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on International Trade |
| By: | Toshiyuki Matsuura; Keiko Ito; Naoto Jinji |
| Abstract: | Using data from the COVID-19 period, this study examines whether firms' participation in global value chains (GVCs) makes them more resilient to external negative shocks, distinguishing between multinational and non-multinational firms and between trading and non-trading firms. Using Japanese customs data matched with firm-level data and a survey on foreign direct investment (FDI) we construct a dataset that contains export destinations, import origins, and investment destinations. We then examine which firms were more affected by the COVID-19 pandemic. We find that export growth rates are higher for firms with more diversified export destinations and import origins, and the result is more pronounced for the intermediate goods trade. However, no such effect is seen for diversification of FDI destination countries. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:tcr:wpaper:e209 |
| By: | Sébastien Jean; Kevin Lefebvre |
| Abstract: | This paper investigates the bilateral impacts of antidumping measures, beyond directly targeted products and exporting firms. It focuses on the country whose exports are most exposed to such measures, China. Product-level analysis shows that export volumes are negatively affected for products similar to a product targeted by an antidumping case, i.e. belonging to the same tariff heading. Using firm-level data, we show that this impact is driven by within-firm contagion: targeted firms not only cut their exports of targeted products, they also reduce significantly their exports of non-targeted products. The decrease is half as large for the latter than for the former, but the total impact on bilateral trade is far larger, because the value of export flows affected by these indirect impacts is ten times larger than the value of directly targeted export flows. In addition, interestingly, this effect is more pronounced for small and private firms. |
| Keywords: | antidumping, spillovers, multi-product firms, China |
| JEL: | F12 F13 F14 F15 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11212 |
| By: | Wassie, Mengistu Alamneh; Kornher, Lukas; Zaki, Chahir |
| Abstract: | This study investigates the trade impacts of trade facilitation (TF) and computes ad valorem tariff equivalents of trade facilitation for Africa. Its contribution is threefold. First, a structural gravity model is used to estimate the impact of TF on trade at a disaggregated level. Second, we validate our results by using different indices that measure TF (time to trade, logistic performance index, and trade-enabling index). Third, in a partial equilibrium framework, it simulates the impact of TF in African countries. Our findings indicate that time to trade has a strong and negative impact on trade, whereas logistics performance and the trade-enabling index positively and significantly impact trade. The analysis suggests that African countries benefit most from TF improvements, particularly those with long delays and weak infrastructural and logistics performance. We find that a one-day custom delay has a 0.9% tariff equivalent. At the product level, the agriculture, food, and some manufacturing sectors, which are the leading African imports, benefit the most from implementing TF. In contrast, mining-related products, which are the major export components of Africa, benefit the least. An ambitious and realistic TF implementation of reducing trade delay by half enhances Africa’s exports and imports by 30.2% and 12.7 % respectively. |
| Keywords: | International Relations/Trade |
| Date: | 2024–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344296 |
| By: | Georg Schneider; Frank Stähler; Georg U. Thunecke |
| Abstract: | Border adjustment taxes like the value-added tax (VAT) are commonly regarded as establishing a level-playing field for international competition. We employ a structural gravity model in order to analyse the effects of the VAT on trade in final goods in the European Union (EU). We find that the VAT is de facto non-neutral. A one percentage point VAT increase reduces aggregate imports and internal trade by 3.1% and implies a 1.8 to 5.4% reduction of imports relative to internal trade. Based on these findings, we conduct a counterfactual analysis and illustrate that VAT rate changes simply substantial welfare effects for an average country in the European Union. |
| Keywords: | Structural gravity, value-added taxation, neutrality, discrimination, border adjustment |
| JEL: | F10 F14 H24 |
| URL: | https://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2023-20 |
| By: | Alan Wm. Wolff (Peterson Institute for International Economics); Yeo Han-koo (Peterson Institute for International Economics) |
| Abstract: | This paper addresses how South Korea, a mid-sized ally of the United States, can best navigate clearly identifiable risks, crafting a positive and pragmatic international trade policy. The authors' primary recommendations are that Korea should (1) increase mutually advantageous investment in and with the United States in key sectors; (2) enter into formal agreements with the United States to support each other's essential security interests, such as in fostering capabilities in semiconductors, batteries, critical minerals, and vaccine production; (3) find mutually beneficial solutions for Section 232 steel tariffs and explore Korea's participation in the green steel talks with other like-minded countries; (4) strengthen institutional supports to defense industrial collaboration, including in the shipbuilding industry; (5) engage more deeply with the Pacific region by joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership; (6) "materialize" the Indo-Pacific Economic Framework through concrete collaborative measures to support supply chain development and the clean economy, which calls for identifiable implementation results and entering into formal agreements with firm commitments; (7) continue to actively support the multilateral trading system with contributions of Korean talent and leadership; and (8) diversify into the Global South and provide assistance to the implementation of the African Continental Free Trade Agreement as part of its outreach. |
| Keywords: | South Korea, bilateral relations, geopolitics, trade, investment, economic security, climate change, semiconductors, steel, critical minerals |
| JEL: | F01 F13 F15 F52 F55 E22 Q56 L52 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iie:wpaper:wp24-19 |
| By: | Zijie Pan; Stepan Gordeev; Jiahui Zhao; Ziyi Meng; Caiwen Ding; Sandro Steinbach; Dongjin Song |
| Abstract: | This paper presents a novel methodology for predicting international bilateral trade flows, emphasizing the growing importance of Preferential Trade Agreements (PTAs) in the global trade landscape. Acknowledging the limitations of traditional models like the Gravity Model of Trade, this study introduces a two-stage approach combining explainable machine learning and factorization models. The first stage employs SHAP Explainer for effective variable selection, identifying key provisions in PTAs, while the second stage utilizes Factorization Machine models to analyze the pairwise interaction effects of these provisions on trade flows. By analyzing comprehensive datasets, the paper demonstrates the efficacy of this approach. The findings not only enhance the predictive accuracy of trade flow models but also offer deeper insights into the complex dynamics of international trade, influenced by specific bilateral trade provisions. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.13698 |
| By: | KIM, Hyunsoo (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)) |
| Abstract: | With the growth of the digital economy and digital trade, discussions to establish common rules for digital trade and to enhance cooperation in the digital economy are taking place on various platforms. At the multilateral level, WTO e-commerce negotiations are in progress, and at the bilateral level, e-commerce chapters of regional trade agreements are being revised. Korea is also expanding its digital trade network by promoting a number of digital trade agreements. Digital trade rules introduced within digital trade agreements are expected to have an economic impact through various channels. Digital trade rules are able to facilitate digital trade by reducing trade barriers, leading to overall trade expansion. Expanding trade not only boosts production through increased imports and exports, but can also increase productivity through the spillover of new technologies and increased competition. As the digital trade network expands, the need to analyze the economic impact of digital trade agreements also grows. The study provides methodologies that quantitatively analyze the economic effects of digital trade agreements through a general equilibrium model. This study first identifies the key digital trade rules in digital trade agreements and estimate how much they reduce trade barriers. Then the macroeconomic impact of introducing digital trade rules is analyzed by building a general equilibrium model that includes the characteristics of the digital economy. |
| Keywords: | digital trade; digital trade agreement; WTO e-commerce |
| Date: | 2024–07–26 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kiepwe:2024_023 |
| By: | Rajesh Aggarwal (Indian Council for Research on International Economic Relations (ICRIER)) |
| Abstract: | India's stance in World Trade Organization (WTO) negotiations has long been characterized by a cautious approach, marked by resistance to expanding the negotiating agenda. The country has consistently avoided discussions on new issues such as e-commerce, climate change, and investment facilitation. This reluctance has sometimes earned India the label of a “spoiler” in international trade talks. India's trade negotiations strategy must keep pace with its desire to building a technology-driven economy and enhancing its global role, as outlined in its vision for "Viksit Bharat 2047". While safeguarding policy flexibility remains crucial for traditional sectors like agriculture and fisheries, India's status as a rising economic power—the world's fifth-largest economy—requires a different approach. To fully tap into emerging fields like the digital economy and high-tech manufacturing, India must actively engage in WTO discussions. It is in India's own interest to play a constructive role in shaping the evolving global regulatory framework in an era characterized by geoeconomics, disruptive technologies and environmental sustainability |
| Keywords: | World Trade Organization (WTO); Negotiations; E-commerce; Climate change; Investment facilitation; India's trade negotiations strategy; Viksit Bharat 2047 |
| Date: | 2024–04 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:ppaper:19 |
| By: | Santeramo, Fabio Gaetano; Jelliffe, Jeremy; Hoekman, Bernard |
| Abstract: | The evolution of agricultural value chains is influenced by numerous societal and economic dynamics, including trade and servicification of the economy. In this paper we analyze margins along agrifood value chains, proxied by the share of the Global Food Dollar accruing to farmers, controlling for differences in GDP and economic development levels. International trade and the increasingly diverse roles played by services in upstream and downstream activities shape the distribution of the value-added generated along the value chains. Trade regimes and services that favour domestic processing of agricultural products increase the farm share. |
| Keywords: | Farm share; agri-food value chains; vertical linkages; structural transformation |
| JEL: | F14 O13 Q13 Q17 Q18 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121610 |
| By: | Trang T. Hoang; Gordon Lewis |
| Abstract: | China's share of U.S. goods imports has fallen significantly since 2017 following the U.S.-China tariff hikes and other geopolitical tensions. Even though the U.S. has reduced its direct sourcing from China, other foreign suppliers of U.S. imported goods have increased their reliance on imports from China. |
| Date: | 2024–08–02 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfn:2024-08-02-4 |
| By: | Ra\'ul M\'inguez; Asier Minondo |
| Abstract: | This paper documents a new feature of international trade: the increase in the number of low-value transactions. Using Spanish data, we show that the share of low-value transactions in the total number of transactions increased from 9% to 61% in exports and from 14% to 54% in imports between 1997 and 2023. The increase in the number of low-value trade transactions is related to the rise in e-commerce and direct-to-customer sales facilitated by online retail platforms. In the case of exports, the increase in the number of low-value transactions is also explained by the fast-fashion strategy followed by clothing firms. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.15509 |
| By: | Cho, Eun Kyo (Korea Institute for Industrial Economics and Trade); Shim, Woojung (Korea Institute for Industrial Economics and Trade) |
| Abstract: | As trade tensions between the US and China ratchet up and spur a wholesale transformation of global supply chains, structural changes to the trade relationship between South Korea and China have become inevitable. This is likely to be most pronounced in high-tech industries, such as semiconductors, batteries, and pharmaceuticals, where there is already a well-established cross-border division of labor. In this paper, we analyze the structure of Korea-China supply chains with respect to the three high-tech industries listed above. We find that Korean semiconductor, battery, and pharmaceutical companies all rely heavily on China for materials. Korean firms source key intermediates and parts and use China as a base for entering other countries, and together these factors constitute the primary driving force underpinning Korea’s high dependency on Chinese suppliers. In this paper, we argue that Korean industries need to internalize and diversify their supply chains to reduce their dependency on Chinese materials while also seeking out new models of cooperation to capitalize on Chinese infrastructure, technology, and markets as well as Chinese companies’ growing interest in using Korea as a production base. |
| Keywords: | semiconductors; batteries; supply chains; Korea-China supply chains; high-tech supply chains; high-tech industry; pharmaceuticals; supply chain diversification; IRA; battery policy; industrial policy; semiconductor policy; Korea; KIET |
| JEL: | F13 F15 F21 F23 F51 F52 |
| Date: | 2024–03–29 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kietrp:2024_005 |
| By: | Hoffmann, Clemens; Kastens, Lina; vPortugal-Perez, Alberto; von Cramon-Taubadel, Stephan |
| Abstract: | We look for evidence that countries increasingly insulate their domestic markets for staple grains from global markets when international prices increase. Previous studies have demonstrated that the transmission of international to domestic prices for these products is less than perfect, which reduces the ability of the global trading system to buffer shocks. However, past studies generally assume that relationships between international and domestic prices are constant, and hence that a country’s degree of insulation does not vary over time. To relax this assumption, we use a smooth-transition model, a modified version of the error correction model (ECM). We estimate elasticities of transmission from international to domestic wholesale and retail prices for a comprehensive set of countries for wheat, yellow and white maize, and rice. We find that price transmission from international to domestic prices weakens in many countries and on average when international prices peak, in other words that the insulation of domestic from international prices increases during high-price episodes (such as in 2007/08 and 2022). We also find that this increased insulation cannot be attributed exclusively to changes in border measures such as export restrictions or import tariffs. This suggests that countries are also using measures such as price controls or the release of stocks to insulate their domestic markets for staple grains. |
| Keywords: | Demand and Price Analysis, International Relations/Trade |
| Date: | 2024–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344313 |
| By: | Kai A. Konrad |
| Abstract: | China’s high investment in foreign trade structures and the extraordinary innovation efforts of their Firms are closely related. They can be explained as a subgame perfect equilibrium outcome of an asymmetric strategic-trade model, in which infrastructure investment renders successful innovation by exporting companies in China more profitable, and in which China and the US have to choose different roles in this innovation competition. That China ends up in the role of the more active investor and the more innovative competitor in this process can be explained by China’s larger export sector and by their competition policy, which is more focused on national champions. |
| Keywords: | Strategic trade policy, infrastructure investment, innovation contests, global patent races, China-US conflict |
| URL: | https://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2023-14 |
| By: | Lionel Fontagn\'e; Francesca Micocci; Armando Rungi |
| Abstract: | This paper introduces a causal machine learning approach to investigate the impact of the EU-Canada Comprehensive Economic Trade Agreement (CETA). We propose a matrix completion algorithm on French customs data to obtain multidimensional counterfactuals at the firm, product and destination levels. We find a small but significant positive impact on average at the product-level intensive margin. On the other hand, the extensive margin shows product churning due to the treaty beyond regular entry-exit dynamics: one product in eight that was not previously exported substitutes almost as many that are no longer exported. When we delve into the heterogeneity, we find that the effects of the treaty are higher for products at a comparative advantage. Focusing on multiproduct firms, we find that they adjust their portfolio in Canada by reallocating towards their first and most exported product due to increasing local market competition after trade liberalization. Finally, multidimensional counterfactuals allow us to evaluate the general equilibrium effect of the CETA. Specifically, we observe trade diversion, as exports to other destinations are re-directed to Canada. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.07652 |
| By: | Rachidi Yasser El Mekki (ENCG, Hassan II University, Casablanca 20000, Morocco); Rharib Abderrahim (ENCG, Hassan II University, Casablanca 20000, Morocco) |
| Abstract: | Foreign direct investment (FDI) in football clubs has grown significantly in recent years. However, Moroccan clubs seem to be excluded from this dynamic. Hence the need to identify barriers to foreign capital entry and to propose strategic recommendations to make football clubs more attractive and accessible to foreign investors. Semi-structured interviews were conducted with five national experts. The thematic analysis of this exploratory qualitative study highlighted five key factors: (historical, legal-legislative, management, economic-commercial and socio-political). The results affirmthat the attractiveness of CMF to foreign investors depends on a profound and multidimensional transformation of the Moroccan football landscape. Keywords: Foreign direct investment (FDI), football clubs, Moroccan football clubs (MFC), foreign capital, foreign investors. |
| Abstract: | Résumé Les investissements directs étrangers (IDE) dans les clubs de football ont connu une croissance significative ces dernières années. Cependant, les clubs marocains semblent être exclus de cette dynamique. D'où la nécessité d'identifier les barrières qui entravent l'entrée de capitaux étrangers et de proposer des recommandations stratégiques visant à rendre les clubs de football plus attrayants et accessibles aux investisseurs étrangers. A cette fin, des entretiens semi-structurés ont été menés avec cinq experts nationaux. L'analyse thématique, de cette étude qualitative exploratoire, a mis en évidence cinq facteurs clés : (historiques, juridiques-législatifs, de gestion, économiques -commerciaux et sociopolitiques). Les résultats suggèrent que l'attractivité des CMF auprès des investisseurs étrangers est tributaire d'une mutation profonde et multidimensionnelle du paysage footballistique marocain. Mots clés : investissements directs étrangers (IDE), clubs de football, clubs marocains de football(CMF), capitaux étrangers , investisseurs étrangers. Abstract Foreign direct investment (FDI) in football clubs has grown significantly in recent years. However, Moroccan clubs seem to be excluded from this dynamic. Hence the need to identify barriers to foreign capital entry and to propose strategic recommendations to make football clubs more attractive and accessible to foreign investors. Semi-structured interviews were conducted with five national experts. The thematic analysis of this exploratory qualitative study highlighted five key factors: (historical, legal-legislative, management, economic-commercial and socio-political). The results affirm that the attractiveness of CMF to foreign investors depends on a profound and multidimensional transformation of the Moroccan football landscape. Keywords: Foreign direct investment (FDI), football clubs, Moroccan football clubs (MFC), foreign capital, foreign investors. |
| Keywords: | football clubs, Moroccan football clubs (MFC), foreign capital, foreign investors, African Scientific Journal, investissements directs étrangers (IDE), clubs de football, clubs marocains de football(CMF), capitaux étrangers , investisseurs étrangers., investissements directs étrangers (IDE) clubs de football clubs marocains de football(CMF) capitaux étrangers investisseurs étrangers Foreign direct investment (FDI) football clubs Moroccan football clubs (MFC) foreign capital foreign investors, capitaux étrangers, investisseurs étrangers Foreign direct investment (FDI) |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04648420 |
| By: | Bakari, Sayef |
| Abstract: | In this study, we conducted a comprehensive analysis of the interplay between domestic investments, exports, and economic growth in Australia from 1972 to 2021. The Vector Error Correction Model (VECM) provided insights into short-term and long-term dynamics, highlighting how deviations from equilibrium are corrected over time and the nature of these interactions. Our findings underscore that domestic investments positively impact GDP, with a 1% increase in investments correlating to a 0.11% increase in GDP in the long run. Conversely, the study found a negative relationship between exports and domestic investments, suggesting that growth in exports does not necessarily lead to increased domestic investment. These insights are crucial for developing balanced economic policies that support both investment and export growth while ensuring sustainable economic development. |
| Keywords: | Domestic Investment, Exports, Economic Growth, VECM, Australia. |
| JEL: | C32 E22 F13 F14 F43 O47 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121604 |
| By: | James R. Markusen |
| Abstract: | Applied general-equilibrium (AGE) models have often made compromises to circumvent difficult modeling problems. One of these is avoiding endogenous zeros, ruling out important questions. Traditional perfect competition models: when do technologies or trade links switch from active to inactive or vice versa? Heterogeneous firms: what types of firms are active in equilibrium? Multinationals: when do firms switch from exporting to foreign production? Capacity constraints: could trade links or production sectors hit capacity limits? Here I exploit the complementarity approach to general equilibrium, focusing on modeling heterogeneous firms and endogenous multinational production. Instead of the traditional continuum formulation, there is a discrete and finite set of firm types, differing in marginal costs across but not within types. There is an upper bound on the number of firms that can enter in each firm type. Formulated as a non-linear complementarity problem, we can solve for the set of active firm types in relation to characteristics of the economy such as size or trade costs and their modes of operation: no entry, domestic, exporting, multinational. The analysis easily incorporates endogenous markups and positive aggregate profits. Productivities can be calculated directly from data and no integrals/integration/parametric distributions are required. |
| Keywords: | complementarity, applied general-equilibrium modelling, heterogenous firms, multinational firms, endogenous zeros |
| JEL: | F12 F23 C63 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11232 |
| By: | Rodríguez-Puello, Gabriel; Hernandez, Leonidas; Romero-Espinosa, Diana; Rowe, Francisco |
| Abstract: | People often move internationally to improve their personal situation. Yet, integration into the host society can be challenging and have negative immediate consequences on individuals' well-being. This paper explores the relationship between international migration and subjective well-being for a sample of European individuals. We use an instrumental variable panel data approach to estimate the monetary cost of individuals' well-being post-migration. Specifically, we estimate that the average cost of an individual willing to accept the potential negative effects of international migration on their well-being. Our results reveal a negative relationship between international migration and subjective well-being. Our estimates suggest that a migrant is willing to accept an average increase of EUR$1, 838 (roughly USD$2, 535) in their monthly overall income to migrate across international borders and endure a negative impact on their well-being as captured by their level of life satisfaction. This negative association is particularly pronounced among established migrants in comparison with recent migrants, and those from lower-middle-income countries. Our work highlights the importance of studying the determinants of well-being for individuals, and contributes evidence to inform policies seeking to improve the local conditions of recent migrants and their adaptation to the new environment. |
| Date: | 2024–07–22 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:ydbxu |
| By: | Araujo, Inacio F. (Departamento de Economia, Universidade de São Paulo); Haddad, Eduardo A. (Departamento de Economia, Universidade de São Paulo) |
| Abstract: | This study explores changes in regional inequality and examines distinct adjustment patterns among Brazilian states investigating the role played by interregional trade during economic stagnation. We combine structural decomposition analysis with observed demographic changes to identify the main drivers of change in regional inequality. By focusing on different dimensions of integration, we show that changes in intra-regional and international integration were the main drivers of the observed reduction in regional inequality. However, interregional trade was critical to drive changes in regional value-added, acting as an absorber of structural changes for the richer states. |
| Keywords: | Interregional trade; Domestic trade; Regional disparity; Location of economic activities; Economic recession; Input-output analysis. |
| JEL: | C67 F14 O18 R15 |
| Date: | 2024–08–02 |
| URL: | https://d.repec.org/n?u=RePEc:ris:nereus:2024_007 |
| By: | Agnes Norris-Keiller; Tim Obermeier; Andreas Teichgraeber; John Van Reenen |
| Abstract: | When firms sell in multiple markets, estimates of markups from the demand-side will generally diverge from estimates based on the supply-side (e.g. via production functions). The empirical examination of the importance of this fact has been hampered by the absence of market-specific cost data. To overcome this, we show production markups can be expressed as the revenue-weighted average of demand-based markups across markets (and products). This highlights that a divergence in demand-based and production-based markups is due to the revenue shares and markups across foreign and domestic markets, factors that can be assessed with readily available trade data. Using data from auto firms producing in the UK, we show production-based markups increased between 1998 and 2018 whereas demand-based markups decreased. These trends can be reconciled by an increase in the markup that UK-based producers gained on their exports, which we corroborate using administrative trade data. We find that increases in production-based markups have been driven by exports, particularly to China where foreign brands command high markups. |
| Keywords: | markup divergence, auto markets, supply and demand |
| Date: | 2024–07–26 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2022 |
| By: | Leal, Alan (Ph.D. candidate in Economics at Universidade of São Paulo); Bugarin, Maurício (Full Professor of Economics at University of Brasília) |
| Abstract: | Trade and environment are intertwined subjects. The literature on the impact of trade opening on environmental outcomes are vast. Lacking however is the literature in how trade can be used politically to induce better environmental outcomes. To model this properly, we develop a game theoretic model in which two countries engage in trade and choose their respective levels of deforestation and trade tariffs. We consider the scenarios of market and central equilibria and derive some useful insights into their relationship of these two variables. As an extension, we also propose different model specifications and develop a numeric generalization of the model, which allows testing our models prediction for several countries. As a result, we find that there is an incentive for free-riding from the countries less concerned with deforestation on the countries that suffer the most disutility of its own deforestation. |
| Keywords: | trade; deforestation; game theory |
| JEL: | F10 |
| Date: | 2024–08–02 |
| URL: | https://d.repec.org/n?u=RePEc:ris:nereus:2024_005 |
| By: | Joonkyo Hong; Davide Luparello |
| Abstract: | Exporting plants often undergo significant technology upgrades, becoming more productive than their domestic counterparts. This process, called learning by exporting, is usually modeled as a Hicks-neutral TFP shifter, overlooking factor-biased technical improvements. We develop a dynamic model of production, exporting, and capital investment that incorporates factor-augmenting efficiencies. We find that exporting increases TFP by 9%, skilled labor productivity by 2%, and unskilled labor productivity by 8%. For new exporters, skilled labor productivity rises by 45%, and unskilled labor productivity increases by 75% within four years of entering export markets. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.14016 |
| By: | Rudolfs Bems; Luciana Juvenal; Weifeng Larry Liu; Warwick J. McKibbin |
| Abstract: | This paper assesses the economic effects of climate policies on different regions and countries with a focus on external adjustment. The paper finds that various climate policies could have substantially different impacts on external balances over the next decade. A credible and globally coordinated carbon tax would decrease current account balances in greener advanced economies and increase current accounts in more fossil-fuel-dependent regions, reflecting a disproportionate decline in investment for the latter group. Green supply-side policies—green subsidy and infrastructure investment—would increase investment and saving but would have a more muted external sector impact because of the constrained pace of expansion for renewables or the symmetry of the infrastructure boost. Country characteristics, such as initial carbon intensity and net fossil fuel exports, ultimately determine the current account responses. For the global economy, a coordinated climate change mitigation policy package would shift capital towards advanced economies. Following an initial rise, the global interest rates would fall over time with increases in the carbon tax. These external sector effects, however, depend crucially on the degree of international policy coordination and credibility. |
| Keywords: | global climate policies, carbon taxes, net-zero emissions, current account balances, international capital flows, dynamic general equilibrium modelling, G-Cubed |
| JEL: | F41 F42 H23 Q54 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2024-50 |
| By: | Afiq bin Oslan |
| Abstract: | Border fortifications have proliferated in recent decades. One prominent rationale given for fortifying the border is to limit illegal incursions, but how successful are fortifications at this task? Current theories fail to account for the fact that illicit actors may be strategic in their choices in order to influence state policies. I accommodate this strategic behaviour in a formal model to demonstrate that this capacity for strategy means that border fortifications are rarely optimal. In the model, states can learn the capacities of illicit actors through the latter’s past transgressions to inform border security policy. Anticipating this, illicit actors may moderate their actions to discourage fortifications. States therefore only secure their borders when illicit actors are powerful enough such that the threat of fortifications does not deter them into moderation. This reveals an inefficiency in border security that gives new insight into the dynamics of border politics. |
| Keywords: | Border Politics, Border Policy, Game Theory, Illicit Trade |
| URL: | https://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2023-18 |
| By: | Mr. Rudolfs Bems; Luciana Juvenal; Weifeng Liu; Warwick J. McKibbin |
| Abstract: | This paper assesses the economic effects of climate policies on different regions and countries with a focus on external adjustment. The paper finds that various climate policies could have substantially different impacts on external balances over the next decade. A credible and globally coordinated carbon tax would decrease current account balances in greener advanced economies and increase current accounts in more fossil-fuel-dependent regions, reflecting a disproportionate decline in investment for the latter group. Green supply-side policies—green subsidy and infrastructure investment—would increase investment and saving but would have a more muted external sector impact because of the constrained pace of expansion for renewables or the symmetry of the infrastructure boost. Country characteristics, such as initial carbon intensity and net fossil fuel exports, ultimately determine the current account responses. For the global economy, a coordinated climate change mitigation policy package would shift capital towards advanced economies. Following an initial rise, the global interest rates would fall over time with increases in the carbon tax. These external sector effects, however, depend crucially on the degree of international policy coordination and credibility. |
| Keywords: | Global climate policies; carbon tax; net-zero emissions; current account balances; international capital flows; dynamic general equilibrium modelling; G-Cubed |
| Date: | 2024–07–26 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/162 |
| By: | Dhaka, Surjeet Singh; Kyire, Samuel Kwabena Chaa; Asare, Jeffery Kofi |
| Abstract: | Climate change has become a global burden. In part, technological innovations (TIs), foreign direct investments (FDIs), and agricultural growth are potential factors contributing to overall emissions. However, empirical evidence on the interplay of these variables on CO2 emissions is rare in literature, particularly for BRICS countries, which is essential to investigate. In this quest, we sourced panel data obtained from World Development Indicators and FAO repositories. We found cross-sectional dependency in the panel data. Hence, the Panel Autoregressive Distributed Lag model (Pooled Mean Group regression) was used to analyse the short-run and long-run relationship. We found a long-run negative effect of TI on CO2 emissions, but no short-run effect was observed. Likewise, agricultural growth had positive significant effect on CO2 emissions only in the long-run. The Granger Causality test confirmed a causal relationship between agricultural growth, TI, and CO2 emissions in the BRICS countries. We recommend that BRICS countries should invest in innovative technologies, especially those that facilitate green production and renewable technologies to minimize greenhouse gas emissions. In addition, there is a need to embrace sustainable agricultural practices like tree-crop plantations, sustainable production technologies, and less-carbon-emitting inputs used to minimize the emissions from agriculture. |
| Keywords: | Agribusiness |
| Date: | 2024–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344316 |
| By: | Christian Vedel |
| Abstract: | Is geography destiny? What is the role of first-nature geography in determining prosperity? This paper estimates the effect of randomly removing and introducing favorable first-nature geography to a specific region using a difference in difference design. In 1825 a storm created a new natural navigable waterway, bringing trade and prosperity to the otherwise relatively isolated northwestern Denmark. 700 years prior, the same event happened in reverse, when a previous channel closed up between 1086 and 1208. The elasticity of geography-induced market access is estimated to be 1.6, corresponding to 26.7 percent population growth within a generation of the event. Demonstrated mechanisms include trade, fertility, fishing, and the rise of manufacturing. The central finding is replicated in reverse in a register of dated archaeological sites. The 1086-1208 closing caused fewer buildings and sites containing coins. The general insight is the same: First-nature geography determines the levels and location of prosperity. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.00885 |
| By: | Allan, R.; Daud, A.; Rosli, A. |
| Abstract: | Pepper, the world's most used spice has been widely used ever since ancient times. This spice has a high value in terms of monetary due to its medicinal properties. This berry-like spice has never lost its popularity as the world's most traded and used spice. In response to its market value, a study was conducted to analyse the market price movement of black pepper among four world major producers – India, Indonesia, Vietnam, and Malaysia. This study addresses the co-movement among these four major pepper-producing markets by setting the world’s top producer Vietnam, as the dependent variable whilst India, Indonesia, and Malaysia are set as the independent variables. Due to the high price fluctuation of this storable commodity and significant price diversity in different markets, market integration among major producers is essential to study. The unison among the global pepper market is important, not only regarding producers and consumers but also in terms of profit maximization and economic risk management. The study uses the Johansen cointegration approach and the vector error correction model to analyse and evaluate the presence and strength of co-movement of price amongst the market, from the perspective of export freight on board price. The study has found that there are co-movements in the market Vietnam, India, Indonesia, Malaysia, and Sri Lanka, despite obvious price differences and frequent fluctuations. The markets are found to be operating as a single organism. The convergence of pepper prices is found to be significant, and the model is stable for the export of black pepper. |
| Keywords: | Agribusiness, Production Economics |
| Date: | 2024–04–28 |
| URL: | https://d.repec.org/n?u=RePEc:ags:asea24:344439 |
| By: | KAWAKUBO Takafumi; SUZUKI Takafumi |
| Abstract: | Recently, supply chains have been disrupted worldwide. Using 12-year panel data on buyer-supplier linkages in Japan, we study how the Great East Japan Earthquake in 2011 affected firm performance and their supply chains. We focus on buyer firms located outside the disaster area that were not directly hit by the earthquake and compare those firms with and without suppliers inside the disaster area before 2011. Exploiting difference-in-differences designs, we first find that treated firms, on average, were not differentially hurt. This is confirmed with various firm performance indicators including sales, employment, profit, investment, and productivity measures. Second, we find that treated firms increased the share of suppliers located outside the disaster area, which suggests that they substantially adjusted their supplier relationships. Moreover, we show that treated firms disproportionately accumulated new suppliers closer to their headquarters. The results suggest that it is important for firms to swiftly adjust their supplier network when they face huge, sizeable shocks. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:24067 |
| By: | Michael A. Clemens (Peterson Institute for International Economics) |
| Abstract: | South Korea faces an unprecedented economic crisis driven by rapid population aging, as it approaches a future of negative economic growth. This paper examines the full range of possible policy responses with the potential to restore dynamism to the Korean economy. Contrary to many prior analyses, the author finds that enhanced labor migration to Korea is necessary, sufficient, and feasible. Migration is necessary because in the best forecasts we have, no other class of policy has the quantitative potential to meaningfully offset aging. Migration is sufficient because enhanced temporary labor migration by itself would offset most of Korea's demographic drag on growth over the next 50 years. And migration is feasible because the levels of migration and timescale of the transition would resemble that already carried out by Malaysia and Australia. Many advanced economies will follow in Korea's demographic footsteps in decades to come, and have much to learn from the decisions that the Korean government makes now. |
| Keywords: | Migration, South Korea, Labor, Demography, Economic Growth, Population Aging |
| JEL: | F22 J15 K37 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iie:wpaper:wp24-18 |
| By: | Guillaume Bataille (Aix Marseille Université); Benteng Zou (DEM, Université du Luxembourg) |
| Abstract: | Motivated by recent examples, this study proposes a dynamic multistage optimal control problem to explain the instability of International Fishery Agreements (IFAs). We model two heterogeneous countries that exploit shared fishery resources, and investigate the conditions that lead to a shift from cooperation to competition. We assume that countries differ in their time preferences, initially behave as if the coalition will last indefinitely, use fixed sharing rules during cooperation, and adopt Markovian strategies after withdrawal. Our findings reveal that, for any sharing rule, coalitions of heterogeneous players always break down in finite time. We use the dynamic Shapley Value to decompose the coalition’s aggregate worth over time, thereby eliminating the incentive to leave the agreement. Additionally, we show that a fishing moratorium policy accelerates the recovery of near-extinct fish stocks; however, fishing should resume under a cooperative regime once sustainable levels are achieved. |
| Keywords: | Fisheries, International Fishery Agreements, Dynamic games, Multistage Optimal Control. |
| JEL: | C71 C72 Q22 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:luc:wpaper:24-06 |
| By: | Alexander Ignatov (Gaidar Institute for Economic Policy); Marina Larionova (Gaidar Institute for Economic Policy); Irina Popova (Gaidar Institute for Economic Policy); Andrey Sakharov (Gaidar Institute for Economic Policy); Andrey Shelepov (RANEPA) |
| Abstract: | In 2023, the main trends in the system of international institutions were related with the US and its allies’ continued efforts to form new rights and institutes, as well as the mounting pressure on other countries to condemn and isolate Russia in the existing multilateral mechanisms. Overall, it can be stated that isolation of Russia has failed, though in the Bank for International Settlements’ committees which are entirely controlled by western countries they succeeded in suspending Russia’s participation.2 Developing and emerging market countries demonstrated greater resistance to pressure, their independence and weight. However, global institutions turned out to be unable to function fully as a result of adversarial positions between their member-countries. At the same time, the importance of non-western institutions, such as the BRICS and the Shanghai Cooperation Organization increased. |
| Keywords: | Russian economy, international organizations, international institutional arrangements |
| JEL: | F5 F53 F55 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:gai:ppaper:ppaper-2024-1338 |
| By: | Martin, Will; Minot, Nicholas |
| Abstract: | This paper begins with a survey of recent commodity price developments that highlights the magnitude of this price surge and identifies the rapid rise in wheat prices as a key element. The analysis in this paper focuses on the extent to which domestic markets are insulated from these changes and on the resulting impacts on world prices. An econometric analysis using Error Correction Models finds stable long-term relationships between world wheat prices and most domestic prices of wheat and wheat products, but with considerable variation across countries in the rate of price transmission. A case study of the price shocks during the Covid pandemic and the Ukraine food price crisis finds that price insulation roughly doubled the overall increase in world wheat prices and raised their volatility both during periods of price increase and price decline. |
| Date: | 2024–07–24 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:dyqek |
| By: | Timothy J. Hatton |
| Abstract: | Sailing ships persisted on emigrant voyages to Australia until the late nineteenth century and passage durations decreased by three weeks from the late 1840s to the mid-1880s. The shortening of voyages by sail has been linked to improvements in navigation and in sailing ship technology but without quantitative estimates. Analysis of 311 voyages of emigrant ships that sailed directly from a UK port to Adelaide from 1848 to 1885 shows that the decline in voyage duration was associated with increases in tonnage, iron construction and, above all, clipper-style ship design. Advances in ship technology also enabled captains to take fuller advantage of sailing the so-called great circle route to Australia. Examining a unique dataset of the tracks of 290 voyages from Europe to Melbourne in 1854-62, I find that larger and clipper-style ships reduced voyage durations, both directly, because they were faster on a given track, and indirectly, because they could better exploit the great circle route. |
| Keywords: | Colonial Australia; Sailing ships; Voyage durations |
| JEL: | F22 N77 O33 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:auu:hpaper:123 |
| By: | Wolfgang Maennig (Chair for Economic Policy, University of Hamburg); Leo Doerr (Chair for Economic Policy, University of Hamburg) |
| Abstract: | This paper provides new evidence on the globalization‒poverty nexus. We innovate by using an indicator of globalization in the food sector, finding evidence of a significantly aggravating impact on poverty prev-alence, adding to earlier studies that use indicators of general globalization. The opening of food markets since the mid-1990s in Latin America might have accounted for approximately 2 additional percentage points of the population living below the absolute poverty line of $2 a day in our sample. |
| Date: | 2024–08–19 |
| URL: | https://d.repec.org/n?u=RePEc:hce:wpaper:078 |
| By: | Kubitza, Christoph; Eckert, Sandra; Lay, Jann |
| Abstract: | Despite the numerous ‘Western’ initiatives to improve the sustainability of global agricultural supply chains, there is little evidence on whether these initiatives can effectively reduce environmental degradation in tropical cultivation areas at scale. In our study, we analyze patterns in the establishment of oil palm plantations and deforestation on peatlands in Indonesia. We compare plantations established by investors from high-income countries (HIC), many of which are covered by sustainability certification, with plantations established by domestic investors or by investors from other low- and middle-income countries (LMIC). Our dataset comprises 386 concessions in Kalimantan and Papua with their investment structure, annual satellite imagery on forest loss and oil palm cultivation, and spatial maps on peatlands. Our results show a divergence in production practices in global agricultural supply chains after 2011, with actors tied to HIC reducing degradation of peatlands within their concessions, while actors from LMIC continued to show no specific protection of these high conservation value areas. While this is good news in terms of the effectiveness of ‘western’ initiatives for sustainable supply chains, companies linked to HIC comprise only 10% of the concession area in the research region compared to companies from LMIC which will limit the overall impact of ‘western’ supply chain initiatives. |
| Keywords: | Environmental Economics and Policy |
| Date: | 2024–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344268 |
| By: | Ms. Alina Carare; Alejandro Fiorito Baratas; Jessie Kilembe; Metodij Hadzi-Vaskov; Wenzhang Zhang |
| Abstract: | We provide a consistent empirical framework to estimate the net joint effect of emigration and remittances on the migrants’ countries of origin key economic variables (GDP growth and labor force participation), while addressing the endogeneity concerns using novel “shift-share” instrumental variables in the spirit of Anelli and others (2023). Understanding this joint impact is crucial for the Latin America and the Caribbean region that has seen a continuous growth in remittances over the past decades, due to steady emigration, and where remittances represent the largest capital inflows for many countries now. Focusing on the past two decades (1999-2019), this study finds that on average emigration has a negative and statistically significant impact on contemporaneous economic growth and change in labor force participation in the countries of origin across LAC, while remittances partially mitigate this adverse impact—especially on economic growth—resulting in a small negative net joint effect. There are significant differences across subregions for all estimates, with the largest negative effects observed in the Caribbean. In addition, the negative impact of emigration and remittances on the change in labor participation is small, but for the youngest cohort (15-24) is twice as large as for the overall labor force participation. The results are robust to various specifications, variables, and measurements of emigration and remittances. |
| Keywords: | Emigration; Remittances; Labor Force Participation; Economic Growth; Latin America |
| Date: | 2024–08–09 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/175 |
| By: | Friedrich, Jonathan (CIRCLE, Lund University); Stihl, Linda (CIRCLE, Lund University); Grillitsch, Markus (CIRCLE, Lund University) |
| Abstract: | The circular economy (CE) is argued as a possible model for dealing with value chain instabilities in global production networks. Since geographical proximity is central to unlocking circular potential, x-shoring (including concepts like reshoring, resourcing, or friendshoring) is arguably key to this process. Often, spatial restructurings of the CE are embraced without a critical examination of their multi-scalar effects. Nevertheless, spatial restructuring of the economy inevitably produces winners and losers. To navigate the tensions that arise in the context of uneven development and environmental (in)justice, we present a framework for anticipating plausible socio-economic and socio-environmental effects of x-shoring processes across place, scale, and time. We illustrate our framework with insights from the literature on old industrial regions and cases documented in the Environmental Justice Atlas. Our framework represents a holistic approach that integrates interdisciplinary literature from different disciplines. We discuss the ambivalent effects of x-shoring across space, scale, and time, principles for navigating the tensions that arise, and outline research avenues for a thorough exploration of the geography of x-shoring in the CE and beyond. Because of the ambivalence of these processes, we conclude that research must embrace the complexity of these developments by employing integrative, multi-scalar approaches that empower local agency. |
| Keywords: | global production networks; global value chains; trade-offs; circular economy; anticipation |
| JEL: | F63 F64 |
| Date: | 2024–08–09 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lucirc:2024_009 |
| By: | Victor Gay (IAST - Institute for Advanced Study in Toulouse, TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | Why are some countries so much richer than others today? This course explores the historical origins of modern economic growth and global economic inequality across countries. After a brief introduction of the field of economic history, we will study when and where modern economic growth emerged, with a particular focus on the Great Divergence and the Industrial Revolution in Western Europe. The course will however cover other settings, such as China, Japan, and Southern Asia (except the United States). Then, we will investigate the factors that can explain these historical patterns, looking successively at the role of institutions, culture, and geography. Finally, we will discuss various issues that come along with modern economic growth in historical perspective such as pollution and global pandemics. |
| Date: | 2024–01–10 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04650773 |