nep-int New Economics Papers
on International Trade
Issue of 2023‒07‒31
39 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Developing countries' integration into the world economy By Lars, Nilsson; Kutlina-Dimitrova, Zornitsa
  2. Adjustments of Multinational’s Production Activities in Response to the US-Sino Trade War : Evidence from Japanese affiliate-level data By LIANG, Licheng; MATSUURA, Toshiyuki
  3. Integration of Mercosur in the Global Economy By Andreas Baur; Lisandra Flach; Feodora Teti
  4. Beyond Trading: Knowledge Spillovers and learning-by-exporting in Global Value Chains By Holger Graf; Hoda Mohamed
  5. The African Continental Free Trade Area (AfCFTA) : Progress, Challenges, and Potential Benefits for Morocco By Taoufik Noujoud; Ouadghiri Kaoutar; Jbali Brahim
  6. Structured literature review and modelling suggestions on the impact of trade and trade policy on the environment and the climate By Felbermayr, Gabriel; Peterson, Sonja; Wanner, Joschka
  7. CETA: Evolution of key economic indicators By Kutlina-Dimitrova, Zornitsa
  8. Time to preference: Early preference uptake under CETA and the EU-Korea FTA By Nilsson, Lars
  9. Liberalisation of Wine Trade under India-Australia CECA By Arpita Mukherjee; Drishti Vishwanath
  10. The Financial Channel of the Exchange Rate and Global Trade By Sai Ma; Tim Schmidt-Eisenlohr
  11. Korea faces opportunities as well as risks under the Indo-Pacific Economic Framework By Jeffrey J. Schott; Megan Hogan
  12. Global value chains, functional diversification and within-country inequality: an empirical assessment By Andrea Coveri; Elena Paglialunga; Antonello Zanfei
  13. Economic Security in the WTO Agreement: Balancing trade liberalization with protection of security interests (Japanese) By KOMETANI Kazumochi
  14. Do trade and financial cooperation improve environmentally sustainable development: A distinction between de facto and de jure globalization By Destek, Mehmet Akif; Oguz, İbrahim Halil; Okumus, Nuh
  15. Destination Trade Credit and Exports: Evidence from Cross Country Panel Data By Changyuan Luo; Shuai Zeng; Laixun Zhao
  16. Interactions between goods and services in international trade: Implications for customs valuation and rules of origin By Kazuyo Aoki; Cemre Balaban; Matteo Fiorini; Sébastien Miroudot; Irene Oliván García
  17. Resource Dependence, Recycling, and Trade By Egger, Peter; Keuschnigg, Christian
  18. Trade Integration, Industry Reallocation, and Welfare in Colombia By George A. Alessandria; Oscar I. Avila-Montealegre
  19. Promoting socio-political stability through Foreign Direct Investment By Assi Okara
  20. Econometric Analysis on the Impact of China Shock on Employment in Japan (Japanese) By HANEDA Sho; KWON Hyeog Ug
  21. Do Aid for Trade flows affect Technology Licensing in Recipient Countries? By Gnangnon, Sèna Kimm
  22. Skill Acquisition and the Gains from Trade: A Cross-country Quantitative Analysis By Ma, Xiao; Nakab, Alejandro; Zhang, Yiran
  23. BILATERAL INTERNATIONAL INVESTMENTS:THE BIG SUR? By Fernando Broner; Tatiana Didier; Sergio L. Schmukler; Goetz von Peter
  24. The economic impact of sanctions and Russian countermeasures following the Russian invasion of Ukraine until the 5th EU sanctions package By Nilsson, Lars; Antimiani, Alessandro; Jan, Schmitz
  25. Exporting Ideology: The Right and Left of Foreign Influence By Pol Antràs; Gerard Padró I Miquel
  26. Governance in the exploration of global and regional determinants of ICT development By Charles S. Saba; Simplice A. Asongu; Nicholas Ngepah; Yolande E. Ngoungou
  27. The nexus between illegal trade and environmental crime By Shunta Yamaguchi
  28. The economics of Canadian immigration levels By Doyle, Matthew; Skuterud, Mikal; Worswick, Christopher
  29. Time on the Crossing: Emigrant Voyages across the Atlantic, 1853 to 1913 By Hatton, Timothy J.
  30. Temporary Foreign Work Permits: Honing the Tools to Defeat Human Smuggling By Emmanuelle Auriol; Alice Mesnard; Tiffanie Perrault
  31. The Role of Covid-19 Policy Responses on GVC Participation: The Turkish Experience By Abdullah Altun; Pýnar Tat; Halit Yanikkaya
  32. Understanding Investment, Trade, and Battery Waste Management Linkages for a Globally Competitive EV Manufacturing Sector By Tom Moerenhout; Amrita Goldar; Saon Ray; Anirudh Shingal; Siddharth Goel
  33. SYMMETRY OF DEMAND AND SUPPLY SHOCKS IN THE EUROZONE By Pedro Oliveira, Maria Paula Fontoura, Nuno Sobreira
  34. Can small economies act strategically? The case of consumption pollution and non-tradable goods By Michael S. Michael; Panos Hatzipanayotou; Nikos Tsakiris
  35. Labor Market Competition and Attitudes toward Immigrants: New Evidence from Asia By Lee, Zeewan; Fong, Joelle H.
  36. Inflation, Exchange Rates, Exports Imports and Growth of Economics? The Empirical Studies in Qatar By triyawan, andi; cahyo, eko nur; Djayusman, Royyan Ramdhani
  37. International Trade, Noise Pollution, and Killer Whales By M. Scott Taylor; Fruzsina Mayer
  38. Carbon Pricing and Carbon Border Adjustment Mechanism: for a European Union Global Strategy By Olimpia Fontana
  39. What do GTAP databases tell us about technologies for industries and regions? By Peter B. Dixon; Maureen T. Rimmer

  1. By: Lars, Nilsson (DG Trade); Kutlina-Dimitrova, Zornitsa (DG Trade)
    Abstract: The importance of international trade for economic prosperity is well documented and has been acknowledged for centuries. There is a wealth of evidence demonstrating that trade liberalisation and trade integration have been crucial factors behind the rise in prosperity for an ever-increasing part of the global population. Trade is thus a powerful source of economic, technological and even societal change. However, many, but not all, developing countries have managed to increase their exports in a permanent way and integrate successfully in the world economy over the past decades. This paper thus provides a comprehensive overview of developing countries export performance over the 2000-2019 period using both quantitative and qualitative trade indicators. We classify developing countries in three groups as Front-runners, Mixed-result countries and Lagging-behind countries while highlighting the role of LDCs, emerging G20 countries as well as developing countries joining the WTO after the Uruguay Round in the various categories. Furthermore, we introduce a social dimension to the analysis and assess how the direction of the country groups’ exports has changed in terms of destination over the period considered.
    Keywords: international trade; quantitative analysis; developing countries; score board; global value chains
    JEL: F13 F15
    Date: 2023–07–10
  2. By: LIANG, Licheng; MATSUURA, Toshiyuki
    Abstract: Using factual affiliate-level data of Japan’s multinational firms from 2017 through 2019, this study investigates the impact of a trade shock (the 2018 US-Sino trade war in this case) on multinational firms’ overseas production activities. Focusing on Japanese affiliates in the Association of Southeast Asian Nations (ASEAN) countries, we find evidence of a potential production shift from China to the ASEAN member countries. According to our empirical results, in response to the trade war, those affiliates in the ASEAN with vertically integrated Chinese siblings belonging to the same multinational parent’s value chains may increase their export to North America and see a growth in total sales. Fast substitution of export and production occurs through the production network within Japanese multinationals when a part of which is negatively affected by the trade shock. In addition, this group of affiliates are also likely to increase both the share and value of local procurement. The study highlights the positive role of setting up a diversified production network for multinationals.
    Keywords: trade shock, multinational enterprise (MNE), affiliates
    JEL: F13 F14 F23
    Date: 2023–07
  3. By: Andreas Baur; Lisandra Flach; Feodora Teti
    Abstract: More than twenty years after the beginning of negotiations, a new window of opportunity seems to have opened for the ratification of a trade agreement between the European Union and Mercosur. For Mercosur, this comes at a crucial juncture in its integration process: the future of the South American trade bloc appears to be more uncertain than ever, with member states holding diverging views on Mercosur’s objectives. Thirty years after its foundation, the original goals of Mercosur’s integration process have been only partially achieved. While there has been some success in terms of trade liberalization within Mercosur, the goals of forming a customs union and pursuing deeper integration steps remain unfulfilled. High Most Favored Nation (MFN) tariffs and non-tariff trade barriers within the region, coupled with the lack of trade agreements, hinder the integration of Mercosur countries into the global economy. In this report, we take the perspective of Mercosur member states. We describe the evolution of trade flows, highlighting China's growing importance and Europe's declining importance as a trading partner. Next, we analyze trade policy developments within the region and the integration of member states into regional and global value chains. Finally, we emphasize the importance of the EU-Mercosur trade agreement
    Date: 2023
  4. By: Holger Graf (Friedrich Schiller University Jena, Economics Department); Hoda Mohamed (Friedrich Schiller University Jena, Economics Department)
    Abstract: Does exporting intermediate goods induce learning from importers? In this paper, we examine to what extent learning from German industries can be explained by knowledge spillovers, channeled through the export of intermediate goods. Our study is based on a sample of 27 German trade partners in 14 manufacturing industries for the period 2004 to 2016. Using data on patent citations and trading in intermediate goods, we find support for the widely known “learning-by-exporting†hypothesis. Our analyses reveal that citations to German patents are positively related to exported intermediate goods weighted by German R&D expenditure. The relationship between these spillovers and learning seems to be particularly strong in certain industries. We also show that the level of absorptive capacity of the exporting trade partner, as measured by the number of researchers involved in R&D activities, plays a role in mediating these spillovers.
    Keywords: GVC, trade, intermediate goods, learning-by-exporting, knowledge spillovers
    JEL: F14 O14 O32 O33
    Date: 2023–07–07
  5. By: Taoufik Noujoud (University Hassan II [Casablanca]); Ouadghiri Kaoutar (University Hassan II [Casablanca]); Jbali Brahim (University Hassan II [Casablanca])
    Abstract: The African Continental Free Trade Area (AfCFTA) is an initiative aimed at establishing a single market for goods and services across Africa. It was signed in March 2018 and became operational on January 1, 2021. The AfCFTA aims to promote intra-African trade, enhance economic diversification, facilitate industrialization and value addition, promote small and medium-sized enterprises (SMEs), encourage investment flows, and harmonize trade and economic policies. For Morocco, joining the AfCFTA presents potential benefits. The country has made the socio-economic development of Africa a priority and was among the first countries to sign the agreement. Simulations and studies suggest that Morocco's exports, particularly in sectors such as manufacturing industries, food, and textiles, could benefit from the AfCFTA. The agreement provides opportunities for increased trade, market access, and economic integration with other African countries. It is important to note that the implementation of the AfCFTA is an ongoing process, and its full impact will be realized over time. The collaboration and efforts of member states are crucial in realizing the potential benefits of the agreement and addressing challenges along the way.
    Keywords: The African Continental Free Trade Area (AfCFTA) intra-African trade impacts, The African Continental Free Trade Area (AfCFTA), intra-African trade, impacts
    Date: 2023–06–07
  6. By: Felbermayr, Gabriel (WIFO); Peterson, Sonja (IfW); Wanner, Joschka (IfW)
    Abstract: This DG TRADE Chief Economist Note provides a structured overview of the existing economic literature on the interaction between environmental outcomes, trade, environmental policy and trade policy, covering both the applied methods and data as well as main findings. Analyzing the literature on Input-Output tables, it first looks at the general pattern of industrialized countries becoming net importers of embedded emissions. It then discusses quantitative trade models of different types modelling emissions along value chains and shedding light on aspects such as the roles of consumption choices at different development stages or the role of trade imbalances. The Note also looks at the rather narrow stand of literature on the importance of emissions from transportation and discusses the implications of carbon levies in general or taxes on transport emissions. Finally, it discusses the theoretical research as well as the econometric analysis and quantitative modeling, which address the questions how international trade is shaped by the role of firms that are found to play an important role in determining the effect of trade on the environment and the climate. In all strands of literature, this Chief Economist Note reflects on potential for future research. It especially identifies how model features and model approaches in quantitative trade modelling could be improved in different respects and how these models can be used for new types of policy analysis.
    Keywords: international trade and climate; literature review
    JEL: F18
    Date: 2023–04–17
  7. By: Kutlina-Dimitrova, Zornitsa (DG Trade)
    Abstract: The purpose of this note is to assess the evolution of key economic indicators pre- and post CETA provisional application. The analysis shows that in the 5 years provisional application of CETA there has been a significant expansion of bilateral goods and services trade. The employment content of EU exports to Canada has increased by 11% in two years from 624, 000 in 2017 to 694, 000 in 2019. The number of EU exporting and importing micro-, small and medium-sized enterprises (MSMEs) increased by 44% and 21% and the value of the products exported and imported by EU MSMEs surged by 54% and by 58% respectively in the period 2017-2019. Furthermore, firms on both sides of the Atlantic are making continuous and increasing use of preferences granted by the Agreement. The evolution of the use of tariff rates quotas also shows that fears linked to the imports of sensitive products have not materialized. In fact, EU exporters are now exporting more frozen beef to Canada than vice versa.
    Keywords: CETA; economic impact; import market share analysis
    JEL: F13 F14
    Date: 2023–04–17
  8. By: Nilsson, Lars (DG Trade)
    Abstract: As the number of free trade agreements (FTAs) has increased worldwide, so has the interest in their implementation, including the extent to which FTAs actually are used. Preference utilisation rates (PURs) of EU FTAs regularly stand at less than 100%. The early literature pointed to that the preferential margin needed to be in the range of 4%, but later studies have showed that what matters is the potential duty savings, i.e. the value of the preference eligible trade flow times the preferential margin. Hence, even small preferential margins will lead to the use of preferences if trade flows – and thus duty savings – are large enough. One aspect that has been overlooked so far in the literature is the impact of time and, hence, of information and awareness of the benefits that FTAs bring. The use of preferences under EU FTAs are often low in early periods of the agreements’ application. For example, the PUR in first month of full application of the EU-Canada Comprehensive Economic and Trade Agreement (CETA), applied as of September 2017, stood around 25% for both EU imports and exports. Corresponding figures for EU trade with Korea, applied as of July 2011 were somewhat higher at some 35%-40%. This paper examines the uptake of trade preferences under these two relatively recent FTAs in their respective first 21 months of application. It analyses PURs of EU imports from Canada and Korea and EU exports to the same two countries by month of application. Controlling for potential duty savings, the impact of time on the use of preferences is estimated and some light is shed on how Member States perform vis-à-vis each other and if learning effects are present over the period. Finally, the paper argues that firm-pair transaction level data is necessary to arrive at conclusive answers as to questions relating to the use of trade preferences
    Keywords: Preference utilisation rates; EU-Korea FTA
    JEL: F14
    Date: 2023–04–17
  9. By: Arpita Mukherjee (Indian Council for Research on International Economic Relations (ICRIER)); Drishti Vishwanath (Indian Council for Research on International Economic Relations (ICRIER))
    Abstract: In April 2022, India and Australia signed an Interim Economic Co-operation and Trade Agreement, and India for the first-time liberalised wines under this agreement. This report studied the scope for liberalisation of tariffs in wines and the scope for removal of non-tariff barriers under the India-Australia trade agreement. It not only investigated different aspects of trade, like tariffs, standards and other non-tariff measures, trade facilitation and logistics in the context of a trade agreement, it also examined how a sector can be liberalised under a trade agreement so that both sides benefit from it. Besides, it sets a framework for tariff liberalisation under different scenarios. The objective of this report is to enhance knowledge about trade agreements and how they can be negotiated to facilitate business-to-business collaboration, especially among small and medium enterprises.
    Keywords: Trade, SMEs, wines, tariff, alcoholic beverages, CECA, icrier
    Date: 2022–06
  10. By: Sai Ma; Tim Schmidt-Eisenlohr
    Abstract: This paper provides evidence that the U.S. dollar affects countries’ exports through the financial channel of the exchange rate (Bruno and Shin (2015)). Using global data on trade between countries whose currency is not the U.S. dollar, it documents a positive relationship between the dollar and import prices. Importantly, this effect is stronger when the dollar share of the exporter’s foreign borrowing is larger. Results strengthen substantially when instrumenting the dollar by U.S. domestic housing activity. Then, a dollar appreciation increases import prices and decreases import quantities, with effects being proportional to the source country’s foreign dollar borrowing share.
    Keywords: dollar, dominant currency, financial channel, international trade
    JEL: F14 F31 G15
    Date: 2023
  11. By: Jeffrey J. Schott (Peterson Institute for International Economics); Megan Hogan (Peterson Institute for International Economics)
    Abstract: South Korea participates in several regional trade and investment arrangements, including the bilateral Korea-China Free Trade Agreement, the Asia Pacific Economic Cooperation (APEC) forum, and the Regional Comprehensive Economic Partnership (RCEP); it has also joined the Digital Economy Partnership Agreement (DEPA) and is considering following China's example and applying for membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). All these initiatives are complementary and open to a broad range of countries and separate customs territories. The US-led Indo-Pacific Economic Framework (IPEF) would largely reinforce Korea's benefits from other economic integration pacts, but in key respects it could build barricades instead of bridges to nonmember countries. The authors examine the progress in building IPEF, how the four IPEF pillars would advance and/or constrain Korean policy, and what the impact could be on Korea's economic relations with major trading nations in the region, including China, which shares membership with Korea in important pacts like RCEP. The key challenge for Korea in IPEF will be to balance its relationships with China while deepening its economic and security ties with the United States.
    Date: 2023–07
  12. By: Andrea Coveri (Department of Economics, Society & Politics, Università di Urbino Carlo Bo); Elena Paglialunga (Department of Economics, Society & Politics, Università di Urbino Carlo Bo); Antonello Zanfei (Department of Economics, Society & Politics, Università di Urbino Carlo Bo)
    Abstract: A growing literature has stressed that the geographical dispersion of production and the subsequent rise of global value chains (GVCs) are associated with important social and economic disparities across countries. However, systemic empirical evidence on the distributional consequences of GVCs within countries has so far been rather limited. In this work, we take a step forward in the direction of filling this gap by providing a comprehensive empirical assessment of the GVC-inequality nexus on a sample including more than 100 countries over the period 2003-2015. Our results show that (i) the association between trade in GVC and income inequality is conditioned by the GVC positioning of countries; (ii) greater shares of FDIs in the upstream (i.e., knowledgeintensive activities such as R&D, design and training) and downstream (i.e., logistics, marketing and post-sales services) segments of the value chain are associated with lower income inequality; (iii) greater functional diversification in FDI is associated with lower levels of income disparities within countries, consistent with the hypothesis that a larger mix of value-adding activities an economy carries out expands learning opportunities and occupational choices for its workers and is conducive to a more inclusive development.
    Keywords: Global value chains; inequality; international trade, FDI; value chain functions;functional diversification
    Date: 2023
  13. By: KOMETANI Kazumochi
    Abstract: This paper proposes that the WTO Agreement should be interpreted as permitting any restriction on military trade based on security considerations and prohibiting any restriction on non-military trade on such grounds, except for restrictions between parties to a war, or when a Member uses such measures to assist a party to a war where the consequences of the measures could seriously impact the security interest of the assisting Member. It disagrees with the existing WTO panel reports that have allowed for a broad interpretation of the phrase “other emergency in international relations†. Such an interpretation increases the risk that economic dependence will be exploited to disincentivize trade liberalization, which would suppose further economic dependence. Furthermore, no restriction on non-military trade should be permissible, even if it is taken for the purpose of protecting a strategically key industry. For that purpose, a Member should explore the possibility of withdrawing relevant tariff concessions on an MFN basis pursuant to GATT Article XXVIII, rather than resorting to the national security exception that could permit non-MFN trade restrictions. It is difficult for the U.S. Section 232 measures concerning certain steel and aluminum products or China’s “Military-Civil Fusion†policy to co-exist with the WTO Agreement. Both of them disregard the previously cited distinction in treatment between military trade and non-military trade.
    Date: 2023–07
  14. By: Destek, Mehmet Akif; Oguz, İbrahim Halil; Okumus, Nuh
    Abstract: Background: The adoption of growth strategies based on foreign trade, especially in the previous century when liberal policies began to dominate, is one of the main reasons for the increase in output and indirectly for environmental concerns. On the other hand, there are complex claims about the environmental effects of liberal policies and thus of globalization. Objectives: This study intends to analyze the effects of global collaborations involving 11 transition economies that have completed the transition process on the environmentally sustainable development of these nations. Research Design: In this direction, the effects of financial and commercial globalization indices on carbon emissions are investigated. The distinctions of globalization are used to distinguish the consequences of the two types of globalization. Subjects: In doing so, the de facto and de jure indicator distinctions of globalization are used to differentiate the consequences of two types of globalization. In addition, the effects of real GDP, energy efficiency, and use of renewable energy on environmental pollution are dissected. Measures: For the main purpose of the study, the CS-ARDL estimation technique that allows cross-sectional dependency among observed countries is used to separate the short and long-run influences of explanatory variables. In addition, CCE-MG estimator is used for robustness check. Results: According to the empirical findings, the economic growth and increasing energy intensity increases carbon emissions, but the increase in renewable energy consumption improves environmental quality. Furthermore, trade globalization does not have a significant impact on the environment in the context of globalization. On the other hand, the increase in de facto and de jure financial globalization indices results in an increase in carbon emissions, but de jure financial globalization causes more environmental damage. Conclusions: The harmful impact of de jure financial globalization on environmental quality suggests that the decreasing investment restrictions and international investment agreements of transition countries have been implemented in a manner that facilitates the relocation of investments from pollution-intensive industries to these countries.
    Keywords: Financial globalization, Trade globalization, De Facto, De Jure, Carbon emissions, Energy efficiency
    JEL: F18 F64 Q56
    Date: 2023–06–06
  15. By: Changyuan Luo (Institute of World Economy, Fudan University, CHINA); Shuai Zeng (School of Economics, Fudan University, CHINA); Laixun Zhao (Research Institute for Economics and Business Administration, Kobe University, JAPAN)
    Abstract: We examine the impact of destination trade credit (DTC) on exports, using cross-country panel data for 2000-2018 and focusing on financing by foreign trade partners. We find DTC promotes a country's exports disproportionately more in liquidity-dependent industries, a consistent result after addressing endogeneity and various robustness tests. DTC mainly promotes trade by increasing export quantity, while lowering export prices and export varieties. Further, the effect is greater if the level of financial development of the source country is lower, but smaller if the product complexity of industries becomes higher. During the 2008 global financial crisis, DTC also contributes to export expansion, but the effect is relatively small.
    Keywords: Informal finance; Destination trade credit; Exports; Cash in advance; Deferred payment
    JEL: F10 G20 G30
    Date: 2023–06
  16. By: Kazuyo Aoki; Cemre Balaban; Matteo Fiorini; Sébastien Miroudot; Irene Oliván García
    Abstract: This paper examines whether the customs valuation systems and rules of origin are sufficiently attuned to the changing landscape of commercial realities characterised by new and diverse configurations of goods-services trade. It proposes a framework to categorise relevant configurations of goods-services trade and applies it to identify potential challenges arising from the current procedures for customs valuation and origin determination. While the existing rules provide an adequate structure for doing business and achieving legitimate trade policy objectives, challenges can arise across different configurations of goods-services trade. Options for policy solutions include developing guidelines and implementation standards to fine-tune customs valuation and rules of origin that apply to specific goods-services trade configurations. The promotion of multilateral openness, harmonisation of rules and practices, and transparency of jurisprudence would contribute to minimising the impact and frequency of potential challenges.
    Keywords: Customs valuation, Goods-services interactions, Servicification, Trade policy
    JEL: F13 F68 K33 K34 L80
    Date: 2023–07–06
  17. By: Egger, Peter; Keuschnigg, Christian
    Abstract: Recycling waste from used goods can substitute for scarce raw materials and reduce resource dependence. This paper presents a model of waste collection, recycling and final goods production using raw and recycled materials. Non-recycled waste must be safely stored by landfill to avoid environmental damage. The costs of waste disposal create externalities. An optimal allocation requires a trash tax to make producers pay for the costs of waste disposal, and an input subsidy to recycling firms to compensate for the savings in disposal costs. We study trade between resource poor economies exporting final goods, and resource rich countries exporting raw materials. We find rich welfare effects of trade policy with non-trivial interactions between terms of trade effects and distortions in recycling and resource extraction.
    Keywords: Waste, recycling, externalities, resource dependence, trade
    JEL: D62 Q32 Q53 F18
    Date: 2023–06
  18. By: George A. Alessandria; Oscar I. Avila-Montealegre
    Abstract: We study empirically and theoretically the dynamic effects of the unilateral reduction in import tariffs undertaken by Colombia from 1989-1993, with a particular emphasis on the transition and including any anticipation effects. We develop an asymmetric two-country, multi-sector heterogeneous firm model with a dynamic exporting decision, input-output linkages, capital accumulation, and trade in financial assets. The model is calibrated to match Colombian exporter dynamics, sectoral trade openness, tariffs, imbalances, and input-output linkages in the late 1980s. We introduce an anticipated phased out reform into the model and relate the predicted path of sectoral and aggregate activity to the data. Our multi-sector dynamic exporting model predicts much larger gains from these reforms than models that abstract from exporter dynamics, sectoral heterogeneity, trade in financial assets, or capital accumulation. It also captures the key macroeconomic features in terms of a temporary expansion in growth featuring a large, but short-lived investment boom financed by international borrowing, more so when the reforms are expected to be short-lived.
    JEL: F15 F4
    Date: 2023–06
  19. By: Assi Okara (African Development Bank Group)
    Abstract: The growing importance of FDI flows to developing countries has implications for their institutional environment as (i) foreign investors do not always adapt to the local environment, (ii) FDI has induced institutional reforms in countries competing to attract them, and (iii) the socioeconomic effects of FDI can trigger institutional changes. The latter argument is what the paper mainly explores in positing that by generating economic opportunities, FDI promotes political stability. The results clearly align with this argument. Accounting for political repression, the findings also highlight that FDI-induced stability is compatible with governmental respect for human rights.
    Abstract: L'importance croissante des flux d'IDE vers les pays en développement a des implications sur leur environnement institutionnel car (i) les investisseurs étrangers ne s'adaptent pas toujours à l'environnement local, (ii) les IDE induisent des réformes institutionnelles dans les pays en concurrence pour les attirer, et (iii) les effets socio-économiques des IDE peuvent susciter des changements institutionnels. C'est ce dernier argument qui est exploré dans cet article qui postule que les IDE favorisent la stabilité sociopolitique à travers leur potentiel de création d'opportunités économiques. Les résultats vérifient largement cet argument. En tenant compte de la répression politique, les résultats soulignent également que la stabilité induite par les IDE est compatible avec le respect des droits de l'homme par les gouvernements.
    Keywords: Institutions, Political stability, Developing countries, IDE, Institution, Greenfield FDI, Stabilité politique, Pays en développement
    Date: 2023–05–30
  20. By: HANEDA Sho; KWON Hyeog Ug
    Abstract: After China's accession to the WTO, the impact of increased competition from Chinese imports (the China shock) on employment and productivity in many developed countries has become a major concern for policy makers. The ratio of manufacturing workers to the total number of employees is declining, which indicates that Japan is no exception. The paper empirically analyzes the impact of the increase in the China shock on employment by using the questionnaire information of the Census of Manufacture , product-level trade data by custom and country, and National Freight Net Flow Survey (Logistics Census). The results indicate that intermediate imports from China have a positive impact on employment while capital goods from China might have a negative impact on employment growth in Japan. Thus, removing trade barriers to intermediate products as well as participating in GVCs play a key role for employment growth in Japan.
    Date: 2023–07
  21. By: Gnangnon, Sèna Kimm
    Abstract: There is an abundant literature on the economic (including trade) effects of Aid for Trade (AfT) flows. However, little attention has been devoted to the effect of AfT flows on demand for technology. The present article aims to fill this void in the literature by investigating the effect of AfT flows on technology licensing in developing countries. The analysis has used an unbalanced panel dataset of 77 countries over the period from 2002 to 2019, and mainly the two-step system generalized method of moments estimator. It has established that AfT flows foster technology licensing in countries that experience lower trade costs. In addition, the analysis has revealed that adverse environmental and external (economic and financial) shocks significantly hamper innovation, including the demand for technology licensing, and that AfT flows promote technology licensing in countries that experience lower magnitudes of such shocks. Finally, AfT flows foster technology licensing in countries that diversify their export products.
    Keywords: Aid for Trade, Technology licensing, Trade costs
    JEL: F10 F35 L24
    Date: 2023
  22. By: Ma, Xiao; Nakab, Alejandro; Zhang, Yiran
    Abstract: This paper studies the impact of trade openness on welfare through alterations in workers' skill acquisition. We integrate endogenous choices of learning investments into a multisector Eaton-Kortum model. In the model, workers can opt to become skilled through education and further enhance their human capital via on-the-job training. Both education and on-the-job training entail time and material costs. Our model reveals that trade openness influences skill acquisition by: (1) reallocating labor between sectors, as skill intensities and on-the-job learning opportunities vary across sectors; and (2) allowing producers in each country to source varieties from more cost-effective suppliers in other countries, thus reducing unit costs of material inputs and raising real wage rates. Our calibrated model indicates that the gains in skill acquisition account for 20% of the total gains from trade. We also find that the gains in skill acquisition primarily stem from increased real wage rates that encourage skill acquisition.
    Keywords: gains from trade; education; on-the-job learning
    JEL: F1 J2
    Date: 2023–06
  23. By: Fernando Broner (CREI and Universitat Pompeu Fabra Ramon Trias Fargas); Tatiana Didier (World Bank Group); Sergio L. Schmukler (Economics Research World Bank Group); Goetz von Peter (Bank for International Settlements (BIS))
    Abstract: This paper presents novel stylized facts about the rise of the South in global finance using country-tocountry data. To do so, the paper assembles comprehensive bilateral data on cross-border bank loans and deposits, portfolio investment, foreign direct investment, and international reserves from 2001 to 2018. The main findings are that investments involving the South, and especially within the South, have grown faster than those within the North. By 2018, South-to-South investments accounted for 8% of total international investments, while investments between the South and the North accounted for an additional 26%. The fastest growth occurred in portfolio investment and international reserves, whereas the slowest growth was in banking. These trends are not driven by China, any particular South region, or offshore financial centers. South-to-South investments grew the fastest even after controlling for regional GDP growth. The extensive margin played a significant role in the growth of investments within the South.
    Keywords: emerging economies; foreign direct investment; international banking; international capital flows; international financial integration; portfolio investment.
    JEL: F21 F36 G15
    Date: 2023–07
  24. By: Nilsson, Lars (DG Trade); Antimiani, Alessandro (DG Trade); Jan, Schmitz (DG Trade)
    Abstract: We use a computable general equilibrium (CGE) model analysis to show estimates of the medium-term economic impact of the sanctions following the Russian invasion of Ukraine and related Russian countermeasures. Sanctions covered are those legally in place and announced against Russia and Belarus by Canada, the EU, Japan, Korea, Switzerland, the UK, the US, and countersanctions by Russia until 25 March 2022. The results simulating the impact of those measures point to a reduction in Russian GDP of 3.7%, amounting to a strong recession, at a level rarely seen in such modelling exercises. EU GDP would fall more modestly by 0.08%.
    Keywords: Russian invasion of Ukraine; sanctions; economic modelling
    JEL: F51
    Date: 2023–04–17
  25. By: Pol Antràs; Gerard Padró I Miquel
    Abstract: We present an economic rationale for countries resorting to foreign influence to export their ideology to other nations. Our model incorporates two fundamental elements: redistribution of the tax burden between capital owners and workers, and international capital mobility. The model highlights the role of ideology in shaping both the taxes implemented by governments and the cross-border externalities of these policy choices. Pro-capital governments set lower capital taxes than pro-labor governments. Importantly, pro-capital governments benefit from other countries setting low capital taxes, while pro-labor governments' efforts to shift the tax burden onto capital owners are facilitated by higher capital taxes abroad. These cross-border externalities create strong incentives for engaging in foreign influence activities. We solve for a political equilibrium in which incumbent governments may exert costly actions that probabilistically affect the electoral outcome in other countries. In equilibrium, pro-capital parties exert influence aimed at promoting pro-capital parties and policies worldwide, while pro-labor governments carry out foreign influence activities aimed at boosting pro-labor parties and policies in other countries.
    JEL: D7 F2 F5 H77 P33
    Date: 2023–06
  26. By: Charles S. Saba (Johannesburg, South Africa); Simplice A. Asongu (Johannesburg, South Africa); Nicholas Ngepah (Johannesburg, South Africa); Yolande E. Ngoungou (Yaoundé, Cameroon)
    Abstract: The present study assesses how governance affects information and communication technology at the global level contingent on macroeconomic policy factors such as trade, foreign investment, manufacturing value added and agriculture value added. The focus of the study is on 183 countries for the period 2003 to 2021 and the empirical evidence is based on the generalised method of moments. The following main findings are established. For the full sample, governance unconditionally promotes ICT development while trade openness (industrial added value) moderate governance to promote (dampen) ICT development. In sub-Saharan Africa, only trade openness effectively moderates governance to induce an overall positive effect on ICT while in the MENA, all policy variables moderate governance for an overall positive incidence on ICT sector development. The findings of the MENA are confirmed in the ECA region with the exception of the moderating role of industrial added values which engenders an overall negative effect. In the East & South Asia and the Pacific (ESAP) countries, one overall positive incidence is apparent in the role of trade openness while net negative effects are established from the moderating roles of industrial added value and agricultural added value, respectively. In the American sub-sample, a positive (negative) net effect is apparent from the role of industrial added value (trade) in moderating the incidence of governance on ICT sector development. Policy implications are discussed.
    Keywords: ICT; Governance; Trade; FDI; Industry; Agriculture
    JEL: G20 O38 O40 O55 P37
    Date: 2023–01
  27. By: Shunta Yamaguchi
    Abstract: Environmental crime is on the rise and is of growing concern to policy makers, to legitimate businesses, and more broadly to the general public. It is growing rapidly worldwide on average at over 8% per year, with an estimated value between USD 110-281 billion in 2018. Emerging issues include wildlife trafficking, illegal timber, illegal mining, illegal chemicals, illegal waste trafficking, and illegal, unreported and unregulated (IUU) fishing. Environmental crime can have serious implications to human health and the environment, to the global economy, and more broadly to good governance, national security and sustainable development.Addressing these criminal activities affecting the environment is difficult exclusively at the national level as they often extend on a transnational scale. In this context, this report provides a snapshot of cross-border environmental crime and available initiatives to tackle illegal activities at a transnational scale, with a particular focus on multilateral and regional frameworks. The key message from this report is that the increasing prevalence of cross-border environmental crime is due to regulatory failures and the growing involvement of transnational organised crimes, which require an internationally co-ordinated response, both at the multilateral and regional level.
    Keywords: environment policy, environmental crime, illegal, illegal chemicals, illegal timber, illegal trade, illegal waste, Trade and environment, trade policy, unreported and unregulated fishing, wildlife tracking
    JEL: F18 F64 K42 Q56
    Date: 2023–07–06
  28. By: Doyle, Matthew; Skuterud, Mikal; Worswick, Christopher
    Abstract: In the hope of addressing chronic labour shortages and sluggish economic growth, the Canadian government plans to increase immigration in the coming years to per capita levels not reached since the 1920s. We argue that economic immigration in the Canadian context should aim to boost GDP per capita in the full population including the newcomers. We then examine the potential for increases in Canadian immigration levels to achieve this objective. Our analysis suggests that Canada is not well-positioned to leverage heightened immigration to boost GDP per capita owing primarily to weak capital investment and quantity-quality tradeoffs in immigrant selection. We conclude by providing a framework for identifying the optimal level of economic immigration.
    Keywords: Immigration, economic growth, human capital
    JEL: J61 F22 J24
    Date: 2023
  29. By: Hatton, Timothy J. (University of Essex)
    Abstract: From 1860 to 1913 the six colonies that became states of Australia strove to attract migrants from the UK with a variety of assisted passages. The colonies/states shared a common culture and sought migrants from a common source, the UK, but set policy independently of each other. This experience provides a unique opportunity to examine the formation of assisted immigration policies. Using a panel of colonies/states over the years 1862 to 1913 I investigate the association between measures of policy activism and a range of economic and political variables. Assisted migration policies were positively linked with government budget surpluses and local economic prosperity. They were also associated with political participation including the widening of the franchise and remuneration of members of parliament. While the reduction in travel time to Australia reduced the need for assisted migration, slumps in the UK increased the take-up of assisted passages.
    Keywords: transatlantic migration, steam ships, voyage times
    JEL: F22 O33 N73
    Date: 2023–06
  30. By: Emmanuelle Auriol (Toulouse School of Economics); Alice Mesnard (City University of London); Tiffanie Perrault (McGill University)
    Abstract: We study how temporary visa schemes can be designed to drive smugglers out of business while meeting labor market needs in host countries. After discussing their compatibility with a large range of policy objectives, we show how combining internal and external controls with a regulated market for temporary visas alleviates the policy trade-off between migration control and ending human smuggling. We use information on irregular migration from Senegal to Spain and the Democratic Republic of Congo to South Africa to calibrate the “eviction†prices of visas for these two routes, which are set to throttle smuggling activities. Our results highlight important constraints for governments seeking to prevent temporary workers from overstaying, especially on south-north routes such as Senegal to Spain. They suggest combining a regulated market for visas with tighter sanctions against employers of undocumented workers as a way forward.
    Keywords: immigration, humansmuggling, marketstructure, legalization
    JEL: F22 I18 L51 O15
    Date: 2023–06
  31. By: Abdullah Altun (Department of Economics, Gebze Technical University); Pýnar Tat (Department of Economics, Gebze Technical University); Halit Yanikkaya (Department of Economics, Gebze Technical University)
    Abstract: This paper explores the association between a variety of trade and government policy measures of both home and trade partners introduced during the Covid-19 pandemic within the gravity-like framework by using the Turkish bilateral trade statistics at the 6-digit product level from February 2020 to March 2022. The unique monthly 6-digit bilateral product-level trade dataset enables us to observe and utilize heterogeneous effects at the product, sector, and country levels. Our initial eye inspection of raw data reveals that the Covid-19 shock is not only a health crisis, but it also represents simultaneous demand and supply shocks for the globally integrated world economy. Our empirical analysis suggests that lower Turkish GVC participation during this period can be attributed to lower mobilities and the lack of vaccines globally. Our analysis utilizing the different income group of countries and technology group of sectors suggest that Turkish high-tech embedded backward participation with developed countries can be more sensitive to any changes in Covid-19-related policy measures, whereas Turkish forward participation with both developed and developing markets can be more volatile during the pandemic because of the containment measures. Given the product and country-level heterogeneities regarding contingency measures implemented by the governments, policymakers should carefully monitor each sub-sample separately and focus especially on enhancement in information, communication, and transportation infrastructures to mitigate the contagious effect of any external shocks.
    Keywords: Bilateral Product Level GVC Participation, Covid-19, Turkey
    JEL: F10 F14 F42
    Date: 2023–07–17
  32. By: Tom Moerenhout (International Institute for Sustainable Development (IISD)); Amrita Goldar (Indian Council for Research on International Economic Relations (ICRIER)); Saon Ray (Indian Council for Research on International Economic Relations (ICRIER)); Anirudh Shingal (Indian Council for Research on International Economic Relations (ICRIER)); Siddharth Goel (International Institute for Sustainable Development (IISD))
    Abstract: The report makes an attempt to comprehend various challenges in trade, investment and battery waste management of EVs in India and identifies diverse solutions to aid India’s EV transition. This summary captures, in brief, the major findings of the larger study aimed towards policy makers, and technology enablers. It discusses detailed stylized facts on trade and tariffs of goods involved in the EV value-chain as well as on investment, addressing regulatory barriers to trade and investment in the EV value-chain and identifying key barriers such as charging infrastructure, supply chain concerns, and skill gaps. At the same time, deliberating on the far end of the EV value chain, the results also focus explicitly on the effective management of EV battery waste. The three critical pillars for battery waste management i.e., technology, employment opportunities, policy and regulations are discussed in detail to draw attention to the crucial role the battery waste sector can play in the economy.
    Keywords: EV manufacturing, battery, waste management, climate, icrier, iisd
    Date: 2022–04
  33. By: Pedro Oliveira, Maria Paula Fontoura, Nuno Sobreira
    Abstract: This paper uses quarterly data for the period of 2004-2019 to investigate the symmetry of cross-country demand and supply shocks in the Eurozone. For this purpose, the structural Vector Autoregressive model (VAR) from BLANCHARD and QUAH (1989) is used to disentangle both types of shocks from cyclical fluctuations in real output and prices, followed by the computation of correlation coefficients of shocks between Euro partners and three alternative benchmarks – Germany, European Union 27 (EU-27) and France. It also investigates whether increased trade integration has contributed positively to a more symmetrical spread of demand and supply shocks. The overall results point to heterogeneous co-movements of demand and supply-side shocks, with several countries displaying negative or very low correlations with the benchmarks and an increasing tendency towards asymmetry, especially on the demand side. Specialization appears to contribute negatively to the symmetry of demand shocks, but positively on the supply side, which can be explained by the spread across countries of technological spillovers. In addition, the results also show that intra-industry trade has contributed positively to a more symmetric spread of demand shocks through aggregate spending spillovers. Since trade in the Eurozone is mainly of the intra-industry type, these results support the occurrence of a Frankel-Rose endogeneity effect.
    Keywords: EMU; demand shocks; supply shocks; trade intensity; intra-industry trade; specialization; symmetric shocks; business cycle synchronization; technological spillovers.
    JEL: F10 F11 F14 F44 F45 L81
    Date: 2023–06
  34. By: Michael S. Michael; Panos Hatzipanayotou; Nikos Tsakiris
    Abstract: We develop a model of two small open asymmetric economies with two tradable and one non-tradable goods, capital mobility and consumption generated cross border pollution. We show that the Nash equilibrium calls for a consumption tax and capital tax (subsidy) when the consumption of the tradable (non-tradable) good pollutes. In this model, the consumption tax causes pollution leakages between the two countries which is partly offset by the capital tax or subsidy. Thus, the existence of non-tradable goods and international capital mobility induce the small countries to act strategically. In the absence of capital taxes, consumption taxes are lower to their rates when capital taxes are also present since are used strategically to mitigate the pollution leakage.
    Keywords: Pollution Leakage; Non-tradable Goods; Capital Mobility; Capital and Consumption Taxes; Consumption-generated Cross-border Pollution
    JEL: F15 F18 F20 H20 H21
    Date: 2023–05–19
  35. By: Lee, Zeewan; Fong, Joelle H.
    Abstract: Immigrants in a destination country both alter the prospects of economic development and influence the livelihood of natives. Using data from 10 Asian countries in the 2018-2020 World Value Survey (WVS), we provide new evidence regarding the impact of skill-driven labor market competition on natives’ attitudes toward immigrants. Linking information on occupation-specific human capital accumulation from O*NET to WVS, we explore granular dimensions of natives’ skills and their implications for labor market competition and vulnerability. To account for the possibility of reverse causality (selection in natives’ occupational choices resulting from natives’ inherent preferences toward immigrants), we run the two-stage instrumental variable estimator adopting the control function approach. Holding educational levels constant, we find that natives with greater manual skills and fewer communication skills are more likely to be pro-immigration. We also find that the links between manual skills and attitudes are driven primarily by the level of flexibility in natives’ skills, while the negative impacts of communication skills are driven by natives’ writing abilities. Our results offer important insights for policymakers in Asia to establish nuanced immigration policies and skill-development programs that account for their impacts on intergroup labor market competition and social cohesion.
    Keywords: attitudes, immigration, labor market competition, skills, human capital accumulation, control function approach
    JEL: F66 F68 J61 J68
    Date: 2023
  36. By: triyawan, andi; cahyo, eko nur; Djayusman, Royyan Ramdhani
    Abstract: This research aims to analyze how exchange rates, inflation, exports, and imports have influenced the economic growth of Qatar between 2000 and 2020. The study utilizes multiple linear regression as its methodology and obtains data on exchange rates, exports, imports, and inflation from the World Bank. The findings of the study indicate that changes in the exchange rate, inflation, exports, and imports all have an impact on Qatar's GDP. In other words, an improvement in these factors leads to an increase in GDP, while a negative influence on these factors results in a decline in GDP. Additionally, the study reveals a positive correlation between Qatar's exchange rate and its economic growth. This means that when the exchange rate rises, so does the level of economic development.
    Date: 2023–06–20
  37. By: M. Scott Taylor; Fruzsina Mayer
    Abstract: Orcinus Orca is the world’s largest predator, and simultaneously a significant tourist asset and cultural icon for much of the Pacific Northwest. In the past two decades, the Southern Resident Killer whale (SRKW) population has declined by more than 25 percent, putting them at risk of extinction. The cause of this decline is hotly debated. This paper employs novel data, an innovative noise pollution model, and quasi-experimental methods borrowed from environmental economics to solve this puzzle. We find consistent evidence that vessel noise pollution from international shipping has lowered fertility and raised the mortality of the SRKW significantly. Had noise pollution remained at its pre-1998 levels, the SRKW population would be 30% larger. Noise pollution is a growing threat to marine mammals worldwide.
    JEL: F1 Q01 Q20 Q53
    Date: 2023–06
  38. By: Olimpia Fontana (Mario Albertini Fellow at Centro Studi sul Federalismo, Torino, Italy)
    Abstract: In 2019, the European Commission launched the European Green Deal and outlined its developing model to combat climate change, particularly focused on accelerating the pace of reducing CO2 emissions. Emissions in Europe have thus far been reduced by 20% compared to 1990 values, while now the goal, as the "Fit for 55" package suggests, is to achieve a 55% reduction by 2030 and to reach climate neutrality by 2050. With these commitments, the EU intends to comply with the Paris Agreement by keeping “the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognising that this would significantly reduce the risks and impacts of climate change†(Art. 2(1)(a) of the Agreement).[...]
    Keywords: European Commission, European Green Deal, CO2, climate change, carbon pricing, carbon leakage
    JEL: E43 E58 F33 F38 F41 F42 G15 H71
    Date: 2022–05
  39. By: Peter B. Dixon; Maureen T. Rimmer
    Abstract: We conduct an historical simulation from 2004 to 2014 with a 57-commodity, 13-region version of the GTAP model. The simulation generates estimates of changes in industry technologies, household preferences and several other unobservable variables by calculating the changes required to connect GTAP databases for the two years. The historical simulation starts from the 2004 database and then in a single-period (10-year) computation produces a picture of 2014. We require this picture to be consistent with a large number of data points in the GTAP database for 2014 and with data on a selection of other variables brought in from non-GTAP sources. The GTAP data are entirely in values. The non-GTAP sources provide movements between 2004 and 2014 in quantity variables. The combination of exogenously set GTAP value targets for 2014 and non-GTAP quantity targets enables the historical simulation to generate a comprehensive set of price movements for 2004 to 2014. Simultaneously, the historical simulation translates commodity and industry value movements into quantity movements. With input and output quantity movements in place, technology and preference movements are revealed.
    Keywords: GTAP historical simulation, Industry technologies, Household preferences
    JEL: C68 C52 D24
    Date: 2023–06

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