nep-int New Economics Papers
on International Trade
Issue of 2024‒02‒12
forty-two papers chosen by
Luca Salvatici, Università degli studi Roma Tre

  1. Global Value Chains and the Design of Trade Agreements By Leonardo Baccini; Arianna Bondi; Matteo Fiorini
  2. Designing Effective Carbon Border Adjustment with Minimal Information Requirements. Theory and Empirics By Alessia Camplomi; Harald Fadinger; Chiara Forlati; Sabine Stillger; Ulrich J. Wagner
  3. Global Trade Fragmentation. An EU Perspective By Norbert Gaal; Lars Nilsson; Jose Ramon Perea; Alessandra Tucci; Beatriz Velazquez
  4. Exporting ideas: knowledge flows from expanding trade in goods By Aghion, Philippe; Bergeaud, Antonin; Gigout, Timothee; Lequien, Matthieu; Malitz, Marc
  5. Trends and determinants of India’s virtual water trade in crop products By Kannan, Elumalai; Kumar, Anjani
  6. Prospects and challenges for the export of rare earths from Sub-Saharan Africa to the EU By Kohnert, Dirk
  7. Corporate Globalization and Worker Representation By Jirjahn, Uwe
  8. CETA, an ex post analysis By Ficarra, Giovanni Maria; Millemaci, Emanuele
  9. The Recent Slump in South Korea's Exports to China: Analysis of Causes and Implications By Han, Jung Min; Kim, Jeong-Hyun
  10. The AfCFTA Tariff Offers - Current State and First Insights By Ole Boysen
  11. Impacts of climate change on global agri-food trade By Martina Bozzola; Emilia Lamonaca; Fabio Gaetano Santeramo
  12. Turning One’s Loss Into a Win? By Rémy Herrera; Zhiming Long; Zhixuan Feng; Bangxi Li
  13. Tickets to the global market: first US patent awards and Chinese firm exports By Gong, Robin Kaiji; Li, Yao Amber; Manova, Kalina; Teng Sun, Stephen
  14. Welfare implications of trade sanctions against Russia By Evgenii Monastyrenko; Pierre M. Picard
  15. Neoclassical growth in an interdependent world By Kleinman, Benny; Liu, Ernest; Redding, Stephen J.; Yogo, Motohiro
  16. The role of firm-to-firm relationships in exporter dynamics By Rigo, Davide
  17. Technical measures, Environmental protection, and Trade By Fabio Gaetano Santeramo; Emilia Lamonaca; Charlotte Emlinger
  18. Opening the labor market to qualified immigrants in absence of linguistic barriers By Nicolò Gatti; Fabrizio Mazzonna; Raphaël Parchet; Giovanni Pica
  19. From Border Opening to Political Closing: Immigration and Voting for the Far Right in Switzerland By Alrababah, Ala; Beerli, Andreas; Hangartner, Dominik; Ward, Dalston
  20. The import effects of the Entry Price System By Fabio Gaetano Santeramo; Victor Martinez-Gomez; Laura Márquez-Ramos
  21. Cross-retaliation and International Dispute Settlement By Richard Chisik; Chuyi Fang
  22. Fair Play? The Politics of Evaluating Foreign Subsidies in the European Union By Robert Basedow; Sophie Meunier; Christilla Roederer-Rynning
  23. The impact of foreign relations between Sub-Saharan Africa and the Arab Golf states on African migrants in the region By Kohnert, Dirk
  24. The Effects of COVID-19 and the Russia-Ukraine War on Inward Foreign Direct Investment By MS Hosen; SM Hossain; MN Mia; MR Chowdhury
  25. Direct investment positions held by captive financial institutions in Luxembourg affiliated to investment funds focusing on private equity or real estate By Gabriele Di Filippo
  26. Assessing the Impact of New Technologies on Wages and Labour Income Shares By Antea Barišić; Mahdi Ghodsi; Robert Stehrer
  27. Global Governance by the EU By Maria Giulia Amadio Viceré; Stephanie C. Hofmann
  28. The South American Meat Industry during the First Global Economy By Andrea Lluch; Pablo Delgado; Vicente Pinilla
  29. Legalization and Long-Term Outcomes of Immigrant Workers By Claudio Deiana; Ludovica Giua; Roberto Nisticò
  30. Digital Mobility of Financial Capital Across Different Time Zones, Factor Prices and Sectoral Composition By Mandal, Biswajit
  31. Does the World Bank's Ease of Doing Business Index Matter for FDI? Findings from Africa By Bhaso Ndzendze
  32. Homeward Bound: How Migrants Seek Out Familiar Climates By Marguerite Obolensky; Marco Tabellini; Charles Taylor
  33. DACA, Mobility Investments, and Economic Outcomes of Immigrants and Natives By Jimena Villanueva Kiser; Riley Wilson
  34. Economic Geography and the Irish Border: A Market Access Approach By Fernihough, Alan
  35. Slowdown in Immigration, Labor Shortages, and Declining Skill Premia By Federico S. Mandelman; Yang Yu; Francesco Zanetti; Andrei Zlate
  36. The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies By Sharat Ganapati
  37. The Labor Market Effects of Restricting Refugees' Employment Opportunities By Ahrens, Achim; Beerli, Andreas; Hangartner, Dominik; Kurer, Selina; Siegenthaler, Michael
  38. Unravelling the New Globalization: An Evolutionary Structural Analysis of Postwar World Capitalism and Policy Implications By Chatzinikolaou, Dimos; Vlados, Charis
  39. Global Supply Chain Vulnerabilities: Assessing Firm Risk, Environmental Commitments, and Information Channels in the wake of COVID-19 By Huzaifa Shamsi
  40. Reforming the WTO's subsidy rules. A new opportunity to tackle the global distortions of China's state capitalism By Matthes, Jürgen; Sultan, Samina
  41. Meeting Skill Needs for the Global Green Transition: A Role for Labour Migration? By Sam Huckstep; Helen Dempster
  42. The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory By Xiwen Bai; Jesús Fernández-Villaverde; Yiliang Li; Francesco Zanetti

  1. By: Leonardo Baccini; Arianna Bondi; Matteo Fiorini
    Abstract: We explore the role of global value chains (GVCs) in the design of preferential trade agreements (PTAs). We propose a theory that focuses on firms involved in backward and forward GVC activities to identify the main actors pushing for deep trade integration. To address the critical issue of endogeneity of trade flows for trade policy, our identification strategy exploits a transportation shock: The sharp increase in the maximum size of container ships, which more than quadrupled between 1995 and 2017. The key variation in our instrument hinges on the fact that only deepwater ports can accommodate these new larger ships. Our strategy is flexible enough to generate excludable instruments for different value-added components of exports, which allows us to disaggregate the causal effect of GVC participation into backward and forward GVC activities. We find that trade through GVCs increases the probability of forming deep PTAs that include provisions regulating both trade-related and non-trade-related policies. We find also evidence that GVC activities affect the flexibility of PTAs. Our results indicate that trade intermediation by producers is the main driver of the design of trade agreements.
    Date: 2023–09
  2. By: Alessia Camplomi; Harald Fadinger; Chiara Forlati; Sabine Stillger; Ulrich J. Wagner
    Abstract: To prevent carbon leakage induced by unilateral carbon pricing, the EU has designed a Carbon Border Adjustment Mechanism (CBAM) that taxes imports based on their carbon content. Since estimating the carbon content of imports is very complex, CBAM will be applied only to a few emissionintensive sectors. We argue that, as a consequence of its limited applicability, CBAM is unlikely to effectively eliminate leakage. We propose a simple alternative route towards leakage prevention with significantly lower information requirements and administrative burden which can be applied to all tradable sectors: the Leakage Border Adjustment Mechanism (LBAM). LBAM offsets the cost disadvantages of domestic producers relative to foreign competitors induced by unilateral carbon pricing by implementing import tariffs and, potentially, export subsidies that hold trade constant at the level before the introduction of carbon pricing. LBAM requires knowledge only about domestic product-specific output-to-emissions elasticities and import demand and export supply elasticities but does not depend upon information on the carbon content of imports. To quantify the welfare and emission effects of LBAM and to compare it to CBAM, we simulate a unilateral carbon-price increase in the EU using a granular structural trade model with 57 countries and 121 sectors. We find that LBAM is very effective in preventing leakage, while the EU CBAM is not.
    Keywords: Carbon Border Adjustment, Carbon leakage, Emission trading, Carbon taxation, Trade policy
    JEL: F13 F64 Q54 Q56
    Date: 2024–01
  3. By: Norbert Gaal; Lars Nilsson; Jose Ramon Perea; Alessandra Tucci; Beatriz Velazquez
    Abstract: The risk of global trade fragmentation has increased significantly. Rising geopolitical tensions, a growing number of trade restrictions and a weakening of multilateral institutions have been important geopolitical drivers. These trends have been accompanied by a drastic rise in trade-inhibiting policy measures, particularly after the Covid-19 pandemic and Russia’s invasion of Ukraine. In this context, the EU’s integration in the global economy via trade and value chains remains resilient thus far. Yet, a more fragmented world trade in the future would result of selected decoupling between countries, a general re-balancing towards resilience of value chains and efforts to secure access to key raw materials in lieu of efficiency. This would come at a significant cost. Global trade fragmentation in the form of an increase in trade barriers and higher trade policy uncertainty could lead to significant reduction in global output in the long-term, with low-income countries likely to be more negatively affected.
    Keywords: global trade, fragmentation, geopolitical, tensions, EU, trade and value chains, Gaal, Nilsson, Tucci, Perea, Velazquez
    JEL: F1 F4 F13
    Date: 2023–09
  4. By: Aghion, Philippe; Bergeaud, Antonin; Gigout, Timothee; Lequien, Matthieu; Malitz, Marc
    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
    JEL: O33 O34 O40 F10 F14
    Date: 2023–11–15
  5. By: Kannan, Elumalai; Kumar, Anjani
    Abstract: This paper analyzed the determinants of India’s virtual water trade in crops and crop products for the period 2001 to 2020. The study used product data at the 6-digit level of commodity classification, covering 206 commodities traded across 218 partner countries. Analysis shows that India has a favorable virtual water trade balance and terms of trade with its partner countries. Among the commodities traded, rice accounted for over one-fourth of the total volume of virtual water exported, and sunflower/safflower oil constitute over one-third of the total volume of virtual water imported. No consistent pattern was observed with regard to the level of endowment of water resources of export destination countries. Gravity model results revealed, as expected, that partner countries’ GDP and population size had a positive effect on virtual water exports, while distance had a negative effect. The coefficient of membership in a free trade agreement (FTA) was negative and statistically significant, implying that FTA member countries are sensitive to the trading of water-intensive agricultural products. The effect of amount of arable land on virtual water exports was negative; this implies that larger virtual water exports correlate with land constraints in a destination country that impede domestic agricultural production. The water endowment variables did not show any significant relationship with virtual water export flows, which confirms the finding in the literature that the water stress of a partner countries does not affect the direction of virtual water flows.
    Keywords: water; trade; crops; commodities; trade liberalization; INDIA; SOUTH ASIA; ASIA
    Date: 2023
  6. By: Kohnert, Dirk
    Abstract: The African continent is increasingly becoming a battleground in the race between superpowers for access to critical minerals needed for the 'Green Revolution', such as rare earth minerals (REE). Companies from China, the USA and Russia play a major role. In most cases, critical minerals are mined by international mining companies supported by their governments and organizing complex global value chains. So far, China has dominated supply chains and has secured mining contracts across sub-Saharan Africa (SSA). Currently, China produces 58% of all REEs worldwide. It is the main importer of minerals from Africa, with mineral exports from sub-Saharan Africa to China totalling USD 10 bn in 2019. Its dominance of the global rare earths market is rooted in politics, not geography. Rare earths are neither that rare nor that concentrated in China. Beijing has adopted a strategy of imports, dumping and control of rare earths that is hardly consistent with WTO rules. Therefore, in June 2022, a newly founded 'Minerals Security Partnership', consisting of the USA, the EU, Great Britain and other Western industrialized countries, invited mineral-rich African countries to counter Chinese dominance. These included resource-rich countries such as South Africa, Botswana, Angola, Mozambique, Namibia, Tanzania, Zambia, Uganda and the Democratic Republic of Congo. The West's push became even more urgent after Beijing imposed export controls on the strategic metals gallium and germanium in July 2023, sparking global fears that China could be next to block exports of rare earth or processing technology. Because African markets are small, they are forced to rely on foreign financing. However, so far, foreign direct investment in rare earth production has confirmed the 'pollution haven' hypothesis about the environmentally harmful effects of FDI flowing into the affected countries. Although the full potential of rare earths in SSA has remained largely untapped due to low exploration, the dark side of the energy transition is becoming increasingly visible. These include pollution of soil, air and water as well as inadequate disposal of toxic residues and intensive water and energy use, occupational and environmental risks, child labour and sexual abuse as well as corruption and armed conflicts. In August 2023, Nigeria, Africa's largest economy, suspended certain illegal Chinese mining activities within its borders, including the activities of Ruitai Mining Company due to its involvement in illegal titanium ore mining. Namibia and the DR Congo followed suit.
    Keywords: rare earths; energy transition; climate change; pollution; emerging markets; Minerals Security Partnership; Sub-Saharan Africa; EU; South Africa; Nigeria; DR Congo; African Studies;
    JEL: D24 D43 D52 E23 F13 F18 F23 F51 F63 F64 L13 L61 L63 L72 N17 N57 Q33 Q53 Z13
    Date: 2024–01–09
  7. By: Jirjahn, Uwe
    Abstract: This chapter reviews research on the linkages between corporate globalization and worker representation. Studies have identified various transmission channels through which the activities of foreign multinational companies (MNCs) affect host-country institutions of union and non-union representation. First, countries compete for inbound foreign direct investment (FDI) and the ability to attract FDI depends among others on a country's industrial relations system. Second, once foreign MNCs have invested in a host country, they exert an influence on the country's institutions of worker representation through how their affiliates adapt to those institutions or tend to avoid them. Third, the affiliates of foreign MNCs affect the bargaining power of host-country worker organizations. Fourth, foreign affiliates have an impact on labor conflicts and the quality of industrial relations. Altogether, the available evidence provides indications that the activities of foreign MNCs can be a challenge for worker representation within host countries.
    Keywords: Multinational Company, Foreign Direct Investment, Union Avoidance, Bargaining Power, Labor Conflict, Centralized Bargaining, Works Council
    JEL: F23 F66 J51 J52 J53 J83
    Date: 2024
  8. By: Ficarra, Giovanni Maria; Millemaci, Emanuele
    Abstract: We perform an ex-post analysis of the effects of the CETA trade agreement in the agricultural, farming and food transformation sectors. We find strong evidence in support of a positive trade effect of the treaty. We also perform a series of analyses aimed at ascertaining the effects of the treaty on various subsectors. We find overall net-positive trade effects although we can clearly identify “winners” and “losers” of the treaty. Our analyses seem to indicate a positive trade creation effect not limited to the parties. We find evidence that the increase in trade flow between the members had a net positive effect in the form of an increase in overall international trade. We draw some preliminary policy conclusions on the effects of the treaty.
    Keywords: CETA – Gravity Equation – Trade – Poisson Regression – Cluster analysis
    JEL: F10 F13 F14 F15
    Date: 2024
  9. By: Han, Jung Min (Korea Institute for Industrial Economics and Trade); Kim, Jeong-Hyun (Korea Institute for Industrial Economics and Trade)
    Abstract: Recently, South Korean exports to China have been consistently weak. In the second quarter (Q2) of 2023, the stabilization of energy prices did help narrow the trade deficit with Korea’s large neighbor to the west. However, Korean exports remain sluggish. The trend in China-bound exports shifted to a decline in Q2 2022, and since then the magnitude of the decline has only expanded, reaching USD 102.6 billion in 2023, a 23 percent decrease compared to the same period the previous year. Concerns are growing about the possibility of a prolonged slump in exports to China, even considering the difficulties in bilateral trade during the COVID-19 pandemic and China’s zero-COVID policy. Examining trends in Korea-China trade, several observations stand out. While changes in the proportion of imports from China are minimal, we can note a clear decline in the proportion of exports to China. From Korea’s perspective, the proportion of exports to China reached its peak at 26.8 percent in 2018, and has since fallen to 19.7 percent (2023). Imports have held steady at around 20 percent. On the other hand, China’s proportion of imports from South Korea fell from 10.9 percent in 2015 to 6.2 percent in 2023, indicating a relative reduction in Korea’s role in the Chinese import market.
    Keywords: xports; trade; imports; Korea-China trade; Korean exports; semiconductors; displays; automobiles; trade policy; free trade; protectionism; economic security; Korea; KIET
    JEL: F10 F13 F18 F21 F23 F51 F52
    Date: 2023–12–31
  10. By: Ole Boysen (European Commission - JRC)
    Abstract: The majority of the African Continental Free Trade Area (AfCFTA) agreement signatories have submitted tariff concession offers, as published on the AfCFTA Secretariatâs website. More than a year after the AfCFTA came into effect, it is time to take stock of these submissions and conduct a first assessment of the data with respect to membersâ stances towards fostering intra-African trade through openness on the one hand and maintaining protection against competing imports and revenues from import tariffs on the other. Combining the offers with corresponding trade and tariff data, we find that there are both substantial data gaps and inconsistencies with the AfCFTAâs trade liberalisation modalities and the trade classification standard. Constructing two tariff schedules, one which repairs the offers for compliance with the modalities and another that maximises the import tariff revenue retained as a benchmark, the study gauges each regionâs offer regarding the commitment to liberalisation versus protetion. The analysis confirms that the modalities require regions to liberalise strongly but most opt to liberalise even more and earlier than necessary. Stances towards freer trade differ markedly between regions. Some tend towards retaining all possible tariff revenues or corresponding negotiation space while others directly and strongly commit to liberalisation. The constructed AfCFTA liberalisation categorisations are provided for download as input to update AfCFTA impact analyses with the latest information available on a likely AfCFTA tariff liberalisation agreement.
    Keywords: African Continental Free Trade Area, trade liberalisation, tariff revenue, trade policy
    JEL: F13 F15 H2
    Date: 2024–01
  11. By: Martina Bozzola; Emilia Lamonaca; Fabio Gaetano Santeramo
    Abstract: Climate change and trade are closely related. Climate may alter the comparative advantages across countries, which may in turn trigger changes in trade patterns. Trade itself may constitute an adaptation strategy, moving excesses of agri-food supply to regions with shortages, and this in turn may explain changes in land-use. We investigate these linkages, showing that the changes in climate affect counties’ trade value and contribute to reshaping trade patterns. First, we quantify the long-term impacts of climate on the value of agri-food exports, implicitly considering the ability of countries to adapt, and show that higher marginal temperatures and rainfall levels tend to be beneficial for countries’ exports. Following a gravity model approach, we then link the evolving trade patterns to climate change adaptation strategies. We find that the larger the difference in temperatures and rainfall levels between trading partners, the higher the value of bilateral exports. Furthermore, while developed and developing exporters are both sensitive to climate change and to cross-countries heterogeneity in climate, we found their responses to changes in climate to be quite diverse.
    Keywords: Climate normal, Climate heterogeneity, Export, Economic development
    Date: 2023–06
  12. By: Rémy Herrera; Zhiming Long (THU - Tsinghua University [Beijing]); Zhixuan Feng (Wuhan University [China]); Bangxi Li (THU - Tsinghua University [Beijing])
    Abstract: This article aims to shed light on the hidden benefits and losses of U.S.-China trade within the framework of unequal exchange theory. After presenting the evolutions of the trade balance between China and the U.S., we propose two methods for measuring the unequal exchange between them: one considers the labor content directly incorporated into the exchange; the other focuses on the international values with input-output tables. This allows to present a synthesis of sectoral analyses. Our results show a significant unequal exchange in U.S.-China trade over 1995–2014, the U.S. being actually the main beneficiary of this trade. Both methods exhibit the inequality in exchange tending to decrease over time; China's disadvantage has been gradually reducing from the 2000s. We finally suggest that the relative decline in the hegemonic status of the U.S. in this bilateral unequal relationship could help explain its decision to launch its trade war with China.
    Keywords: International trade, trade war, unequal exchange, Marxism, labor value, input-output table., International trade trade war unequal exchange Marxism labor value input-output table, input-output table
    Date: 2023–11
  13. By: Gong, Robin Kaiji; Li, Yao Amber; Manova, Kalina; Teng Sun, Stephen
    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
    JEL: F10 F14 O30 O31 O34
    Date: 2023–11–21
  14. By: Evgenii Monastyrenko (DEM, Université du Luxembourg); Pierre M. Picard (DEM, Université du Luxembourg)
    Abstract: Since the beginning of the war between Russia and Ukraine in 2022, Western countries have been discussing and then implementing new trade sanctions against Russian fossil fuels. This paper quantifies such policies’ trade and welfare effects using a general equilibrium model with 92 countries and 65 intermediate products and sectoral linkages. The paper breaks down the effects of the bans on gas, crude and refined oil, and coal, and discusses the impact of alternative coalitions of sanctioning countries. In the most stringent case, the model predicts welfare losses of about 16.8% in Russia and 0.42% in the sanctioning countries. These losses are very heterogeneous across sanctioning countries. The OECD countries have an important role as their participation in sanction policies significantly influences expected outcomes in Russia. Meanwhile, should only EU countries implement fossil fuel sanctions, their welfare losses are predicted to be 3.3% on average
    Keywords: trade shocks, sanctions, welfare outcomes.
    JEL: F13 F14 F17
    Date: 2023
  15. By: Kleinman, Benny; Liu, Ernest; Redding, Stephen J.; Yogo, Motohiro
    Abstract: We generalize the closed-economy neoclassical growth model (CNGM) to allow for costly goods trade and capital flows with imperfect substitutability between countries. We develop a tractable, multi-country, quantitative model that matches key features of the observed data (e.g., gravity equations for trade and capital holdings) and is well suited for analyzing counterfactual policies that affect both goods and capital market integration (e.g., U.S.-China decoupling). We show that goods and capital market integration interact in non-trivial ways to shape impulse responses to counterfactual changes in productivity and goods and capital market frictions and the speed of convergence to steady-state.
    Keywords: economic growth; international trade; capital flows
    JEL: F10 F21
    Date: 2023–12–05
  16. By: Rigo, Davide
    Abstract: This paper investigates the role of firm-to-firm relationships in export market dynamics, documenting the following stylized facts for French exporters. First, exporters grow in a foreign market by expanding their customer base; the average French exporter doubles its number of buyers after 8 years. Second, sales to existing customers remain the predominant source of growth in a foreign market, with long-lasting relationships contributing to most export values. Third, as a mechanism driving firms' growth in a relationship, prices fall as a relationship ages. Fourth, I exploit the Brexit referendum as a quasi-natural experiment to examine how firm-to-firm relationships adjust in response to changes in market access. I find that French exporters with long-lasting relationships in the UK are less affected by the referendum shock and exhibit higher exchange rate pass-through. Overall, these findings indicate that long-lasting relationships represent a crucial margin for export market growth and in shielding exporters from changing market conditions.
    Keywords: Wiley deal
    JEL: J1
    Date: 2024–01–09
  17. By: Fabio Gaetano Santeramo; Emilia Lamonaca; Charlotte Emlinger
    Abstract: : Fabio Gaetano Santeramo, Emilia Lamonaca, Charlotte EmlingerTitle: Technical measures, Environmental protection, and TradeAbstract: Technical regulations are numerous, growing, and less transparent than price measures. Frequently used for Non-trade Policy Objectives (NTPOs), the technical regulations are adopted also for environmental protection. The trade effects of environmental measures are underinvestigated. Relying on a unique and original dataset of technical measures notified for environmental reasons, we show how they hinder bilateral trade flows, and tend to favour trade flows of countries with solid economic and political influence, such as high-income and G20 economies. Regardless of the environmental impacts of the technical regulations, beyond the scope of our investigation, the measures shape trade in favour of the wealthiest and most industrialised countries which have better financial and technical endowments to comply with environmentally friendly requirements. Far from suggesting which mechanism drives the discriminatory nature, we argue that the rapid raise of new regulations for the environmental protection may exacerbate existing divide.
    Keywords: International trade, Non-trade policy objective, Technical regulation, TBT
    Date: 2023–07
  18. By: Nicolò Gatti; Fabrizio Mazzonna; Raphaël Parchet; Giovanni Pica
    Abstract: This paper investigates the impact of opening the labor market to qualified immigrants who hold fully equivalent diplomas as natives and share the same mother tongue. Leveraging the 2002 opening of the Swiss labor market to qualified workers from the European Union, we show that the policy led to a large inflow of young immigrants with highly heterogeneous effects on the wages and employment status of qualified natives. While incumbent natives experienced a wage gain and a decrease in the likelihood of becoming inactive, the opposite happened for young natives entering the labor market after the policy change.
    Keywords: qualified immigration, wage effects, worker substitutability, experience
    JEL: F22 J08 J31 J61
  19. By: Alrababah, Ala; Beerli, Andreas; Hangartner, Dominik; Ward, Dalston
    Abstract: The main theories explaining electoral backlash against immigration give centrality to citizens' cultural, economic, and security concerns. We test these predictions in Switzerland, which opened its labor market to neighboring countries in the 2000s. Using a difference-in-differences design, we document that immigration to Swiss border municipalities increased substantially after the borders opened, followed by a more than six percentage point (29%) increase in support for anti-immigrant parties. However, we find no adverse effects on citizens' employment and wages nor on their subjective perceptions of economic, cultural, or security threats. Instead, we describe how far-right parties introduced novel threats to increase hostility toward immigrants. Our evidence demonstrates how elite rhetoric targeted border municipalities and had the greatest effects on voters vulnerable to political persuasion. Together, these findings emphasize the role that elites may play in driving anti-immigrant votes.
    Date: 2024–01–11
  20. By: Fabio Gaetano Santeramo; Victor Martinez-Gomez; Laura Márquez-Ramos
    Abstract: The complexity of the trade policy environment in the European fruit and vegetables (F&Vs) market is mostly due to the Entry Price System (EPS), a non-tariff measure that regulates imports. We investigate the trade effects of the EPS by estimating a structural gravity model of trade flows from major European suppliers of apples, lemons, oranges, peaches, pears, table grapes and tomatoes. We assess how imports react to EPS overshoots, difference between import price and entry price threshold, and to level and volatility in Standard Import Values (SIVs). The EPS limits imports of F&Vs, but differences exist across products. While the efficacy of the EPS is valid for all products, its effectiveness is greater for less perishable F&Vs.
  21. By: Richard Chisik (Department of Economics, Toronto Metropolitan University, Toronto, Canada); Chuyi Fang (Department of Economics and Finance, Sydney Institute of Language and Commerce, Shanghai University, Shanghai, 201800, China)
    Abstract: Although politicians and the popular press often express the desire to link retaliation in trade agreements to non-trade issues, the WTO discourages and usually disallows cross-retaliation even among its own agreements. In this paper we analyze the welfare implications of cross-retaliation. We compare two different mechanisms in a two-country two-sector tariff-setting political-economy model with incomplete information. In a same-sector retaliation mechanism a safeguard action, or other limited violation of the international trade agreement, is punished by an equivalent suspension of concessions in the sector where the initial deviation takes place. In a linked, or cross-sector, retaliation mechanism, retaliatory actions may be taken in another sector or agreement. We next consider less-than-equivalent suspensions of concessions whereby the probability of retaliation is less than unity. We then endogenize this probability and derive its optimal level separately for same- and cross-sector retaliation. We also consider the long-run viability of these self-enforcing trade agreements. We show that whether retaliation is certain or probabilistic a cross-sector retaliation mechanism can generate greater welfare and self-enforcement capability than a same-sector mechanism unless export-oriented lobbies are strong in the cross-sector targeted for retaliation. Even when cross-sector retaliation is welfare improving, there may be little additional benefit to extending retaliation to a different agreement.
    Date: 2024–01
  22. By: Robert Basedow; Sophie Meunier; Christilla Roederer-Rynning
    Abstract: The European Union (EU), for decades a pillar of openness and multilateralism, has recently shifted towards a more assertive commercial policy relying on the development of new geoeconomic instruments designed to level the playing field and deal with the increasing blurriness between economy and national security. Alongside the new EU FDI screening framework for national security in place since 2020, the EU recently proposed and adopted another FDI screening mechanism to tackle market distortions arising from foreign subsidies in the context of European mergers and acquisitions. Why is the EU introducing this new policy instrument right now? What political economy forces shape the institutional design? And why does this instrument enjoy broad support in the Commission, Council of Ministers and European Parliament despite its likely redistributive impacts on Member State economies? Our paper uses process tracing, expert interviews, media research and secondary literature to trace the history of this policy project from its inception to its entry into force in mid 2023. In particular, we question why the decision was made to embed this policy under the competition arm of the European Commission, unlike FDI screening for national security which is managed by the trade policy arm. The paper finds that framing foreign subsidies as a competition issue sought to insulate the policy from accusations of disguised protectionism and ensured political support across the EU. Whereas more activist Member States, services of the European Commission and Members of the European Parliament see the instrument as a steppingstone toward a European industrial policy and more assertive foreign policy, vis-à-vis notably China, others perceive it as a long overdue measure to close regulatory gaps and to strengthen EU competition and state aid policy as well as relevant WTO rules. The paper contributes to the growing literature on EU foreign economic policy at the nexus between International Political Economy and Security Studies by shedding light on one of the most prominent new policy initiatives in these domains.
    Keywords: EU, China, FDI, M&A, Subsidies, State Aid, Competition Policy, anti-trust
    Date: 2023–06
  23. By: Kohnert, Dirk
    Abstract: As early as 1991, Ali Mazrui argued that the Red Sea was not suitable for separating Africa from Arabia. The two regions were inextricably intertwined through languages, religions (particularly Islam) and identities in both the Sahara and the Red Sea in a historical fusion of Arabism and African identity. Their separation was closely linked to a broader trend in which the white world closed ranks and created a system of global apartheid. Saudi Arabia and the United Arab Emirates increasingly viewed the Horn of Africa as their ‘Western security flank’. They were united in their desire to prevent the growing influence of Turkey, Iran and Qatar in this part of the world. These Gulf rivalries formed the basis for growing economic cooperation with SSA as well as military support and security alliances, particularly in the Horn of Africa. Saudi Arabia and the United Arab Emirates, which together have become the largest Gulf investors in Africa, compete with each other, particularly with Qatar, which has established embassies in most SSA countries. In addition, state and non-state actors from the Middle East and North Africa were closely involved in the destabilization of the Sahel in the 2010s by providing military, intelligence and ideological support to SSA states and terrorist groups. On the other hand, the Gulf States became increasingly dependent on migrant labour and the steady increase in migration from SSA to these countries, reinforced by the massive influx from African migrant-sending countries given the restrictions on African migration to Europe. As early as the seventh century AD, Arabia had relied heavily on the slave trade and the supply of labour from SSA, founded on the philosophy that it was legitimate to enslave black people because they were no better than animals. During this time, Black Africa became the largest slave depot in the Islamic world. To this day, there are significant African migrant and diaspora communities in the Middle East. Their presence has at times helped to perpetuate long-standing derogatory views and attitudes towards Africa and its peoples. These attitudes, based on an Arab-centric social hierarchy and expressing contempt for African cultures, remain prevalent today and shape social relationships between employers and African migrants in the emirates of the Arabian Peninsula.
    Keywords: GCC; Middle East; Arabian Peninsula; Arab states of the Persian Gulf; Sub-Saharan Africa; Red Sea; Horn of Africa; Yemen; Arab Spring; Sahel; Islamic terrorism; Arab slave trade; Arab nationalism; Islam; Culture of Africa; migrant workers; human trafficking; forced labor; Ethiopia; Somalia; Ghana; Turkey; Iran; Afro-Arabs; Saudi Arabia; United Arab Emirates; Qatar; Oman; African Studies;
    JEL: D31 D62 D72 D74 E26 F35 F51 F52 F53 F54 F55 H12 H56 N45 Z13
    Date: 2023–11–24
  24. By: MS Hosen; SM Hossain; MN Mia; MR Chowdhury
    Abstract: Inward Foreign Direct Investment (IFDI) into Europe and Asian developing countries like Bangladesh is experimentally examined in this study. IFDI in emerging markets has been boosted by global investment and inflow influenced by resource availability and public policy. The economic policy uncertainty on IFDI in 13 countries is explored at a time when the crisis between Russia and Ukraine war is having a global impact. Microeconomic factors affected Gross Domestic Product (GDP) growth, inflation, interest rates, and the currency rate fluctuated with IFDI, which mostly shocked during COVID-19 and the Russia-Ukraine war. With data from the World Bank and the United Nations Conference on Trade and Development (UNCTAD) database, we compile a panel dataset covering 2018-2022. The researchers used a mixture of panel and linear regression analysis using a random effect model. Our findings show that the impact of global rates hurts IFDI in 13 selected countries. There is a correlation between a country's ability to enforce contracts and the amount of Inward FDI it receives. Using the top 13 hosts of incoming FDI flows COVID-19 and Russia-Ukraine wartime series analysis gives valuable information for policymakers in the remaining countries chosen to attract IFDI inflows.
    Date: 2024–01
  25. By: Gabriele Di Filippo
    Abstract: This paper presents a new database of direct investment positions held through captive financial institutions (CFIs) in Luxembourg that are owned by (resident and non-resident) investment funds focusing on private equity or real estate. Compared to Di Filippo (2023), the new database is more comprehensive as it includes smaller CFIs with less than 500 million euros in total assets. Over 2011-2021, intra-Luxembourg investment positions were larger than foreign direct investment (FDI) positions (both inward and outward). Most of these intra-Luxembourg investment positions arise because investment funds use Luxembourg CFIs to structure their holdings and acquisitions across the globe. In 2021, only about 1% of the inward FDI position held through these CFIs is ultimately invested in targets located in Luxembourg. The outward FDI position held through these CFIs is invested in private companies (65%) or real estate assets (35%). While most investment fund sponsors are headquartered in the United States or in the United Kingdom, investment targets are mostly in Western Europe, with a focus on the euro area. Outward FDI in private equity targets companies that are quite dispersed across economic activities. In 2021, "Information, telecommunications and computer services" have the largest share (17%), followed by "Electricity, gas, water supply, recycling" (12%) and "Chemicals and non-metallic mineral products" (10%). Outward FDI in real estate is more concentrated by property type, with 45% in commercial buildings (office and retail properties), 24% in industrial buildings (in particular logistics properties) and 15% in residential properties. Targets in Luxembourg are mostly companies operating in finance and insurance activities (private equity) or office properties (real estate).
    Keywords: Foreign direct investment, Captive financial institutions and money lenders, Sector S127, Investment funds, Private equity, Real estate
    JEL: C80 C81 F23 F30 G23 G32
    Date: 2024–01
  26. By: Antea Barišić; Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This paper advances the literature on the impacts of new technologies on labour markets, focusing on wage and labour income shares. Using a dataset from 32 countries and 38 industries, we analyse the effects of new technologies – proxied by patents, information and communication technology (ICT) capital usage, and robot intensity – on average wages and labour income shares over time. Our results indicate a positive correlation between patents and wage levels along with a minor negative impact on labour income shares, suggesting that technology rents are not fully passed on to labour. Robot intensity is positively associated with labour income shares, while ICT capital has an insignificant effect. These effects persist over time and are reinforced by global value chain (GVC) linkages. Our conclusions align with recent research indicating that new technologies have a generally limited impact on wages and labour income shares.
    Keywords: Robot adoption, ICT investment, new technologies, GVC, wages, labour income shares
    JEL: C13 C23 F14 F16 O33
    Date: 2024–01
  27. By: Maria Giulia Amadio Viceré; Stephanie C. Hofmann
    Abstract: The EU conducts global governance in multifaceted ways. In this paper, we address how the EU engages with various global governance actors and how it navigates these relational webs. We draw particular attention to the EU’s competences, its structuring powers and how it navigates its institutional environment to answer these questions. First, we highlight that the EU’s issue scope and membership has increased over time, triggering an increased interest in global governance issues and actors. As a result, partnerships have been increasingly established with other countries and organizations. Second, we discuss the competences that the EU has across the different issue areas and show that its competences vary across them, showing that the EU does not always act as one. These two sections set the stage for examining not only the formal powers that the EU has in speaking and acting on behalf of its membership but also its structural powers that can shape global governance arrangements through issue linkages and regulations. Third, a focus on the EU’s institutional landscape enables us to draw attention to its strategies employed to navigate global governance arrangements. We show how the EU makes use of densely institutionalized governance spaces and exploits overlaps in membership and mandate with other organizations to pursue its preferences. Overall, this analytical lens helps decenter the EU and question EU-narratives about its liberal aspirations and vision for global governance.
    Keywords: EU, Global Governance, Liberal Order, Competences, Structural Power, Institutional Environment
    Date: 2023–06
  28. By: Andrea Lluch (Universidad Nacional de La Pampa, CONICET, Argentina); 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.)
    Abstract: The production, trade and consumption of meat products and their movement around the planet were essential to the development of global markets during the first wave of globalization. This article analyzes the main changes in the ownership structure and profile of the beef industry in South America from the late nineteenth century until 1930 and how this process was reflected in certain macroeconomic variables. It provides a comprehensive analysis of the drivers of success of the meat-producing regions of Argentina, Uruguay, Brazil, Paraguay, and Patagonia (both the Argentine and Chilean sides), and also examined the failure cases of Venezuela and the Colombian Caribbean.
    Keywords: Mutinationals, Meat packing industry, Beef trade, South America.
    JEL: F14 N56 N76
    Date: 2024–01
  29. By: Claudio Deiana (University of Cagliari and University of Essex); Ludovica Giua (University of Cagliari and University of Essex); Roberto Nisticò (University of Naples Federico II, CSEF and IZA)
    Abstract: This paper establishes a new fact about immigration policies: legalization has long- term effects on formal employment of undocumented immigrants and their assimilation. We exploit the broad amnesty enacted in Italy in 2002 together with rich survey data collected in 2011 on a representative sample of immigrant households to estimate the effect of regularization in the long run. Immigrants who were not eligible for the amnesty have a 14% lower probability of working in the formal sector a decade later, are subject to more severe ethnic segregation on the job and display less linguistic assimilation than their regularized counterparts.
    Keywords: Undocumented immigrants; Amnesty program; Formal employment; Discrimination; Segregation
    JEL: J15 J61 K37
  30. By: Mandal, Biswajit
    Abstract: In this paper I make an effort to formalize the possibility of transfer of financial capital across time zones to exploit the benefit of day night mismatch between two countries. The major precondition for such transaction is the completion of production, buying and selling of the product in twelve hours day-time of any calendar date. And the process of monetary transaction must be done through digital platform. In this backdrop I argue that exploration of such possibility reduces the effective cost of capital in the sector which is potentially timezone difference exploitative. Subsequently we find other factor price effects and sectoral composition changes in a very conventional Heckscher-Ohlin nugget kind of structure. Though the results are not very surprising, the mechanism through which it works is very unconventional. Without any traditional channels like trade, FDI, technology transfer, endowment changes I generate price effect due to digital mode of payment and twelve hours of activity.
    Keywords: Time Zone Differences, Service Trade, Financial Capital, Outsourcing
    JEL: F12 F16 F21
    Date: 2024
  31. By: Bhaso Ndzendze
    Abstract: This paper investigates whether foreign investment (FDI) into Africa is at least partially responsive to World Bank-measured market friendliness. Specifically, I conducted analyses of four countries between 2009 and 2017, using cases that represent two of the highest scorers on the bank's Doing Business index as of 2008 (Mauritius and South Africa) and the two lowest scorers (DRC and CAR), and subsequently traced all four for growths or declines in FDI in relation to their scores in the index. The findings show that there is a moderate association between decreased costs of starting a business and growth of FDI. Mauritius, South Africa and the DRC reduced their total cost of starting a business by 71.7%, 143.7% and 122.9% for the entire period, and saw inward FDI increases of 167.6%, 79.8% and 152.21%, respectively. The CAR increased the cost of starting businesses but still saw increases in FDI. However, the country also saw the least amount of growth in FDI at only 13.3%.
    Date: 2023–12
  32. By: Marguerite Obolensky (Columbia University); Marco Tabellini (Harvard Business School); Charles Taylor (HarvardKennedySchool)
    Abstract: This paper introduces the concept of “climate matching†as a driver of migration and establishes several new results. First, we show that climate strongly predicts the spatial distribution of immigrants in the US, both historically (1880) and more recently (2015), whereby movers select destinations with climates similar to their place of origin. Second, we analyze historical flows of German, Norwegian, and domestic migrants in the US and document that climate sorting also holds within countries. Third, we exploit variation in the long-run change in average US climate from 1900 to 2019 and find that migration increased more between locations whose climate converged. Fourth, we verify that results are not driven by the persistence of ethnic networks or other confounders, and provide evidence for two complementary mechanisms: climate-specific human capital and climate as amenity. Fifth, we back out the value of climate similarity by: i) exploiting the Homestead Act, a historical policy that changed relative land prices; and, ii) examining the relationship between climate mismatch and mortality. Finally, we project how climate change shapes the geography of US population growth by altering migration patterns, both historically and into the 21st century.
    Keywords: Migration, climate matching, value of climate
    JEL: J15 J61 N31 N32 Q54 R11
    Date: 2024–01
  33. By: Jimena Villanueva Kiser (Brigham Young University); Riley Wilson (Brigham Young University)
    Abstract: Exploiting variation created by Deferred Action for Childhood Arrivals (DACA), we document the effects of immigrant legalization on immigrant mobility investments and economic outcomes. We provide new evidence that DACA increased both geographic and job mobility of young immigrants, often leading them to high-paying labor markets and licensed occupations. We then examine whether these gains to immigrants spill over and affect labor market outcomes of U.S.-born workers. Exploiting immigrant enclaves and source-country flows of DACA-eligible immigrants to isolate plausibly exogenous variation in the concentration of DACA recipients, we show that in labor markets where more of the working-age population can access legal protection through DACA, U.S.-born workers see little-to-no change in employment rates and actually observe increases in wage earnings after DACA’s implementation. These gains are concentrated among older and more educated workers, suggesting immigrant workers complement U.S.-born workers and immigrant legalization generates broader local labor market benefits.
    Keywords: Legal states, DACA, immigration, geographic mobility, job mobility, occupational licensing, local labor markets
    JEL: J15 K37 R23
    Date: 2024–01
  34. By: Fernihough, Alan
    Abstract: This paper examines the economic impact of Ireland's partition, assessing market access losses using detailed geospatial data and multimodal transport network analysis. The study reveals that partition significantly reduced market access on both sides of the border, contributing to population decline. Districts closest to the border were the most affected, with estimated population figures being approximately 10 per cent lower than they would have been without the border. This negative impact has persisted, remaining evident despite the reduction of many physical border barriers. A counterfactual analysis suggests that absent the border, the current populations of the Republic of Ireland and Northern Ireland would have been 3 per cent and 5 per cent higher, respectively. These findings illustrate the persistent role of political borders in shaping regional economic activity.
    Keywords: Economic Geography, Irish Border, Market Access, Economic History of Ireland
    JEL: R12 F15 R11 N94
    Date: 2024
  35. By: Federico S. Mandelman; Yang Yu; Francesco Zanetti; Andrei Zlate
    Abstract: We document a slowdown in low-skilled immigration that began around the onset of the Great Recession in 2007, which was associated with a subsequent rise in low-skilled wages, a decline in the skill premium, and labor shortages in service occupations. Falling returns to education also coincided with a decline in the educational attainment of native workers. We then develop and estimate a stochastic growth model with endogenous immigration and training to rationalize these facts. Lower immigration leads to higher wages for low-skilled workers but also to higher consumer prices and lower aggregate consumption. Importantly, the decline in the skill premium reduces the incentive to train native workers and hurts aggregate productivity over time, which reduces welfare. We assess the implications of stimulus policies implemented during the COVID-19 pandemic and show that the shortage of low-skilled immigrant labor amplified the increase in consumer prices, partially eroding the effectiveness of stimulus.
    Keywords: international labor migration; skill premium; task upgrading; heterogeneous workers
    JEL: F16 F22 F41
    Date: 2024–01–16
  36. By: Sharat Ganapati
    Abstract: Nearly half of all transactions in the $5 trillion market for manufactured goods in the United States were intermediated by wholesalers in 2012, up from 32 percent in 1992. Seventy percent of this increase is due to the growth of “superstar” firms - the largest one percent of wholesalers. Estimates based on detailed administrative data show that the rise of the largest firms was driven by an intuitive linkage between their sourcing of goods from abroad and an expansion of their domestic distribution network to reach more buyers. Both elements require scale economies and lead to increased wholesaler market shares and markups. Counterfactual analysis shows that despite increases in wholesaler market power and markups, scale has benefits. Buyers gain access to globally sourced varieties, nationwide distribution networks, and increased quality while wholesalers decrease their marginal costs.
    JEL: D43 F14 L13 L81 R12
    Date: 2024–01
  37. By: Ahrens, Achim; Beerli, Andreas; Hangartner, Dominik; Kurer, Selina; Siegenthaler, Michael
    Abstract: This paper investigates whether employment restrictions contribute to refugees having poorer labor market outcomes than citizens. Utilizing linked register data from Switzerland and within-canton policy variation between 1999-2015, we find substantial negative effects on employment and earnings when refugees are barred from working upon arrival, excluded from specific sectors or regions, or face resident prioritization. Removing 10% of refugees' outside options reduces job-to-job mobility by 7.5% and wages by 3.0%, widening the wage gap to citizens in similar jobs. The restrictions depress refugees' labor market outcomes even after they apply, but do not spur emigration nor benefit other immigrants.
    Date: 2024–01–09
  38. By: Chatzinikolaou, Dimos (Democritus University of Thrace, Department of Economics); Vlados, Charis (Democritus University of Thrace, Department of Economics)
    Abstract: The globalized socioeconomic system seems to be undergoing a profound crisis and radical structural transformation. This transitional era appears to be leading gradually to a form of a “new globalization, ” which has not been definitively shaped yet. This article aims to establish why this new globalization emerges nowadays. First, it examines the postwar phases of world capitalism (from 1945 onward) based on the “evolutionary structural triptych” that explanatorily unifies different theoretical approaches to conclude that the previous globalization period of 1980-2008 has come full circle. Then, it concludes by presenting a critical overview of different approaches to the new globalization and proposes a novel definition of the phenomenon. Finally, it outlines some points that appear crucial for the advent of the desirable new globalization—towards an innovational and realistic global liberalism.
    Keywords: new globalization; postwar world capitalism; socioeconomic development; evolutionary approach; hegemonic stability theory; regulation school; international regime; innovation generations
    JEL: B52 F60 P16
    Date: 2023–12–27
  39. By: Huzaifa Shamsi
    Abstract: This study investigates the profound impact of the COVID-19 pandemic on firm risk, focusing on supply chain disruptions and their spillover effects on environmental commitments. The research highlights the crucial role of information channels in mitigating these challenges. Employing a Difference-in-Differences (DiD) regression design, the findings reveal a significant increase in default probability among US-incorporated firms with heightened foreign relationships post-COVID-19, particularly those connected to Chinese supply chains. Additionally, firms with foreign relationships show a decline in environmental commitments, suggesting prioritization of survival during adversity. Notably, companies with robust information channels with industry peers exhibit resilience against supply chain disruptions.
    Date: 2024–01–08
  40. By: Matthes, Jürgen; Sultan, Samina
    Abstract: The African Group proposes to reform the WTO's subsidy rules for industrial goods. Even if this demand for more policy space entails some problems, the EU should view this as an opportunity. By combining the African Group's proposal with new rules against tradedistorting industrial subsidies by major global players, the EU can start a new initiative to tackle global economic distortions emanating particularly from nonmarket economies. While this initiative is no panacea, it offers various attractive advantages.
    Date: 2023
  41. By: Sam Huckstep (Center for Global Development); Helen Dempster (Center for Global Development)
    Abstract: The green transition will generate an enormous demand for workers. This paper reviews demand for, and supply of, skills relevant to the green transition in five countries in the Global South and five in the Global North. It focuses on the installation and maintenance workforce needed in two sectors: solar photovoltaic panels and heat pumps. It finds that in almost all of the 10 countries studied, supply of the necessary skilled workers is unlikely to meet demand. In particular, Global North countries, which must cut more emissions sooner, face challenges in obtaining sufficient workers against a backdrop of ageing populations. If green transition targets are to be met, migration is likely to be needed as a complement to domestic training and reskilling. Given that the shortage of green-skilled workers is global, however, migration must be accompanied by support for training and retaining workers at home.
    Date: 2024–01–23
  42. By: Xiwen Bai; Jesús Fernández-Villaverde; Yiliang Li; Francesco Zanetti
    Abstract: We study the causal effects and policy implications of global supply chain disruptions. We construct a new index of supply chain disruptions from the mandatory automatic identification system data of container ships, developing a novel spatial clustering algorithm that determines real-time congestion from the position, speed, and heading of container ships in major ports around the globe. We develop a model with search frictions between producers and retailers that links spare productive capacity with congestion in the goods market and the responses of output and prices to supply chain shocks. The co-movements of output, prices, and spare capacity yield unique identifying restrictions for supply chain disturbances that allow us to study the causal effects of such disruptions. We document how supply chain shocks drove inflation during 2021 but that, in 2022, traditional demand and supply shocks also played an important role in explaining inflation. Finally, we show how monetary policy is more effective in taming inflation after a global supply chain shock than in regular circumstances.
    Date: 2023–01–22

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