nep-int New Economics Papers
on International Trade
Issue of 2023‒12‒18
39 papers chosen by
Luca Salvatici, Università degli studi Roma Tre

  1. Environmental Non-tariff Measures and Trade in APEC Member Economies By Hyun, Hea-Jung
  2. Spain, Split and Talk: Quantifying Regional Independence By Hanna Adam; Mario Larch; Jordi Paniagua
  3. Issue linkage and trade policy uncertainty: Evidence from trade preferences for developing countries By Suttner, Stefan
  4. Exporting ideas: Knowledge flows from expanding trade in goods By Philippe Aghion; Antonin Bergeaud; Timothee Gigout; Matthieu Lequien; Marc Malitz
  5. BMF CP57: A Gravity Model analysis of Ukraine crisis’s impact on Germany’s trade patterns By Cuong, Nguyen Manh; Mutai, Noah C.; Ibeh, Lawrence
  6. From local to global, and return: geographical Indications and FDI in Europe By Crescenzi, Riccardo; De Filippis, Fabrizio; Giua, Mara; Salvatici, Luca; Vaquero Pineiro, Cristina
  7. A journey toward global value chain upgrading: Exploring the transition from backward to forward integration By Stojcic, Nebojsa; Matic, Matija
  8. Cultural similarity and migration: New evidence from a gravity model of international migration By Grohmann, Tobias
  9. A Gravity Model analysis of Ukraine crisis impact on Germany’s trade patterns By Cuong, Nguyen Manh; Mutai, Noah C.; Ibeh, Lawrence
  10. Tickets to the global market: First US patent awards and Chinese firm exports By Robin Kaiji Gong; Yao Amber Li; Kalina Manova; Stephen Teng Sun
  11. Increasing supply chain risks and Implications for Korea By CHOI, Wonseok; HAN, Hyoungmin
  12. United States-Latin America and the Caribbean Trade Developments 2023 By -
  13. From net importer to global leader: understanding the drivers of Spain's meat export growth since the 1960s By Pablo Delgado; Vicente Pinilla; Ignacio Belloc
  14. 동남아·대양주 유권자들의 보호무역주의 성향 연구와 시사점: 필리핀, 태국, 호주, 뉴질랜드를 중심으로(Voters’Attitudes toward Protectionism in Southeast) Asia and Oceania: Evidence from the Philippines, Thailand, Australia, and New Zealand) By Kim, Nam Seok
  15. Repackaging FDI for Inclusive Growth: Nullifying Effects and Policy Relevant Thresholds of Governance By Ofori, Isaac; Asongu, Simplice
  16. Economic Sanctions and Informal Employment By Kelishomi, Ali Moghaddasi; Nistico, Roberto
  17. How to get the best deal for massive FDI incentives By Sauvant, Karl P.; Zimny, Zbigniew
  18. Foreign Direct Investment, Information Technology and Total Factor Productivity Dynamics in Sub-Saharan Africa By Asongu, Simplice; Odhiambo, Nicholas
  19. State Aid, R&D, and the Digital Content of Trade By Chiara Castelli; Dario Guarascio; Stefan Jestl; Robert Stehrer
  20. Economic Sanctions and Informal Employment By Ali Moghaddasi Kelishomi; Roberto Nisticò
  21. A Framework for Geoeconomics By Christopher Clayton; Matteo Maggiori; Jesse Schreger
  22. Introduction - Crises and challenges in international trade: Supply chain and trade, globalization and local cultures By Joël Brémond; Gaelle Fauchard
  23. Pandemic-Era Inflation Drivers and Global Spillovers By Julian di Giovanni; Ṣebnem Kalemli-Özcan; Alvaro Silva; Muhammed A. Yildirim
  24. Understanding multi-layered sanctions: a firm-level analysis By Shamsi, Javad
  25. Estimating Market Implications from Corn and Soybean Yields Under Climate Change in the United States By Beckman, Jayson; Ivanic, Maros; Nava, Noé J.
  26. Developing economies' participation in environmental services negotiations: What are the challenges and what should be done? By Tuljapurkar, Sanvid; Zhang, Ruosi
  27. Can Green Hydrogen Exports Contribute to Regional Economic Development?. Exploring Scenarios from the Dutch-Brazilian Green Hydrogen Corridor for the State of Ceará By Clara Rabelo Caiafa; Amaro Olimpio Pereira; Henny Romijn; Heleen de Coninck
  28. The Channels of International Comovement By Omar Barbiero
  29. Trade Uncertainty and U.S. Bank Lending By Ricardo Correa; Julian di Giovanni; Linda S. Goldberg; Camelia Minoiu
  30. Recent Migration and Visa Trends in New England and Implications for the Labor Market By Riley Sullivan
  31. Equilibrium existence and uniqueness in additive trade models By Fedor Slepov; Sergey Kokovin
  32. Fiscal Rules and Foreign Direct Investment in developing countries By HISGUIMA DASSIDI Crépin
  33. Unexpected opportunities to support investor-state dispute prevention through the WTO Investment Facilitation for Development Agreement By Calamita, Jansen
  34. Skilled Immigration in South Africa: An input into the Operation Vulindlela review of Critical Skills and General Work visas By Zaakhir Asmal; Haroon Bhorat; David de Villiers; Lisa Martin
  35. Global tax hubs By Baistrocchi, Eduardo
  36. The geopolitics of hydrogen: Technologies, actors and scenarios until 2040 By Pepe, Jacopo Maria; Ansari, Dawud; Gehrung, Rosa Melissa
  37. Beyond Borders: Assessing the Influence of Geopolitical Tensions on Sovereign Risk Dynamics By António Afonso; José Alves; Sofia Monteiro
  38. Scenarios of Global Food Consumption: Implications for Agriculture By Sands, Ronald D.; Meade, Birgit; Seale, James L., Jr.; Robinson, Sherman; Seeger, Riley
  39. Regional Determinants of Attitudes Towards Immigrants By Julia Peter; Silke Uebelmesser

    Abstract: This study examines how environmental nontariff measures (NTMs) affect trade in Asia-Pacific Economic Cooperation (APEC) member economies. Using product-level panel data spanning 2009–2020, we find that stringent environmental NTMs reduce trade in APEC member economies, whereas no significant effect exists when exporting is destined to non-APEC economies. The trade-impeding effect of NTMs is prominent in exports of dirty goods from economies with high-intensity greenhouse gas emissions through additional adaptation costs to meet environmental standards set by high-income importing countries with the high-intensity imposition of the measure. Results imply that APEC economies need to enhance effective environmental regulations by taking the heterogeneous effects of NTMs on trade across industries and types of measures into account.
    Keywords: Environmental Nontariff Measure; Technical Barriers to Trade (TBT); Sanitary and Phytosanitary Measure (SPS); APEC; International Trade
    JEL: F13 F14 F15
    Date: 2023–11–23
  2. By: Hanna Adam; Mario Larch; Jordi Paniagua
    Abstract: We quantify the economic impact of a potential secession of Catalonia from Spain. Using a novel dataset of trade flows between 17 Spanish sub-national regions and 142 countries, we estimate effects of different levels of borders on trade flows and uncover heterogeneity in country-to-country, region-to-country, region-to-region, as well as EU border effects. We use a general equilibrium analysis to understand the consequences of a potential Catalan secession, considering the associated political uncertainty. In counterfactual experiments, we impose new borders on Catalan trade, potentially within or outside the EU, resulting in a welfare decline for Catalonia and the remaining Spanish regions.
    Keywords: international trade, regional trade, border effects, regional independence
    JEL: F10 F13 F14 H77 R12
    Date: 2023
  3. By: Suttner, Stefan
    Abstract: This paper quantifies potential costs of issue linkage examining trade preferences granted under the US Generalized System of Preferences (GSP). Preferential market access via US GSP is conditional on political practices by beneficiaries. Using monthly import data, I study trade policy uncertainty related to country-level GSP eligibility reviews conducted by the US administration. For cases initiated between 2003 and 2019, I find negative effects for trade flows from countries under review despite the fact that applied tariffs remained unchanged during the review process. The estimated trade effects of eligibility reviews are sizable and larger for less differentiated product categories. Placebo events before reviews yield no trade effects. The results suggest that trade policy uncertainty induced by issue linkage may undermine trade-promoting incentives of trade preferences at stake.
    Keywords: Trade Policy Uncertainty, Trade Preferences, Generalized System of Preferences, Developing Countries, Issue Linkage
    JEL: F13 F14 O19
    Date: 2023
  4. By: Philippe Aghion; Antonin Bergeaud; Timothee Gigout; Matthieu Lequien; Marc Malitz
    Abstract: We examine the effect of entry by French firms into a new export market on the dynamics of their patents' citations received from that destination. Applying a difference-in-differences identification strategy with a staggered treatment design, we show that: (i) entering a new foreign market has a significant impact on the long-run flow of citations; (ii) the impact is mostly driven by the extensive margin; (iii) inventors in destination countries patent mostly in products that do not directly compete with those of the exporting firm; (iv) the spillover intensity decreases with the technological distance between the exporting firm and the destination.
    Keywords: international trade, spillover, innovation, patent
    Date: 2023–11–15
  5. By: Cuong, Nguyen Manh; Mutai, Noah C.; Ibeh, Lawrence
    Abstract: The Ukraine conflict has profoundly affected global trade and international relations, particularly for Germany, a major player in Europe and the European Union. This study utilizes a Gravity Model analysis to explore Germany’s trade network and assess the impact of the conflict on its trade partnerships. By examining missed opportunities and potential disruptions caused by conflicts, the research contributes to a deeper understanding of trade dynamics post-geopolitical crises. This knowledge can guide policymakers and stakeholders in adapting trade policies and sustaining partnerships amid conflicts. Germany’s economic well-being relies heavily on exports, making it crucial to analyze the Ukraine crisis’s effects on its trade dynamics.
    Date: 2023–11–05
  6. By: Crescenzi, Riccardo; De Filippis, Fabrizio; Giua, Mara; Salvatici, Luca; Vaquero Pineiro, Cristina
    Abstract: The Geographical Indications (GIs) scheme of the European Union guarantees visibility and protection to high-quality agri-food products associated with a demarcated region of origin. This paper estimates the impact of the scheme in attracting agri-food Foreign Direct Investment (FDI) in European NUTS3 regions, using a novel dataset and a Generalized Propensity Score Matching approach. Areas endorsed with GIs attract more FDI in agri-food related activities than their non-GI counterparts. Positive effects, estimated for FDI inflows, related job creation, and inter-sectoral spillovers on local employment, involves territories with lower institutional quality.
    Keywords: foreign direct investment; geographical indications; regional development; territorial policy; European Union; European Union’s Horizon 2020 Research and Innovation Programme H2020 project BATModel [grant agreement number 861932] and the PON “Ricerca e Innovazione 2014–2020—Azione IV.6. Contratti di ricerca su tematiche Green”; D.M. 1062/2021; Ministero dell’Università e della Ricerca. This research was also funded by UK Research and Innovation (UKRI) under the UK government’s Horizon Europe funding guarantee [grant number 10041284]. This work is also part of a project that has received funding from the European Union’s Horizon Europe Programme [Grant agreement No. 101061104- ESSPIN-HORIZON-CL2-2021-TRANSFORMATIONS-01]; Wiley deal
    JEL: R11 Q18 O24 C31
    Date: 2023–10–12
  7. By: Stojcic, Nebojsa; Matic, Matija
    Abstract: Global value chains (GVCs) are embraced worldwide as a gateway to technological and economic upgrading. Countries integrate into backward, value-importing linkages with the aim of accumulating technological capabilities and transitioning towards creating their own forward, value-exporting chains while capturing a greater share of the value generated within GVCs. Existing knowledge, which is largely fragmented and descriptive, points to a number of uncertainties and complexities that make this process far from linear. It remains an open question whether deepening backward linkages facilitate forward integration in GVCs. Using data from 65 countries over two decades, we demonstrate that the impact of backward integration on forward integration in GVCs varies over time and is moderated by the country's level of development, the diversity of the GVC partner network, and the innovation conditions in the home market. The research introduces a new perspective to the literature on GVC-driven upgrading.
    Keywords: global value chain; upgrading; backward and forward integration
    JEL: F14 F6 O3
    Date: 2023–11–23
  8. By: Grohmann, Tobias
    Abstract: Theory suggests that cultural similarity increases migration flows between countries. This paper brings best practices from the trade gravity literature to migration to test this prediction. In my preferred specification, I use lags of time-varying similarity variables in a panel of international and domestic migration flows (>200 countries, 1990-2019, 5-year intervals) and estimate a theory-consistent structural gravity model with origin-year, destination-year, and corridor fixed effects. The results do not show the hypothesized positive effect of cultural similarity on migration. Instead, religious similarity has a significant negative effect on migration, while WVS-based attitudinal similarities regarding individualism, indulgence, and trust are insignificant. Additional results suggest that cultural selection and sorting can explain these findings, where migrants are attracted by destinations that are culturally similar to their personal cultural beliefs rather than the average cultural beliefs of their home country. Results of a two-stage fixed effects (TSFE) procedure and a gravity-specific matching estimator, which both allow the estimation of time-invariant similarity variables, confirm that the relationship between cultural similarity and migration is more nuanced than previously thought.
    Keywords: international migration, culture, gravity model of migration
    JEL: F22 O15 Z10
    Date: 2023
  9. By: Cuong, Nguyen Manh; Mutai, Noah C.; Ibeh, Lawrence
    Abstract: The Ukraine conflict has profoundly affected global trade and international relations, particularly for Germany, a major player in Europe and the European Union. This study utilizes a Gravity Model analysis to explore Germany’s trade network and assess the impact of the conflict on its trade partnerships.
    Date: 2023–11–05
  10. By: Robin Kaiji Gong; Yao Amber Li; Kalina Manova; Stephen Teng Sun
    Abstract: We investigate how international patent activity enables firms from emerging economies to thrive in the global marketplace. We match Chinese customs data to US patent records and leverage the quasi-random assignment of USPTO patent examiners to identify the causal effect of a US patent grant on the subsequent export performance of Chinese firms. Successful first-time patent applicants achieve significantly higher export growth, compared to otherwise similar first-time applicants that failed. This effect operates only in small part through market protection for technologically patent-related products in the US and is largely driven by expansion in other markets. The response across destinations and products reveals that a US patent award signals the Chinese firm's capacity to produce high-quality products and credibility to honor contracts, mitigating information frictions in international trade. There is little evidence for the relaxation of financial constraints or the promotion of follow-on innovation.
    Keywords: patent rights, innovation, export performance, trade, market protection, asymmetric information, signalling
    Date: 2023–11–21
    Abstract: This study starts by highlighting how geopolitical factors, such as the US-China conflict and the Russia-Ukraine war, are reshaping global supply chains. The US-China conflict, marked by tariff wars and policy shifts, particularly affects key sectors like semiconductors and batteries. These conflicts reveal vulnerabilities in supply chains concentrated in specific countries and have been exacerbated by external factors like the COVID-19 pandemic. From these results, it suggests strategies for Korea in response to these global supply chain changes. These include stabilizing supply chain cooperation with the U.S. and China, strengthening connections with emerging countries, and forming multilateral or bilateral supply chain alliances.
    Keywords: Global Value Chain; US-China conflict
    Date: 2023–11–17
  12. By: -
    Abstract: United States trade in goods fell by 3.9% year-on-year in the first six months of 2023, ending a recovery that started in 2021. This was a result of goods exports declining by almost 1% and goods imports by 6.3%. In contrast, in 2022, United States services trade reached a record high, with US$ 697 billion in imports and US$ 929 billion in exports. United States-Latin America and the Caribbean Trade Developments provides an overview of selected developments in trade relations between the United States and Latin America and the Caribbean. In light of the global focus on the climate crisis and the specific emphasis of President Biden’s trade policy agenda on advancing a sustainable environment and climate path, this year’s report includes a section on United States trade in circular economy goods.
    Date: 2023–11–10
  13. By: Pablo Delgado (Department of Applied Economics, Faculty of Economics and Business Studies, Universidad de Zaragoza and Instituto Agroalimentario de Aragón (IA2), Zaragoza, Spain.); Vicente Pinilla (Department of Applied Economics, Faculty of Economics and Business Studies, Universidad de Zaragoza and Instituto Agroalimentario de Aragón (IA2), Zaragoza, Spain.); Ignacio Belloc (Department of Economic Analysis, Faculty of Economics and Business Studies, Universidad de Zaragoza and Institute of Employment, Digital Society and Sustainability (IEDIS), Zaragoza, Spain.)
    Abstract: How has Spain transitioned from historically having a relatively low meat production and being a net importer of meat in 1990 to becoming the world's leading exporter of pork in 2020? This is the research question we aim to address in this article. In our quest for an answer, we constructed a gravity model to examine the determinants of Spanish meat exports. We posit that a significant surge in domestic meat consumption since the 1960s led to substantial economies of scale in the sector, rendering it highly competitive by the 1980s. Consequently, when Spain joined the European Union and liberalized the sector, it was sufficiently competitive to conquer international markets. In other words, we aim to study how a Home Market Effect has occurred in Spain and how it has been reinforced by the European Union adhesion. Ultimately, this high competitiveness has allowed Spain to capitalize on China's demand for pork in recent years.
    Keywords: meat exports, Home market effect, gravity equation, Spain, international trade.
    JEL: N54 N74 F12 F13 F14
    Date: 2023–12
    Abstract: 본 연구는 동남아·대양주 4개국(필리핀, 태국, 호주, 뉴질랜드) 유권자들의 보호무역주의 성향 결정 요인을 분석하고, 유권자들의 보호무역주의 성향이 투표행위와 연관이 있는지에 대해서 논한다. 유권자들의 보호무역에 대한 태도가 어떻게 형성되는지 이해하기 위해 국제경제학에서 연구되고 있는 내생적 무역정책 형성이론의 미시적 기초를 활용한다. 나아가 유권자들의 정당 지지가 그들의 보호무역정책에 대한 태도에 의해 설명될 여지가 있는지 살펴봄으로써 각국의 통상정책 기조의 변화가 정치경제적 배경에 의해 이해될 수 있음을 확인한다. 이번 연구의 분석 결과는 교역 상대국의 국내 정치경제 상황을 반영하여 통상교섭 전략을 고도화할 필요성을 반영한다. This research analyzes the determinants of voters’ attitudes towards protectionism in four Southeast Asian and Oceania countries (the Philippines, Thailand, Australia, and New Zealand) and discusses whether voters’ attitudes toward protectionism are related to their voting behavior. This study utilizes the endogenous trade policy formation theory in international economics to understand how voters’ attitudes toward protectionism are formed. Furthermore, by examining whether voters’ political party support can be explained by their attitudes toward protectionism, this study confirms that changes in each country’s trade policy orientation can be understood in the context of their domestic political-economic background. The main findings of this study are as follows: Voters in relatively labor-abundant countries such as the Philippines and Thailand prefer protectionist trade policies as their human capital attainment increases. In contrast, voters in relatively capital-abundant countries such as Australia and New Zealand prefer free trade policies as their human capital attainment increases. These findings align with the theoretical predictions of the Heckscher-Ohlin model-based factor endowment approach. However, since the factor endowment approach is based on the long-run assumption of free labor mobility across industries, it may deviate significantly from reality. To address this limitation, the analysis introduces a specific-factor approach that considers rigidities in the labor movement between industries to test whether there are differences in attitudes towards protectionism between voters in comparative advantage industries and voters in comparative disadvantage industries. The results of the analysis show that the theoretical predictions of the specific-factor approach did not have empirical validity for the voters in the four countries.(the rest omitted)
    Keywords: Protectionism; Trade Barrier; Trade Policy; Southeast Asia; Oceania
    Date: 2023–11–10
  15. By: Ofori, Isaac; Asongu, Simplice
    Abstract: This study examines whether the remarkable inflow of resources in the form of foreign direct investment (FDI) to SSA contributes to inclusive growth in the region. The study further investigates whether SSA’s institutional fabric modulates the effect of FDI on inclusive growth in SSA. To this end, we draw data on 42 SSA countries for the period 1990 – 2020 for the analysis. The evidence, which are based on the GMM estimator shows that: (1) though FDI fosters inclusive growth in SSA, the effect is weak, and (2) the weak inclusive growth inducing-effects of FDI are weakened or nullified completely by SSA’ fragile governance quality. Nonetheless, the optimism, which we provide by way of threshold analysis shows that channelling resources into the development of these governance dynamics yield positive net effects from the short-term through to the long-term. Notably, the results show that the short-term to long-term FDI-induced inclusive growth gains of developing frameworks and structures for fighting corruption while addressing fragilities in regulatory quality and government effectiveness are outstanding. A few policy recommendations are discussed in the end.
    Keywords: AfCFTA; Africa; Economic Integration; FDI; Governance; Inclusive Growth
    JEL: F15 F60 O43 O55 R58
    Date: 2022–01–02
  16. By: Kelishomi, Ali Moghaddasi (Loughborough University); Nistico, Roberto (University of Naples Federico II)
    Abstract: This paper examines how economic sanctions affect the allocation of workers across formal and informal employment. We analyse the case of the unprecedented sanctions imposed on Iran in 2012. Employing a difference-in-differences approach, we compare the probability of being employed in the informal sector before and after 2012 for workers in industries with different pre-existing exposure to international trade. Our analysis reveals that, following the sanctions, workers in industries with higher trade exposure are significantly more likely to experience informal employment compared to workers in industries with lower trade exposure. These results remain robust when accounting for potential sorting issues by using an instrumental variable approach. Our findings suggest that the sudden shock to market access caused by the sanctions might have induced a decline in firms' productivity, especially in industries that heavily depend on imported inputs, and therefore an increase in firms' incentives to reduce the costs by shifting their employees to the informal sector. This sheds light on an important margin of labour market adjustment through which sanctions can affect the economy of the target country.
    Keywords: economic sanctions, exposure to trade, informal employment, labor reallocation
    JEL: E26 F16 F51 O17
    Date: 2023–11
  17. By: Sauvant, Karl P.; Zimny, Zbigniew
    Abstract: Countries offer hundreds of billions of dollars for semiconductor, electric vehicles and renewable energy projects, super-charging a global FDI incentives race. This Perspective suggests that countries providing incentives should do that in a manner that results in wider benefits for the host economy, outlining how this can be done.
    Date: 2023
  18. By: Asongu, Simplice; Odhiambo, Nicholas
    Abstract: Compared to other regions of the world, the potential for information technology penetration in sub-Saharan Africa (SSA) is very high. Unfortunately, productivity levels in the region are also very low. This study investigates the importance of information technology in influencing the effect of foreign direct investment (FDI) on total factor productivity (TFP) dynamics. The focus is on 25 countries in SSA. Information technology is measured with mobile phone penetration and internet penetration, while the engaged TFP productivity dynamics are TFP, real TFP, welfare TFP, and real welfare TFP. The empirical evidence is based on the Generalised Method of Moments. The findings show that, with the exception of regressions pertaining to real TFP growth for which the estimations do not pass post-estimation diagnostic tests, it is apparent that information technology (i.e. mobile phone penetration and internet penetration) modulate FDI to positively influence TFP dynamics (i.e. TFP, welfare TFP, and welfare real TFP). Policy and theoretical implications are discussed.
    Keywords: Productivity; Foreign Investment; Information Technology; Sub-Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2022–01
  19. By: Chiara Castelli (The Vienna Institute for International Economic Studies, wiiw); Dario Guarascio; Stefan Jestl (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: We test for the role of state aid as a driver of digital competitiveness at the industry level, focusing on the digital factor content of trade. Results show that state aid may increase digital competitiveness, particularly in R&D-intensive industries and in relation to the export of (digital) capital-intensive goods and services. Interestingly, aggregate state aid appears to be more effective than specific R&D funds in explaining the performance of country-industries in foreign markets.
    Keywords: Factor content of trade, ICT capital, state aid, sectoral R&D capability
    JEL: F14 O30
    Date: 2023–11
  20. By: Ali Moghaddasi Kelishomi (School of Business and Economics, Loughborough University); Roberto Nisticò (Università di Napoli Federico II, CSEF and IZA)
    Abstract: This paper examines how economic sanctions affect the allocation of workers across formal and informal employment. We analyse the case of the unprecedented sanctions imposed on Iran in 2012. Employing a difference-in-differences approach, we compare the probability of being employed in the informal sector before and after 2012 for workers in industries with different pre-existing exposure to international trade. Our analysis reveals that, following the sanctions, workers in industries with higher trade exposure are significantly more likely to experience informal employment compared to workers in industries with lower trade exposure. These results remain robust when accounting for potential sorting issues by using an instrumental variable approach. Our findings suggest that the sudden shock to market access caused by the sanctions might have induced a decline in firms’ productivity, especially in industries that heavily depend on imported inputs, and therefore an increase in firms’ incentives to reduce the costs by shifting their employees to the informal sector. This sheds light on an important margin of labour market adjustment through which sanctions can affect the economy of the target country.
    Keywords: Economic sanctions, Exposure to trade, Informal employment, Labor reallocation.
    JEL: E26 F16 F51 O17
    Date: 2023–11–08
  21. By: Christopher Clayton; Matteo Maggiori; Jesse Schreger
    Abstract: Governments use their countries’ economic strength from existing financial and trade relationships to achieve geopolitical and economic goals. We refer to this practice as geoeconomics. We build a framework based on three core ingredients: input output linkages, limited contract enforceability, and externalities. Geoeconomic power arises from the ability to jointly exercise threats arising from separate economic activities. Being able to retaliate against a deviating country across multiple arenas, often involving indirect threats from third parties also being pressured, increases the off equilibrium threats and, thus, helps in equilibrium to increase enforceability. A world hegemon, like the United States, exerts its power on firms and governments in its economic network by asking these entities to take costly actions that benefit the hegemon. We characterize the optimal actions and show that they take the form of mark-ups on goods or higher rates on lending, but also import restrictions and tariffs. The input-output amplification makes controlling some sectors more valuable for the hegemon since changes in the allocation of these strategic sectors have a larger influence on the world economy. This formalizes the idea of economic coercion as a combination of strategic pressure and costly actions. We apply the framework to two leading examples: national security externalities and the Belt and Road Initiative.
    JEL: F02 F10 F5
    Date: 2023–11
  22. By: Joël Brémond (CRINI - Centre de recherche sur les identités, les nations et l'interculturalité - Nantes Univ - UFR FLCE - Nantes Université - UFR Faculté des Langues et Cultures Etrangères - Nantes Université - pôle Humanités - Nantes Univ - Nantes Université); Gaelle Fauchard (CRINI - Centre de recherche sur les identités, les nations et l'interculturalité - Nantes Univ - UFR FLCE - Nantes Université - UFR Faculté des Langues et Cultures Etrangères - Nantes Université - pôle Humanités - Nantes Univ - Nantes Université)
    Abstract: Presentation as part of the international and interdisciplinary conference, entitled "Crises, challenges, innovations", organized by researchers united in Theme 2 of CRINI (Research Center on Identities, Nations and Interculturality), which was held on June 22, 23 and 24, 2022 at Nantes University.
    Abstract: Présentation dans le cadre du colloque international et interdisciplinaire, intitulé « Crises, défis, innovations », organisé par des chercheurs réunis dans le Thème 2 du CRINI (Centre de Recherche sur les Identités, les Nations et l'Interculturalité), lequel s'est tenu les 22, 23 et 24 juin 2022 à Nantes Université.
    Keywords: Supply chain, international trade, globalization, local cultures, échanges internationaux, commerce, mondialisation, cultures locales
    Date: 2023
  23. 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 2020–23 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/EUR 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 2020-21. 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 2021-22. 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 U.S. 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.
    Keywords: inflation; international spillovers; global production network
    JEL: E2 E3 E6 F1 F4
    Date: 2023–11–01
  24. By: Shamsi, Javad
    Abstract: This paper examines which types of firms are hit by multi-layered sanctions, quantifies the extent of the economic impact on the affected firms, and identifies the channels through which these effects are propagated. To this end, I use a text-based approach from computational linguistics to gauge the exposure of publicly listed Iranian firms to sanctions, validating this measure through its anticipated fluctuation over time and across industries. The findings reveal three key insights. First, Iranian firms report significant challenges due to sanctions, exceeding COVID-19 concerns by up to 20%. Second, politically-connected and non-connected firms suffer equally from sanctions; for every $1 loss inflicted on connected firms, an externality of $5 is imposed on non-connected firms, considering their economic scale. This contradicts the idea that sanctions only inflict harm on political decision-makers. Third, sanctions are hurtful; firms with higher exposure to sanctions endure greater losses in stock market value in the wake of unanticipated sanction events. Sanctions also lead to reduced sales, investment and hiring. Furthermore, the study reveals that sanctions impact firms via several mechanisms, the primary one being the limitation of access to export destinations.
    Keywords: economic sanctions; firms; text-as-data; computational linguistics
    JEL: E00 E60 F00 G12 H32 F51 F14
    Date: 2023–11–07
  25. By: Beckman, Jayson; Ivanic, Maros; Nava, Noé J.
    Abstract: The United States is one of the largest producers and exporters of corn and soybeans globally partly because of yields that are among the highest in the world. However, a changing climate could affect these yields, which could ultimately affect production and the availability of products for export. In this report, the authors estimate that U.S. corn yields could increase 3.1 percent and soybean yields could decrease 3.0 percent in 2036 relative to 2016, based on climate projections. These results are driven primarily by the increased frequency of periods of extreme heat and declines in precipitation in counties east of the 100th meridian part of the United States. These estimates are then used in a simulation model to explore the market implications from these yield projections, and those results indicate that these yield changes could affect U.S. production and ultimately trade. The estimated growth in U.S. corn yields increases corn production that could ultimately affect the amount of corn the United States has available to export. Holding yields in other countries fixed, the model indicates that U.S. corn exports increase 0.36 percent (the equivalent of $63 million). The decline in soybean yields decreases production, leading to a 1.17-percent drop in U.S. exports (the equivalent of $319 million) based on 2016 exports.
    Keywords: Crop Production/Industries, International Relations/Trade, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy
    Date: 2023–10
  26. By: Tuljapurkar, Sanvid; Zhang, Ruosi
    Abstract: The urgency to tackle climate change has placed sustainable development at the centre of recent trade related narratives. With trade being considered as means to achieve sustainable development goals, one issue to be addressed is how to adjust trade negotiations which used to be the main approach to pursuing market opening. In this context, this paper examines trade negotiations on environmental services by focusing on developing economies' participation. Environmental services and related trade play a critical role in achieving environmental and sustainable development goals. Nevertheless, developing economies' participation in environmental services trade negotiations has been limited. By analysing the reasons behind such limited participation and assessing some new approaches, this paper attempts to explore how environmental services trade negotiations could be adapted to better engage developing economies and serve sustainable development goals.
    Keywords: Environmental services, developing economies, trade negotiations
    JEL: F13 F18 F63
    Date: 2023
  27. By: Clara Rabelo Caiafa; Amaro Olimpio Pereira; Henny Romijn; Heleen de Coninck
    Abstract: To meet climate change mitigation targets, an exponential increase in global green hydrogen trade is expected. Countries rich in renewable energy resources would be in a favourable position to become exporters, potentially bringing opportunities for socio-economic development. The Brazilian state of Ceará is developing a large-scale green hydrogen hub, which is expected to provide one-fifth of European Union (EU) imports by 2030 via the green corridor between Ceará and The Netherlands. Located in what has historically been the least-developed Brazilian region, the green hydrogen hub could bring unique opportunities for regional development in Ceará. However, while empirical studies on economic impacts from other renewable energy projects in developing economies show limited localised benefits, the potential economic co-benefits from export-oriented green hydrogen projects remains uncertain. This study combines semi-structured interviews and input-output modelling to estimate impacts on value-added, income and jobs (by gender) in Ceará according to four local content share scenarios and three renewable energy technologies (onshore wind, offshore wind and solar photovoltaics). By doing so, this study is the first to estimate the potential for economic co-benefits from export-oriented green hydrogen projects in a developing economy context, in a sub-national level, while accounting for technology- and project-specificity as well as impacts on gender inequality. Results suggest that highly internationalised scenarios, that is, with low local content shares and dominated by multinational companies, would not only present local benefits that are often an order of magnitude lower, but could, through distributional implications of employment types, also exacerbate existing income and gender inequalities.
    Keywords: Economic Co-benefits, Green Hydrogen, Gender, Input-Output Analysis, Regional development, Brazil
    Date: 2023–11–29
  28. By: Omar Barbiero
    Abstract: How does exposure to international markets affect returns and cash flow comovements? Foreign bond owners, lenders, affiliates, investors, customers, and suppliers all transmit country shocks to companies. Most multinationals have many of these exposures simultaneously within the same foreign market. Returns and cash flows of two companies comove when exposed to the same country through the same channel. Within-country exposure through different channels is generally associated with lower comovement, in line with an operational hedging strategy. This evidence can help reconcile how, on average, increased market integration does not lead to increased comovement.
    Keywords: returns comovement; business cycle; multinationals; FDI; international financing; supply chain; foreign exposure
    JEL: E44 F21 F23 F34 G11 G15
    Date: 2023–10–01
  29. By: Ricardo Correa; Julian di Giovanni; Linda S. Goldberg; Camelia Minoiu
    Abstract: This paper uses U.S. loan-level credit register data and the 2018–2019 Trade War to test for the effects of international trade uncertainty on domestic credit supply. We exploit cross-sectional heterogeneity in banks’ ex-ante exposure to trade uncertainty and find that an increase in trade uncertainty is associated with a contraction in bank lending to all firms irrespective of the uncertainty that the firms face. This baseline result holds for lending at the intensive and extensive margins. We document two channels underlying the estimated credit supply effect: a wait-and-see channel by which exposed banks assess their borrowers as riskier and reduce the maturity of their loans and a financial frictions channel by which exposed banks facing relatively higher balance sheet constraints contract lending more. The decline in credit supply has real effects: firms that borrow from more exposed banks experience lower debt growth and investment rates. These effects are stronger for firms that are more reliant on bank finance.
    JEL: F34 F42 G21
    Date: 2023–11
  30. By: Riley Sullivan
    Abstract: From 2010 to 2021, 56 percent of the total population growth in New England came from increases in foreign-born residents. The labor force participation rate of foreign-born residents in the region in 2022 was 4 percentage points higher than that of native-born residents. While numbers of J-1 visa workers and international students in the region have declined, overall temporary employment visa use in the region has continued to rise.
    Keywords: New England; NEPPC; labor market; immigration; visas; international students; foreign-born workers; COVID-19
    Date: 2023–11–28
  31. By: Fedor Slepov (National Research University Higher School of Economics); Sergey Kokovin (National Research University Higher School of Economics)
    Abstract: This paper develops a modeling technique of “attainable profit” functions, applying it to two models of monopolistic competition. First, it revisits the Krugman’s classical trade model in the most general form: several asymmetric countries and non-specified additive utility functions. We establish the weakest conditions on utilities, sufficient for the existence of equilibria. These conditions are also necessary under symmetric preferences. Equilibrium uniqueness is proved only for the case of two countries. Second, we study another, “indirectly additive” trade model (Bertoletti and Etro, 2015), and establish weak conditions on non-specified indirect utilities for the existence of equilibria in several asymmetric countries.
    Keywords: international trade, monopolistic competition, variable elasticity of substitution, variable markups, existence of equilibria, attainable profits
    JEL: F12 L13 D43
    Date: 2023
    Abstract: This study analyses the effect of fiscal rules on Foreign Direct Investment (FDI) in developing countries. Using a sample of 78 countries, we use the entropy balancing method to analyze the causal effect of rule adoption on FDI. Two hypotheses are tested in this study. The first one states that adopting fiscal rules increases FDI, and the second one is related to the ability of different types of rules to attract more investments. First, the robust results show that adopting fiscal rules increases FDI. The ratio of the public deficit to GDP, the rating of long-term sovereign debt in foreign currency, and the ratio of short-term external debt outstanding are the transmission channels through which fiscal rules affect FDI. The effect of the rules is amplified in the presence of a high level of business climate, economic performance, and better structuring of the agricultural and industrial sectors. On the other hand, this effect is attenuated in the presence of mineral rents and the economy’s high real interest rate.
    Keywords: Fiscal rules, Foreign Direct Investment, fiscal policy
    JEL: C33 E62 F21
    Date: 2023–11
  33. By: Calamita, Jansen
    Abstract: Mechanisms to avoid investment treaty disputes are an increasing priority for states. States often struggle, however, to develop evidence-based mechanisms due to a lack of information regarding the risks created by the operation of their administrative institutions. The self-assessment process of the WTO Investment Facilitation for Development Agreement provides states with a unique opportunity to develop information to strengthen dispute prevention efforts.
    Date: 2023
  34. By: Zaakhir Asmal; Haroon Bhorat; David de Villiers; Lisa Martin (Development Policy Research Unit, University of Cape Town)
    Abstract: Currently, the process of obtaining Critical Skills Visas and General Work Visas is perceived to be lengthy, onerous and ineffective at solving short-term skills shortages. The administrative process represents a significant barrier to entry. A consequence identified in the Economic Reconstruction and Recovery Plan (ERRP) is that the growth of multiple economic sectors is constrained by insufficient skills (Republic of South Africa, 2020). This is further exacerbated by skilled emigration and competition for scarce skills between countries. Operation Vulindlela has engaged with the Department of Home Affairs (DHA) in order to undertake a comprehensive review of the regulatory framework and processes for the Critical Skills and General Work visas in order to improve the efficiency of the policy framework and processes. Within the context of this review, this paper considers a number of issues related to the need for high skilled immigrant labour to be imported into the country against a backdrop of hhigh unemployment. Specifically, this paper considers the following as inputs into the broader work being done by Operation Vulindlela: Evidence of the benefits associated with skilled immigration in countries; An analysis of firm experiences with the visa application process using responses from a survey of firms; A review of the operational and structural inefficiencies within the current visa application processes in South Africa, taking into consideration the nature of unemployment in South Africa and the role of Employment Services of South Africa (ESSA) data and the Critical Skills List in skilled immigration visa application assessments.
    Keywords: South Africa; labour migration; skilled immigration; unemployment; policy & regulatory frameworks; work visas; wage inequality; foreign labour
    JEL: N3 N17 E24 J08 J21 J24 J61
    Date: 2023–05
  35. By: Baistrocchi, Eduardo
    Abstract: Global tax hubs are the black boxes of the international tax regime (ITR). The driving forces of their strategic interaction with other building blocks of the ITR remain undertheorized. This paper offers the first theory of tax hubs as a two-sided global marketplace. It argues that tax hubs are the matchmakers of the ITR. Indeed, international investors, tax hubs and endpoint jurisdictions play different yet interrelated roles within the same ecosystem, i.e., the two-sided platform. The theory is positive rather than normative. It aims to explain how the creeping marketization of the ITR, as part of international law, has been frequently instrumented worldwide over the last century. The paper provides a stress test to the theory’s explanatory power and its limitations. The conceptual framework of this piece rests on antitrust law and economic concepts.
    JEL: F3 G3 J1
    Date: 2023–08–21
  36. By: Pepe, Jacopo Maria; Ansari, Dawud; Gehrung, Rosa Melissa
    Abstract: The transition to a hydrogen-based economy is gaining momentum in both Germany and the European Union (EU). Used as an energy carrier, hydrogen holds the promise of freeing hard-to-decarbonise sectors like heavy industry, aviation, and maritime trade from their emissions. At the same time, policymakers hope that hydrogen will promote Europe's energy independence, push sustainable development, and strengthen value-based trade. This study presents three plausible yet disruptive scenarios for the geopolitics of hydrogen up to the year 2040 (developed with a team of experts in a multi-stage foresight process). "Hydrogen Realignment" considers the possibility of an eastward shift of industry, power, and technological leadership; "Hydrogen (In)Dependence" depicts a future, in which Europe pursues hydrogen self-sufficiency but becomes dependent on raw material supply; and "Hydrogen Imperialism" delves into the dystopian scenario of a hydrogen transition dominated by hegemons and despots. The transition to hydrogen is likely to shift and complicate Europe's external dependence rather than eliminate it; the role of supply chains will become more important. Moreover, the potential of hydrogen trade for global sustainable development is limited and requires targeted efforts. Resource distribution, production potential, current geopolitical power dynamics, and their interplay will influence hydrogen policy and decision-making along the entire value chain, with actors often giving priority to socioeconomic, geopolitical, and technopolitical considerations. Germany and the EU must pursue a proactive hydrogen strategy, acknowledge the preferences of external actors, and form pragmatic partnerships to keep sight of climate goals, retain industry, and avoid losing global influence. In addition to promoting targeted technologies, decision-makers must manage dependencies across sectors and do so in an anticipatory way. Pursuing diversification is indispensable, and instituting targeted diplomacy and development assistance would be helpful. The new hydrogen sector also needs governing institutions - for example a "Hydrogen Alliance" - to mitigate geopolitical risks and allocate investments correctly.
    Date: 2023
  37. By: António Afonso; José Alves; Sofia Monteiro
    Abstract: We assess the impact of geopolitical risk and world uncertainty on the sovereign debt risk of 26 European Economies during the period 1984-2022, through the implementation of OLS-Fixed Effects regressions and the Generalized Method of Moments (GMM). We find that geopolitical tensions and global uncertainty in border countries contribute to the rise of European country’s sovereign risk as measured by 5- and 10-year Credit Default Swaps (CDS) and bond returns. Moreover, this interconnection is more pronounced during turbulent times such as the subprime crisis. Lastly, we found that geopolitical tensions in other country’ groups such as South America and Asia have a significant impact on the government risks of European countries.
    Keywords: FGeopolitical Risk; World Uncertainty; Political Tensions; Sovereign Risk; European Economy; GMM; Subprime crisis
    JEL: C23 E44 G32 H63
    Date: 2023–11
  38. By: Sands, Ronald D.; Meade, Birgit; Seale, James L., Jr.; Robinson, Sherman; Seeger, Riley
    Abstract: The global land base is under increasing pressure to provide food for a growing population. This report describes how increasing population, income, and agricultural productivity may affect the production and consumption of crops and food products by 2050. Rising incomes have historically implied increasing consumption of animal products, with large increases in feed calories relative to increases in calories consumed as food. Crop calories are the unit of agricultural production in this report, allowing aggregation across multiple crop types, comparison to calories consumed as food, and providing an indicator of cropland requirements. The following questions are addressed: How do increasing population and income affect global demand for crop and food calories by 2050? What is the effect of agricultural productivity growth on food prices and cropland area expansion? Results show that in an income-driven food demand scenario, production of world crop calories increases by 47 percent from 2011 to 2050. Demand for food calories and crop calories increases over time in all scenarios, with most of the adjustment through increases in crop yield (intensification). The amount of cropland also increases (extensification) but less on a percentage basis.
    Keywords: Crop Production/Industries, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Land Economics/Use, Livestock Production/Industries, Productivity Analysis, Research Methods/ Statistical Methods
    Date: 2023–09
  39. By: Julia Peter (Friedrich Schiller University Jena); Silke Uebelmesser (Friedrich Schiller University Jena, and CESifo)
    Abstract: Attitudes toward immigrants play a crucial role in voting behaviour and political decision-making. Such attitudes are shaped by individual characteristics, but the regional environment may also be important. This paper examines how individual attitudes toward immigrants are related to the economic, political, and social environment. We use individual-level data based on a large-scale representative survey and district-level administrative data. Specifically, we examine regional variation in economic growth, voting patterns, and characteristics of the immigrant population and their relation to beliefs about and attitudes toward immigrants. We also use an information experiment in which information about the actual characteristics of the immigrant population in Germany is provided and assess its impact on attitudes toward immigrants in the regional context. Our results suggest that the impact of the environment - over and above individual characteristics - is small and depends on the type of attitude.
    Keywords: attitudes, immigrants, regional determinants, economic concerns, policy preferences
    JEL: C90 D83 F22 J15 R11 R23
    Date: 2023–11–22

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