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on International Trade |
| By: | Ning Meng; Feicheng Wang |
| Abstract: | This paper explores an under-researched margin of firms’ export adjustments in response to negative trade policy shocks: export reallocation across markets. Using detailed Chinese customs data spanning from 2000 to 2015 and a difference-in-differences approach, we compare export dynamics between multi-destination exporters that were subject to antidumping (AD) duties and those that were not affected. Our empirical results show that, on average, AD duties reduced firms’ entry into new markets and increased their exit from existing markets. These effects were less pronounced for exports to high-income destinations and high-quality products. Continuing exporters, however, raised their exports to non-AD markets after being affected by AD duties and this effect was stronger for high-income destination exports. Further analysis underscores the role of quality upgrading in explaining the trade-promoting effect of AD duties in third countries. Our findings reconcile the seemingly contradictory trade diversion and tariff echoing effects of AD duties documented in earlier studies. |
| Keywords: | antidumping, multi-destination firms, within-firm adjustment, quality |
| JEL: | F13 F14 F51 F61 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10752&r=int |
| By: | Kang, Duyang (Korea Institute for Industrial Economics and Trade) |
| Abstract: | Insofar as we define globalization as the consistent growth in the volume of global trade relative to world GDP, we reasonably conclude that the second phase of globalization, which lasted for five decades since the signing of the General Agreement on Trade and Tariffs (GATT) in 1947, effectively ended with the global financial crisis of 2007-2008. Anti-globalization sentiment has taken root in many advanced countries since the global financial crisis and has conspired with an intensifying US-China rivalry to stem the erstwhile growth in trade relative to world GDP. The United States, the onetime champion of postwar globalization, has recently embraced a New Washington Consensus that represents a sharp departure from the original of the 1990s, effectively putting an end to globalization. The end of globalization means an end to a chapter in the history of global trade. It remains to be seen how the post-globalization trade environment will evolve. The actions of various countries over the next decade will ultimately shape this landscape. The United States and China will play significantly greater roles than other countries in the process, but the fact that no single country can claim unchallenged hegemony over the global economy also leaves room for concerted actions from smaller countries. The end of globalization is particularly significant to Korea, which has achieved a remarkable economic transformation thanks to the success of an export-led growth strategy. Several studies show in common that the US-China decoupling will have a significant negative impact on the global economy, and that Korea will be one of the countries hit the hardest. As a chief beneficiary of free trade and the world’s eighth-largest trading country, Korea has practical interests, a moral obligation, and the potential to help ameliorate worsening global trade conditions. By making it known that the fragmentation of the global economy is not in its interest, Korea ought to partner with countries that share the same perspective and mobilize international support toward maintaining an open, non-discriminatory, and free trade order against protectionist and fragmenting forces. |
| Keywords: | free trade; globalization; anti-globalization; protectionism; economic nationalism; economic security; exports; US-China conflict; Korea |
| JEL: | F01 F02 F10 F13 F15 F52 O20 O21 O24 O25 |
| Date: | 2023–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kietrp:2023_006&r=int |
| By: | Hendrik Mahlkow; Joschka Wanner |
| Abstract: | International trade is highly imbalanced both in terms of values and in terms of embodied carbon emissions. We show that the persistent current value trade imbalance patterns contribute to a higher level of global emissions compared to a world of balanced international trade. Specifically, we build a Ricardian quantitative trade model including sectoral input-output linkages, trade imbalances, fossil fuel extraction, and carbon emissions from fossil fuel combustion and use this framework to simulate counterfactual changes to countries’ trade balances. For individual countries, the emission effects of removing their trade imbalances depend on the carbon intensities of their production and consumption patterns, as well as on their fossil resource abundance. Eliminating the Russian trade surplus and the US trade deficit would lead to the largest environmental benefits in terms of lower global emissions. Globally, the simultaneous removal of all trade imbalances would lower world carbon emissions by 0.9 percent or 295 million tons of carbon dioxide. |
| Keywords: | carbon emissions, international trade, gravity |
| JEL: | F14 F18 Q56 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10729&r=int |
| By: | Mathilde Muñoz |
| Abstract: | This paper studies how differences in labor market regulations shape countries' comparative advantage in the cross-border provision of labor-intensive services, using administrative data in Europe for the last two decades. I exploit exogenous variation in labor taxes and minimum wages faced by exporting firms engaged in a large European trade program. Firms from different countries compete to supply the same physical service in the same location but their employees are subject to different payroll taxes and minimum wages. These rules varied across countries, sectors, and over time. Reduced-form country case-studies as well as model-implied gravity estimates show evidence of large trade responses to lower labor taxes and minimum wages, with an elasticity that is around one. The Bolkestein directive, by exempting foreign firms from all labor regulations in the destination country, would have doubled exports of physical services from Eastern European countries, rationalizing the wave of protests in high-wage countries that led to the withdrawal of the proposal. |
| JEL: | F14 H25 J23 J31 J8 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31876&r=int |
| By: | Mengqi Wang; Mrs. Swarnali A Hannan |
| Abstract: | The paper builds a unique industry-level dataset by combining Mexico’s nationally sourced inputoutput data (INEGI) with cross-country sources (WIOD, UN Comtrade). Using this dataset to exploit higher supply linkages across a larger number of industries than what is available in cross-country sources, the paper estimates the trade diversion effect on Mexico’s exports to the U.S. from two episodes, with a focus on the first: the U.S.-China trade tension in 2018 and the U.S. sanctions on Russia in 2014. Difference-in-differences, local projections and few other empirical methodologies are used. For the first episode, the paper finds higher trade diversion effects than estimates in literature. Output tariff plays an important role, and there is some evidence of a positive impact through downstream tariffs. The effects are stronger when nationally sourced input-output data is used compared to those derived from cross-country sources. Importantly, the magnitude of trade diversion across industries does not depend on Mexico’s industry-level trade exposure to the U.S., but rather on the U.S. tariff changes on Chinese goods, the decrease in imports from China, product substitutability with Chinese products, and (weakly) on Mexico’s GVC integration. Similarly, for the second episode, the paper finds positive trade diversion effects. Overall, the findings suggest that trade diversion effect might be higher than previously thought and the proper accounting of dataset and supply linkages makes a difference. |
| Keywords: | input-output linkages; trade diversion; U.S.-China trade tensions |
| Date: | 2023–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2023/234&r=int |
| By: | Nagengast, Arne (Deutsche Bundesbank); Yotov, Yoto (Drexel University) |
| Abstract: | We nest an extended two-way fixed effect (ETWFE) estimator for staggered difference-in-differences within the structural gravity model. To test the ETWFE, we estimate the effects of regional trade agreements (RTAs). The results suggest that RTA estimates in the current gravity literature may be biased downward (by more than 50% in our sample). Sensitivity analyses confirm the robustness of our main findings and demonstrate the applicability of our methods in different settings. We expect the ETWFE methods to have significant implications for the estimates of other policy variables in the trade literature and for gravity regressions on migration and FDI flows. |
| Keywords: | Staggered Difference-in-Differences; Gravity Model; Trade Agreements |
| JEL: | C13 C23 F10 F13 F14 |
| Date: | 2023–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2023_006&r=int |
| By: | Escaith, Hubert |
| Abstract: | Talks of deglobalization after the global financial crisis of 2008─2009 intensified in recent years due to bilateral trade wars and the disruption of supply chains during the COVID-19 pandemic. Deglobalization is often associated to a shortening of the supply chains through reshoring and nearshoring, entailing smaller geographical distance travelled by traded goods. This paper proposes a new methodology to analyse the evolution of distance through time, while controlling for the effect of the geographical distribution of exporters and importers linked, inter alia, with the growing weight of large emerging countries in the world economy and the expansion of South-South trade. The new indicator, rooted in trade empirics, operational research and information theory, allows to isolate the endogenous effect of changes in the geographical distribution of supply and demand (a structural effect) to estimate changes in the appetite to trade with distant countries (the globalization effect). It also provides information on geographical diversification that is not captured through more traditional trade indicators. Taking into consideration the rise of Global Value Chains, the analysis is applied to both gross and value-added trade data for a selection of goods and services sectors between 1995 and 2020. We find that it is premature to conclude that global trade has been suffering a deglobalization trend, at least up to 2018. Nonetheless, the situation is heterogeneous between small and large countries and across sectors and regions. |
| Keywords: | Entropy; non-parametric gravity; index number; structural decomposition; trade slowdown and nearshoring |
| JEL: | C43 F14 F6 |
| Date: | 2023–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:119045&r=int |
| By: | Meisiek, Anne (Institute for Employment Research (IAB), Nuremberg, Germany); Meister, Moritz (Institute for Employment Research (IAB), Nuremberg, Germany); Niebuhr, Annekatrin (Institute for Employment Research (IAB), Nuremberg, Germany ; Univ. Kiel); Rudolph, Meike (Institute for Employment Research (IAB), Nuremberg, Germany) |
| Abstract: | "This study investigates the importance of global value chain (GVC) integration for local labor market outcomes in Germany during the COVID-19 pandemic. Although COVID-19 can be considered as a global crisis, there are at the same time strong geographical differences in its impact. We observe pronounced spatial variation in infection rates, policy responses, and behavioral changes. A rapidly growing number of studies provide evidence of heterogeneous effects of the COVID-19 pandemic on local labor markets, most of them focusing on the initial shock and often on the effects of lockdowns and economic policy measures. This paper takes a different perspective on the regional economic effects of the pandemic. We focus on the impact of disrupted GVC during the COVID-19 crisis on local labor markets and investigate whether GVC integration influenced the magnitude of the initial shock and the subsequent recovery process of regions in Germany until December 2021. Our analysis of the regional effects of GVC disruptions in Germany focuses on the bilateral GVC relationship between China and Germany because the two countries are important agents in GVC. Moreover, China was hit early and severely by the pandemic which led to a sizeable decline in the country's production and exports at the beginning of 2020. To measure regional and sectoral GVC integration, we use the 2021 edition of the OECD's Inter-Country Input-Output tables, which provide detailed information on trade in intermediate goods between 45 industries and 66 countries up to the year 2018. Using this data on international trade in intermediate products, we apply different indicators to measure the GVC integration of German sectors via imports and exports of intermediate inputs. To measure the integration of local labor markets in GVC, we quantify the regional variation in trade in intermediate goods using the variation in sectoral specialization across labor market regions. Our main outcome variable is the regional employment share of workers receiving a short-time work allowance. The extensive use of short-time work (STW) was one reason why the unemployment rate showed a relatively moderate increase during the COVID-19 pandemic in Germany. Therefore, we apply STW rather than regional unemployment rates to measure the labor market effects of GVC disruptions caused by the COVID-19 crisis. As a second outcome variable, we consider regional employment. Our descriptive results point to a clustering of highly integrated regions in southern Germany that appears to be slightly more pronounced for GVC trade with China than for GVC trade with the rest of the world. In contrast, many regions in the Northeast of Germany show a below average GVC integration. A decomposition GVC-related trade into imports and exports shows that the export component is almost twice as large as GVC-related imports in Germany. However, the export and import measures are highly correlated, indicating that when a region is strongly integrated into GVC-related trade, it is usually through both imports and exports. Regression results show that short-time work increased more strongly in 2020 in local labor markets which are characterized by an above average GVC integration with China. We detect significant effects of both an integration through exports and imports of intermediate goods, with the impact of GVC-related imports from China being somewhat stronger. The effects that we find for GVC integration with China are, however, only temporary and decline quickly during the second half of 2020. Regions that are highly integrated with the rest of the world, in contrast, do not stand out from other local labor markets in Germany when it comes to the effects of GVC disruptions. There are different potential reasons behind the swift recovery of those regions that show a high GVC integration with China. First of all, China does not differ that much from other important trade partners of Germany in 2021 when it comes to trade disruptions. Moreover, there is some first evidence on firms adjusting their production process and the procurement of inputs in response to value chain disruptions." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | Bundesrepublik Deutschland ; China ; Pandemie ; IAB-Open-Access-Publikation ; Außenhandel ; Auswirkungen ; Beschäftigungseffekte ; Betriebsunterbrechung ; Globalisierung ; internationale Arbeitsteilung ; Kurzarbeit ; Produktionsorganisation ; regionaler Arbeitsmarkt ; Wertschöpfung ; Wirtschaftszweige ; Zulieferer ; 2021-2021 |
| Date: | 2023–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabfob:202310&r=int |
| By: | Chad P. Bown (Peterson Institute for International Economics); Kimberly A. Clausing (Peterson Institute for International Economics) |
| Abstract: | Recent efforts to reduce greenhouse gas emissions have revealed different policy priorities; the United States and China have emphasized subsidy-based approaches, and the European Union has emphasized carbon pricing. These divergent policy choices--some lowering energy costs, others raising them--raise concerns about industry competitiveness and have implications for upstream and downstream firms in supply chains. This paper identifies the trade tensions resulting from varying climate policy approaches and describes policy efforts to address them. It then describes the role of a rules-based trading system in tackling the challenges that these distinct policy approaches create, examining World Trade Organization (WTO) rules on subsidies, border measures, and export restrictions. The authors suggest that the United States, the European Union, and China prioritize reforms to those rules as a path forward for cooperation on trade and climate. Such an approach would be an important starting point toward creating a functioning multilateral system. |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp23-8&r=int |
| By: | Herreros, Sebastián |
| Abstract: | This report presents the results for Latin America and the Caribbean of the fifth United Nations Global Survey on Digital and Sustainable Trade Facilitation, conducted in the first half of 2023 with the participation of 163 countries (26 from the region). The average regional implementation rate across the 31 core measures is 71%, slightly above the average for all participant countries (69%). Despite being severely hit by the coronavirus disease (COVID-19) pandemic, the countries of the region have continued to advance in the implementation of the Trade Facilitation Agreement of the World Trade Organization. Going forward, the considerable progress made at national level will have a greater impact on trade flows and production integration if the implementation of trade facilitation measures is coordinated among groups of countries. In recent years, there have been several promising developments in this regard, mainly at the subregional level, including the electronic cross-border exchange of trade documents and the increasing number of mutual recognition agreements of authorized economic operator schemes. Stepping up these efforts should be a priority in the coming years. |
| Date: | 2023–10–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col022:68577&r=int |
| By: | Kokas, Deeksha (Nanyang Technological University, Singapore); Lopez-Acevedo, Gladys (World Bank); Vu, Ha (affiliation not available) |
| Abstract: | Are the labor market changes from exports specific to exporting industries, or do they dissipate throughout the economy? To analyze this question, we study the case of Vietnam. Vietnam exported a total of $356B, making it the number 18 exporter in the world in 2021. Recent studies show provinces in Vietnam with greater exposure to tariff reductions observe greater rates of poverty decline and gains in wages and employment. We extend this literature by estimating the impact of exports propagated through domestic production linkages in Vietnam between 2010 and 2019. We find that direct exposure to exports has a limited impact, except for wages. When considering supply chain linkages, the impact on wages and income is more significant, especially for those in foreign sector and in the lowest income bracket. College premium decreases, and the gender wage gap narrows. With respect to employment variables, direct exposure to exports leads to increased employment and reduced inactivity and these findings remain consistent when accounting for supply chain linkages. The gains in employment are concentrated in workers with no schooling, while employment rate falls for more skilled workers. |
| Keywords: | inequality, labor markets, international trade, poverty, jobs |
| JEL: | F16 J16 O19 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16566&r=int |
| By: | Häggqvist, Henric (Department of Economic History, Uppsala University); Karlsson, Lars (Department of Economic History, Uppsala University); Hedberg, Peter (Department of Economic History, Uppsala University) |
| Abstract: | In this paper we present new foreign trade- and price data to analyze Swedish terms of trade in the very long run, from 1780 to 2018. We examine what influenced the trend in the terms of trade in the long run, particularly in how it related to the general trade structure. We also analyze the volatility of the terms of trade, and discuss how it might have affected economic growth in Sweden. The index improved slowly but substantially over the century from 1850 to 1950, which was likely connected to another poignant trend, a steadily increasing share of manufactures and finished goods in the export basket. In comparative perspective, Sweden had more industrial exports and lower export concentration than most of the rest of the European periphery, as well as much lower terms of trade volatility. We find that the growth trend and low volatility of Swedish terms of trade was positively connected with economic growth, but only really so from about 1850 to 1913. During this period the development of the terms of trade was particularly connected to increasing investment in new industries. The years from 1914 to 1960 were on the other hand characterized by high volatility in the terms of trade, and was still connected to high growth rates, such as during the interwar period. Hence, we conclude that while low volatility was connected to the onset of Swedish industrialization, it was also possible to maintain high growth rates during periods of high terms of trade volatility. |
| Keywords: | International trade; Terms of trade; Export concentration; Volatility; Economic growth |
| JEL: | F14 N73 N74 |
| Date: | 2023–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uuehwp:2023_002&r=int |
| By: | Jevan Cherniwchan; Nouri Najjar |
| Abstract: | We test the hypothesis that governments alter environmental policy in response to trade by studying NAFTA’s effects on the formation of environmental policy in the US House of Representatives between 1990 and 2000. We find that reductions in US tariffs decreased political support for environmental legislation. This decrease appears to be due to: (i) a reduction in support by incumbent Republican legislators in response to trade-induced changes in the policy preferences of their constituents, and (ii) changes in partisan representation in affected districts due to decreased electoral support for pro-NAFTA Democrats following the agreement. |
| Keywords: | NAFTA; trade liberalization; voting; environmental policy |
| JEL: | F18 F64 F68 Q56 Q58 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:deptwp:2023-05&r=int |
| By: | Timothy J. Moore; William W. Olney; Benjamin Hansen |
| Abstract: | The U.S. opioid crisis is now driven by fentanyl, a powerful synthetic opioid that currently accounts for 90% of all opioid deaths. Fentanyl is smuggled from abroad, with little evidence on how this happens. We show that a substantial amount of fentanyl smuggling occurs via legal trade flows, with a positive relationship between state-level imports and drug overdoses that accounts for 15, 000-20, 000 deaths per year. This relationship is not explained by geographic differences in "deaths of despair, '' general demand for opioids, or job losses from import competition. Our results suggest that fentanyl smuggling via imports is pervasive and a key determinant of opioid problems. |
| JEL: | F1 F6 I1 K4 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31885&r=int |
| By: | Kim, Dongsoo (Korea Institute for Industrial Economics and Trade); Jeon, Jeonggil (Korea Institute for Industrial Economics and Trade) |
| Abstract: | As of the end of 2022, Taiwan surpassed both South Korea and Japan in terms of gross domestic product (GDP) per capita, a first since South Korea caught up with and then surpassed Taiwan 19 years ago. Even as many economies have struggled in the wake of the twin shocks of the COVID-19 pandemic and the Russian invasion of Ukraine, Taiwan achieved steadfast economic growth from 2020 through 2022. The stability of Taiwan’s growth has been all the more remarkable amid the rapid and volatile reconfiguration of global supply chains against the looming backdrop of escalating United States-China tensions. Like South Korea, Taiwan has a heavily export-oriented economy that is also centered chiefly on semiconductors. Taiwan is also similarly dependent on China for both its industries and its trade but has managed to maintain a stable trade balance thus far. Compared to South Korea, the Taiwanese economy is also a more favorable host for small and medium-sized enterprises (SMEs), which contribute significantly to the nation’s competitiveness. The Taiwanese semiconductor industry boasts an evenly balanced ecosystem of chip design, manufacturing, packaging, and testing. The nation’s multiple science parks, led by the one at Hsinchu, are connected by open innovation networks through which researchers can move freely. The political stability of Taiwan has also buttressed its competitive industries, providing effective visions for new industry growth and timely legislative support, notably the most recent law on semiconductors. Taiwan’s self-positioning in trade with China and policy centered on important manufacturing industries, including semiconductors, carries many lessons for South Korea. It is time for Korea to analyze Taiwan’s success and ascertain what makes its Taiwanese competitors so competitive and successful. Thank you for reading this abstract of a report from the Korea Institute for Industrial Economics and Trade! Visit us on YouTube: https://www.youtube.com/watch?v=Q36v30l5CV0 Visit us on Instagram: https://www.instagram.com/worldkiet/ Visit our website: http://www.kiet.re.kr/en |
| Keywords: | Taiwan; Taiwanese economy; exports; semiconductors; chips; supply chains; export competitiveness; innovation; open innovation; economic security; US-China conflict; manufacturing; manufacturing competitiveness; manufacturing innovation; innovation clusters |
| JEL: | F02 F10 F13 F18 F23 F51 F52 O11 O14 O24 O25 O32 O38 |
| Date: | 2023–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kietrp:2023_014&r=int |
| By: | César, Andrés; Ciaschi, Matías; Falcone, Guillermo; Neidhöfer, Guido |
| Abstract: | This paper investigates whether the impact of trade shocks on employment and wages persists across generations. Using survey data with retrospective information on parental employment, we study the causal effect of increased Chinese import competition in Brazilian industries on individuals with differently exposed fathers. Results show that several years after the shock, children of more exposed fathers have lower education and earnings, lower chances of formal jobs, and are more likely to rely on social assistance. These effects are substantially stronger for children from disadvantaged background, indicating that the shock had a negative impact on intergenerational mobility. |
| Keywords: | Import competition, Education, Social Mobility, Incomes, Brazil |
| JEL: | I24 J62 F14 F16 J23 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:279786&r=int |
| By: | Mary Amiti; Cedric Duprez; Jozef Konings; John Van Reenen |
| Abstract: | Using firm-to-firm transactions, we show that starting to supply a "superstar" firm (large domestic firms, exporters and multinationals) boosts productivity by 8% in the medium-run. Placebos on starting relationships with smaller firms and novel identification strategies support a causal interpretation of "superstar spillovers". Consistent with a model of technology transfer, we find falls in markups and bigger treatment effects from technology-intensive superstars. We also show that the increase in new buyers is particularly strong within the superstar firm's network, a "dating agency" effect. This suggests an important role for raising productivity through superstars' supply chains regardless of their multinational status. |
| Keywords: | productivity, FDI, spillovers |
| Date: | 2023–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1917&r=int |
| By: | Bredtmann, Julia; Otten, Sebastian |
| Abstract: | Using data from the European Social Survey 2002-2020 covering immigrants in 25 European countries, this paper investigates the role of natives' gender norms in the labor market integration of female immigrants. To analyze the role of natives' gender norms, we exploit intertemporal, interregional, and age-specific variation in female-to-male labor force participation ratios. We find a positive and robust association between immigrant women's labor supply and the femaleto-male labor force participation ratio in their region of residence. No similar association is found among immigrant men. We provide evidence that our finding is due to the cultural assimilation of female immigrants to native women's gender norms, and not the result of exposure to similar institutions and economic conditions. Based on a gravity model of female immigrants' regional location choice, we further provide supportive evidence that the association between natives' gender norms and immigrant women's labor supply is not driven by a selective location choice of female immigrants. |
| Keywords: | Female labor force participation, immigration, gender norms |
| JEL: | J16 J22 J61 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:279542&r=int |
| By: | Julian di Giovanni; Ṣebnem Kalemli-Özcan; Alvaro Silva; Muhammed A. Yildirim |
| Abstract: | We estimate a multi-country multi-sector New Keynesian model to quantify the drivers of domestic inflation during 2020–2023 in several countries, including the United States. The model matches observed inflation together with sector-level prices and wages. We further measure the relative importance of different types of shocks on inflation across countries over time. The key mechanism, the international transmission of demand, supply and energy shocks through global linkages helps us to match the behavior of the USD/Euro exchange rate. The quantification exercise yields four key findings. First, negative supply shocks to factors of production, labor and intermediate inputs, initially sparked inflation in 2020–2021. Global supply chains and complementarities in production played an amplification role in this initial phase. Second, positive aggregate demand shocks, due to stimulative policies, widened demand-supply imbalances, amplifying inflation further during 2021–2022. Third, the reallocation of consumption between goods and service sectors, a relative sector-level demand shock, played a role in transmitting these imbalances across countries through the global trade and production network. Fourth, global energy shocks have differential impacts on the US relative to other countries’ inflation rates. Further, complementarities between energy and other inputs to production play a particularly important role in the quantitative impact of these shocks on inflation. |
| JEL: | F40 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31887&r=int |
| By: | Costas Arkolakis; Fabian Eckert; Rowan Shi |
| Abstract: | We introduce a general quantifiable framework to study the location decisions of multinational firms. In the model, firms choose in which locations to pay the fixed costs of setting up production, taking into account potential complementarities among production locations. The firm’s location choice problem is combinatorial because the marginal value of an individual production location depends on its complete set of production sites. We develop a computational method to solve such problems and aggregate optimal decisions across heterogeneous firms. We use our calibrated model to study Brexit and the recent sanctions war with Russia. In both counterfactuals, changes in the location decisions of multinationals are driving real wage responses. |
| JEL: | F12 F21 F6 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31877&r=int |
| By: | Cho, Eun Kyo (Korea Institute of Industrial Economics and Trade) |
| Abstract: | Acute tensions persist between the United States and China, and nowhere is this more evident that in the field of cutting-edge technologies and industries. Washington has expanded semiconductor sanctions against China while major European countries have sought to reduce their exposure to China-based supply chains. Beijing has responded in kind by imposing restrictions on exports of key raw materials. China’s efforts to curtail exports are not only a retaliatory response to US sanctions, but they are also a crucial part of China’s long-term strategy to strengthen its supply chains for its cutting-edge industries. China is reinforcing its existing strengths in semiconductor and battery production and internalizing core technologies in an effort to establish self-a sufficient supply chain ecosystem. Beijing, in other words, is increasing its long-term investments in core technology R&D to reduce reliance on foreign sources, while giving given primacy to domestic sources of raw materials. It is also leveraging its production capacity, price competitiveness, and large domestic consumer market to its advantage.Chinese firms are competitors with Korean peers in key industries such semiconductors, batteries, and others. Critically, Korean industries depend upon China for critical materials and parts. It is therefore crucial that Korean policymakers not only to respond to China’s intensifying export controls, but also to establish a comprehensive and long-term industrial policy that can navigate China’s supply chain strategy. To that end, Korean must stay abreast of China’s evolving policies designed to foster its own cutting-edge industries and technologies and implement measures to prevent China from recruiting Korean experts. Korean needs to proactively address Chinese measures to lead next-generation technologies and markets by establishing more self-sufficient ecosystems for emerging technologies in the Korean semiconductor and battery industries. Thank you for reading this abstract of a report from the Korea Institute for Industrial Economics and Trade! Visit us on YouTube: https://www.youtube.com/watch?v=Q36v30l5CV0 Visit us on Instagram: https://www.instagram.com/worldkiet/ Visit our website: http://www.kiet.re.kr/en |
| Keywords: | US-China conflict; Chinese industry; Chinese technology; intellectual property; technological competitiveness; supply chains; supply chain strategy; semiconductors; batteries; chips; next-generation technology; technological development; economic security |
| JEL: | F02 F10 F13 F15 F50 F51 F52 L60 L63 O31 O32 O34 O38 |
| Date: | 2023–07–23 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kietrp:2023_010&r=int |
| By: | Dominique Bureau (Ministère de l'écologie et Ecole Polytechnique) |
| Abstract: | Existing gaps between territorial inventories of CO2 emissions and carbon footprints resulting from the final domestic demands of countries highlight the need to reduce imported emissions in developed countries. Generalized carbon border pricing would help but it requires avoiding the risk of its use as a trade barrier. However, such an import tax is not the unique possible approach and it is not a substitute for enhanced climate cooperation. In addition to the advantages usually put forward in terms of efficiency and mechanism design, the setting of a common carbon price, by the means of national taxes or a cap and trade mechanism, would present a threefold interest in this context: of discarding the objections of trade distortions against climate policies; of regulating imported emissions and internal emissions with the same level of ambition; and of acting both on the use of products as well as on their processes. Footprint taxation is then unnecessary, except with non-participants. But a Green Fund is needed for fair sharing of the burden of the efforts. Moreover, its rules must be adapted when integrating trade-related emissions, which has not been pointed out so far in the debates on Article 6 of the Paris Agreement. Corresponding conditions are specified here and it is underlined that this approach has also the advantage having to deal only with the net distributive effects involving trade in carbon. |
| Keywords: | carbon pricing, carbon footprint, climate cooperation, international trade, burden sharing |
| JEL: | Q54 Q56 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2022.03&r=int |
| By: | Jason Dunn; Fernando Leibovici |
| Abstract: | Is the recent rise in international shipping costs due to higher demand for goods during COVID-19, or are other disruptions also at play? |
| Keywords: | COVID-19; shipping costs |
| Date: | 2022–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:l00001:94059&r=int |
| By: | Subhayu Bandyopadhyay; Praew Grittayaphong |
| Abstract: | Local immigrants with at least a bachelor’s degree are more likely to specialize in the physical sciences than immigrants nationally. |
| Keywords: | immigration; St. Louis metropolitan statistical area (MSA) |
| Date: | 2022–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:fip:l00001:94061&r=int |
| By: | Kai Fischer |
| Abstract: | How do skilled migrant workers affect firms’ performance and output? I estimate the causal effect of EU nurse withdrawal after the Brexit referendum on the performance of English hospitals. Exploiting variation in the reliance on EU workers across hospital providers in pre-referendum years, I find that providers with a mean share of EU nurses before the referendum persistently face 2% more hospital-related deaths after the referendum. This translates to 5, 900 additional hospital-related deaths p.a. in England. Unexpected readmissions of patients increase by 5% and reported incidents with harm to patients by 7% respectively. Providers respond to missing EU nurses by hiring UK nurses and fostering promotions in the short run, and by recruiting non-European nurses in the long run. |
| Keywords: | skilled labour shortage, public healthcare, e-/immigration, Brexit |
| JEL: | J24 J61 I18 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10747&r=int |
| By: | Jason Dunn; Fernando Leibovici |
| Abstract: | Recent history suggests that the sharp rise in shipping prices will lead to more container ships, but deliveries of new ships will take years. |
| Keywords: | international shipping; shipping prices; container ships |
| Date: | 2022–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:fip:l00001:94073&r=int |
| By: | Kohnert, Dirk |
| Abstract: | In the 1960s, sub-Saharan Africa experienced a major diplomatic offensive by Israel. Kwame Nkrumah's Ghana was the first country to establish diplomatic and economic relations. Others soon followed, so that by the mid-1960s some forty African countries were receiving agricultural and military aid from Israel and benefiting from scholarships for their students. Israel's involvement was facilitated by the CIA's activities in Africa at the time, which were conceived and funded by the United States and other Western powers as their "third force" in Africa. Since then, the situation has evolved due to Africans' growing solidarity with the Palestinians and their rejection of Israel's "apartheid" system of systematic discrimination against non-Israeli populations. Israel lost the support of most SSA countries in the early 1970s because of its collaboration with apartheid South Africa. As Nelson Mandela said, "South Africa will never be free until Palestine is free". At its 12th Ordinary Session in Kampala in 1975, the OAU for the first time identified Israel's founding ideology, Zionism, as a form of racism. Nevertheless, several African countries continued to maintain low-level contacts through thirteen foreign embassies, for example in Ethiopia, Tanzania, Uganda and Zaire, while educational and commercial exchanges continued, albeit on a much reduced scale and away from the public eye. But the scourge of Islamist terrorism necessitated a revival of relations. Military and security cooperation, including cyber security, is particularly intensive with Ethiopia, Zaire, Uganda, Ghana, Togo and South Africa, for example. It has also often served to prop up despotic African regimes. Today, sub-Saharan Africa is a lucrative market for the Israeli defence industry. |
| Keywords: | Israel; AU; Palestinians; African immigration to Israel; dispatched labour; remittances; human trafficking; smuggling; military aid; coup d'état; governance; sustainable development; informal sector; ODA; Peace and Security Council; Sub-Saharan Africa; South Africa; Nigeria; Eritrea; Rwanda; Egypt; Sudan; African Studies; |
| JEL: | D31 D62 D72 D74 E26 F22 F35 F51 F53 F54 F55 H12 H56 N47 Z13 |
| Date: | 2023–10–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:118992&r=int |
| By: | Singh, Rajesh |
| Abstract: | This paper compares the welfare under two standard alternative exchange rate regimes, fixed and flexible, in a stochastic dynamic general equilibrium two-country setting. Conventional wisdom holds that countries often prefer low exchange-rate variability to stabilize trade. This may explain the observed `fear of floating' in emerging markets -- although most of them claim to adopt a flexible system, in reality they often intervene to peg. We show that under incomplete capital markets a fixed exchange rate regime unambiguously increases trade and improves welfare. This provides a potential explanation for the observed exchange rate policies in emerging markets. |
| Date: | 2023–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genstf:202311061509510000&r=int |
| By: | Proestou, Maria; Schulz, Nicolai; Feindt, Peter |
| Abstract: | Policies to promote the transition from carbon-based to bio-based economies are proliferating around the globe. Meanwhile, concerns are growing about the resilience of bioeconomy, but the attention given to resilience issues in bioeconomy policies has remained underexplored. To address this gap, we conduct a systematic content analysis of the resilience orientation in 78 bioeconomy policy documents across 50 countries. Our descriptive statistical analyses show that more than 60 per cent of the average policy text concerns resilience-related goals or instruments, driven particularly by adaptability and transformability considerations. Our explorative correlational analysis indicates that policy design spac-es characterized by political openness, economic wealth, high arable land shares, low export shares, and limited oil rents might be conducive to high resilience orientation. These findings contribute to a better understanding of the role of resilience concepts in global bioeconomy policy making. |
| Date: | 2023–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:5xzwf&r=int |
| By: | Amuedo Dorantes, Catalina; Arenas-Arroyo, Esther; Mahajan, Parag; Schmidpeter, Bernhard |
| Abstract: | We examine how migrant workers impact firm performance using administrative data from the United States. Exploiting an unexpected change in firms' likelihood of securing low-wage workers through the H-2B visa program, we find limited crowd-out of other forms of employment and no impact on average pay at the firm. Yet, access to H-2B workers raises firms' annual revenues and survival likelihood. Our results are consistent with the notion that guest worker programs can help address labor shortages without inflicting large losses on incumbent workers. |
| Keywords: | Guest workers, migrants, employment, firm dynamics, H-2B visa |
| JEL: | J23 F22 J61 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:279541&r=int |
| By: | Klingebiel, Stephan |
| Abstract: | This policy brief discusses the new geopolitical and geo-economic context and its significance for the Global South and the development policies of Western actors. The systemic confrontation between China and the USA, the Russian invasion of Ukraine, but also the seizure of power through a military putsch in Niger, among other places, show: The environment for global cooperation efforts has become much more difficult. Actors in the Global South are no longer just participants on the sidelines of geopolitical conflicts, but are taking an active role. Western countries and Russia make strong efforts to woo them. At the same time, China and India in particular aspire to leadership roles as leaders for the Global South. The following points are of particular importance: (1) The changes in the international system have given the Global South as a group (despite the enormous differences between the actors in this group) a new impetus of identity - similar to the West. It is noteworthy that this North/South bloc formation makes other possible commonalities less pronounced. This applies above all to the attempt - which has been less success-ful so far - to strengthen the identification of open democratic systems as a mark of belonging. For many debates and alliances, the identification 'Global North/South' is formative. Formation of North and South camps is not helpful for finding international solutions. Approaches to counteract entrenched bloc formations and to create effective formats for exchange and understanding are therefore important. (2) From the perspective of Southern actors, the existing international order is a deeply unjust system that primarily protects the interests of the West, and especially those of the USA. Political offers from the West that do not really lead to structural changes are unlikely to arouse interest in the Global South, and will instead favour counter-designs - be they from China with its claim to leadership for the Global South or Russia. (3) In principle, the development policy of OECD actors has important potential to help shape the realignment of relations with the Global South. The policy field is, on the one hand, a proof of international credibility (among other things, fulfilment of international obligations) and, on the other hand, an approach that makes it possible to work with operational means on international problems in the first place. (4) Western development policy is likely to face further difficult situations with risks of escalation and failure (such as Niger and Afghanistan) in the face of multiple tensions in developing regions. Development policy should reflect the geopolitical context even more consciously in strategy and action. The defining geo-political context harbours the danger that the original development policy task - sustainable development of the partner countries - will be overshadowed. (5) Overall, it should be an important concern to rethink how international burden-sharing for development and climate finance agendas is organised. Here, it is important to consider both the actors from the Global North and those from the Global South. |
| Keywords: | Geopolitics, geoeconomics, development policy, development cooperation, Global South, India |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:idospb:279674&r=int |
| By: | Anwarul Hoda (Indian Council for Research on International Economic Relations (ICRIER)) |
| Abstract: | Some initiatives in the ongoing debate on improving transparency and notifications as a part of talks on WTO reform seem to have been based on the false belief that compliance with notification requirements could be induced through threat of punitive action. Arguments made during discussions on the issue seem to have convinced the WTO membership that defaults in meeting the deadlines for notifications arise less from wilful neglect and more from the challenging complexity of the format of notifications and lack of capacity and paucity of resources in many developing countries. Even so, the assessment made by the author is that the compliance performance of the top 50 or so trading nations is reasonably satisfactory. It is mainly the LDCs, island developing countries and other developing countries with limited administrative infrastructure that have fallen short. The solution lies in simplifying the formats for the benefit of all members and lowering the bar on frequency of notifications for LDC members and other members with small economies and limited administrative infrastructure. |
| Keywords: | WTO reform, monitoring, surveillance |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdc:wpaper:418&r=int |