et de Gestion des Organisations de Santé - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Nicolas Sirven (IRDES - Institut de Recherche et Documentation en Economie de la Santé - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres)
    Abstract: This paper provides new empirical evidence on the relationship between migration and social integration. It explores the hypothesis that migrants essentially differ from non-migrants with regard to the length of residence in the country – which is a proxy of migrants' social distance to natives. The determinants of social participation and interpersonal trust are examined at both the individual and institutional level. Using SHARE data and macroeconomic series, we first analyse the influence of migratory status and immigrant length of stay in the host country on social integration indicators. We then examine the role institutional characteristics play on cross-country differences in speed of social integration (i.e. immigrants' propensity to social participation according to their length of stay in the host country). As expected, the immigrant population presents a lower likelihood than the native population to get involved in social activities and to trust other people. Nevertheless, the more immigrants have spent time in the host country, the more they take part in social activities. The analysis also reveals significant cross-country differences in immigrants' speed of social integration. Macroeconomic series like the GINI coefficient of income inequality and the Corruption perceived index could explain these differences. From a public policy perspective, our results suggest that immigrants' social integration is more rapidly achieved in "fair" countries – i.e. those with a more favourable social environment – where the levels of income inequality and perceived corruption are lower.
    Abstract: L'objet de cette étude est d'analyser les relations entre la migration et l'intégration sociale. Notre analyse se propose d'étudier l'hypothèse selon laquelle l'intégration sociale des immigrés diffère essentiellement de celle des natifs en raison de la durée de résidence dans le pays d'accueil, facteur qui constitue dans notre analyse un indicateur de la distance sociale des migrants aux natifs. Les déterminants de la participation sociale et de la confiance interpersonnelle sont analysés au niveau individuel et institutionnel. À partir des données de l'enquête SHARE, complétées par des séries macroéconomiques, nous analysons dans un premier temps l'influence de la durée de résidence dans le pays d'accueil des immigrés sur les deux indicateurs d'intégration sociale. Nous étudions ensuite le rôle joué par les caractéristiques institutionnelles sur les différences de vitesse d'intégration entre les pays européens (i.e. la probabilité d'un immigré d'être intégré selon sa durée de résidence dans le pays d'accueil). Les résultats indiquent que la population immigrée présente une plus faible probabilité que la population native de participer à des activités collectives et d'avoir confiance en autrui. Cependant, l'intégration sociale des immigrées s'accroit avec la durée de résidence dans le pays d'accueil mais l'analyse révèle, par ailleurs, des différences de vitesse d'intégration entre les pays européens. Ces différences sont expliquées par les séries macroéconomiques telles que le coefficient de GINI et l'indice de corruption. D'un point de vue des politiques publiques, nos résultats suggèrent que l'intégration sociale des immigrés est plus rapide dans les sociétés caractérisées par un environnement social favorable, où les niveaux d'inégalité de revenu et de corruption sont faibles.
    Keywords: Social capital, Ageing, Income inequality, Multilevel models
    Date: 2023–05–23
  30. By: Amrita Goldar (Indian Council for Research on International Economic Relations (ICRIER)); Saon Ray (Indian Council for Research on International Economic Relations (ICRIER)); Sajal Jain (Indian Council for Research on International Economic Relations (ICRIER)); Tom Moerenhout (International Institute for Sustainable Development (ISID))
    Abstract: The Indian automobile industry is expected tobe the third largest globally by 2030. During FY 2018-19, it contributed 7.1 per cent of India’s GDP and employed more than 37 million people. The government provided an extra policy push to ensure the accelerated and sustained growth of theautomobile industry under its Automotive Mission Plan (AMP) 2006-2016, followed by an updated plan for the period of 2016-26 launched in 2015. It aimed to propel the Indian Automotive industry to be the engine of the Make in India programme’ as well as increase the net exports of the industry.
    Keywords: EV, Battery Waste Management, Electric Vehicles, Climate, icrier
    Date: 2022–11
  31. By: Gong, Ziqian; Baker, Justin S.
    Keywords: Resource/Energy Economics and Policy, Production Economics, International Development
    Date: 2023
  32. By: Luthra, Renee Reichl; Platt, Lucinda
    Abstract: Recent scholarship suggests that immigrant selectivity – the degree to which immigrants differ from non-migrants in their sending countries – can help us understand their labour market outcomes in the receiving country. The selectivity hypothesis rests on three assumptions: first, that immigrants differ from non-migrants in their observed characteristics, such as education; second, that there is an association between such observed selection and (usually) unobserved characteristics, and third that this association drives positive relationships between observed selection and immigrant outcomes. While there is some evidence for a relationship between the degree of immigrants’ selectivity and their children’s outcomes, a comprehensive assessment of these assumptions for immigrants’ own labour market outcomes remains lacking. We use high-quality, nationally representative data for the UK, with large numbers of immigrants from a wide range of different origins and with a rich set of measures of networks, traits and characteristics, as well as economic outcomes, not typically found in surveys of immigrants. This enables us to conduct a comprehensive assessment of the selectivity hypothesis and its assumptions. We find that immigrants to the UK are on average positively selected on educational attainment. However, counter to theoretical assumptions, educational selection has little association with labour market outcomes: it is not or negatively associated with employment; and it is only associated with pay for those with tertiary qualifications and with occupational position for women. We show that the general lack of economic benefits from selection is consistent with an absence of association between educational selectivity and (typically unobserved) mechanisms assumed to link selection and labour market outcomes: social networks, cognitive and non-cognitive skills, and mental and physical health. We contextualise our findings with heterogeneity analysis by migration regime, sending country characteristics, level of absolute education and location of credential.
    Keywords: immigration; education; selection; labour market; inequality; Grant held at Essex University
    JEL: J1 R14 J01
    Date: 2023–07–01

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