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on International Trade |
| By: | Ingo Borchert (University of Sussex Business School, CITP, UKTPO); Mario Larch (University of Bayreuth, CEPII, CESifo, GEP, ifo Institute); Serge Shikher (United States International Trade Commission); Yoto V. Yotov (Drexel University, ifo Institute, CESifo) |
| Abstract: | We introduce the International Trade and Production Database for Simulation (ITPDS) and use it, in combination with the International Trade and Production Database forEstimation (ITPD-E), to quantify the impact of globalization on bilateral trade, realincome, and inequality in the world at the industry level in 1990-2019. To perform theanalysis we rely on a new quantitative trade model, which enables us to estimate the magnitude of globalization and then perform a counterfactual analysis of the impact of globalization on real output within the same framework. Our estimates reveal that, on average, bilateral globalization forces have led to a remarkable increase in international trade of about 570%, between 1990 and 2019, with very wide but intuitive variation across industries. Our counterfactual analysis reveals that globalization has benefited most countries but relatively more so smaller and more open economies, which are typically developing countries. As a result, this ‘catch-up’ implies less crosscountry income inequality. |
| Keywords: | Trade dataset, Domestic trade, Globalization, Inequality, Disaggregated simulation analysis, Gravity |
| JEL: | F10 F14 F63 O11 O19 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:sus:susewp:1124 |
| By: | Mgeni Msafiri; Vincent Leyaro |
| Abstract: | Diplomatic relations have potential to enhance international trade by minimizing potential risks that firms encounter in their foreign operations, especially for developing countries. This has been a driving force for government intervention in international trade and investment through economic diplomacy. Using bilateral trade data for the period 1997 – 2019, this study examines the impact of economic diplomacy measured by the presence of embassies in Tanzania and in importer countries on Tanzanian exports and imports. The study uses augmented Pseudo Poisson Maximum Likelihood estimation to account for large proportion of zero trade flows, and a lagged trade variable to correct for the potential reverse causality of opening diplomatic representations. Results show that, on average, Tanzania exports more to countries that host Tanzanian embassies, and imports more from countries that have embassies in Tanzania. Results underscore the effective role of economic diplomacy in reducing trade barriers and foster international trade; implying that as a country Tanzania needs to enhance and strengthen its economic diplomacy with her trading partners. |
| Keywords: | economic diplomacy, international trade, Tanzania |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:not:notcre:24/05 |
| By: | António Afonso; José Alves; Lucas Menescal; Sofia Monteiro |
| Abstract: | We examine the effects of World Uncertainty and Geopolitical Risk on Trade flows for 31 European economies between 1995 and 2023. To do so, we resort to Panel estimation techniques, including OLS and Poisson Pseudo Maximum Likelihood (PPML). Our findings reveal that European nations primarily respond to global uncertainty by concentrating their exports and imports among top trading partners particularly their top 5 highest trading partners. This result is more pronounced when uncertainty is driven by low-income countries. Moreover, there is a stronger relationship between imports and global uncertainty compared to exports. Our study underscores the importance of European economies strategically adapting their export and import approaches in response to these challenges. |
| Keywords: | geopolitical risk, world uncertainty, trade flows, international trade, European economies |
| JEL: | C23 E44 F14 F41 F62 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11401 |
| By: | Seema Narayan (Monash University, Melbourne, Australia) |
| Abstract: | This study evaluates how e-commerce is reshaping international trade in goods for two Association of Southeast Asian Nations (ASEAN) Member States. E-commerce features in the analysis in two forms: (i) as a global trend in the e-commerce transition, measured as the total e-commerce sales as a percentage of total retail sales, and (ii) as the e-commerce ranking of the exporting and importing nations. We examine the relationship between the e-commerce and exports of Indonesia and Malaysia to their 200 or more trading partners, respectively, over 2014–2020. Our results suggest that the global transition towards e-commerce benefits the exports of both nations, although its mediating role for the bilateral supply chain–exports relationship is conspicuous for Indonesia only. Moreover, an increase in the e-commerce ranking of the two nations impacts their exports positively, but a higher e-commerce ranking of the trading partner countries adversely affects exports in Indonesia and Malaysia. We also find that interactions between e-commerce and supply chains can boost exports. However, in many cases, this occurs if e-commerce growth is falling. Our results imply that e-commerce enablers remain underdeveloped, and that cross-border e-commerce activities depend on existing trade enablers such as supply chain drivers. Therefore, the growth of e-commerce may have been partially responsible for the supply chain disruptions in Indonesia and Malaysia. We show that the results vary between Indonesia and Malaysia and by trading partner. We scrutinise our results using an array of robustness tests and provide policy implications for the two ASEAN Member States. |
| Keywords: | : Gravity export model, e-commerce, digital trade, supply chain, COVID-19, Indonesia, Malaysia |
| JEL: | F14 L81 |
| Date: | 2023–12–22 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2023-22 |
| By: | Elhoussaine Wahyana; Eduardo Amaral Haddad |
| Abstract: | The debate on global value chains (GVCs) has emphasized countries’ contributions to value-added creation. From an intercountry perspective, a new body of research is addingto this debate by studying how subnational regions contribute to the indicators in specific countries. Proper assessment of economic contributions is essential for designing incentive policies. This paper analyzes the role played by the main trading partners of Moroccan regions in local value chains. We use input-output (IO) analysis to decompose regional value-added in Morocco, based on different sources of domestic and foreign final demand, taking into account the differences in regional economic structures and the nature of systematic interdependence associated with the structure of inter-regional linkages in Morocco. For each final demand originating from and into one of the Moroccan regions, we estimate measures of trade in value-added (TiVA). The output decomposition of final demand into domestic and foreign demand, where the latter is broken down into the final demand from each trading partner, serves as the methodological anchor for the study. We use the inter-regional input-output table for Morocco with 2019 data. The measures of trade in value-added reveal different inter-regional and international trade integration hierarchies, with implications for regional inequality in the country. We try to answer two main questions. First, how do domestic absorption and foreign exports affect value-added generation in Moroccan regions? Second, what is the regional value-added content incorporated in the components of final demand by geographical source? |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:rp_01-24 |
| By: | Elisa Grugni; Giorgio Ricchiuti |
| Abstract: | Modern economies exhibit deeply integrated and synchronized networks among heterogeneous agents. This paper focuses on the trade network and seeks to unravel the mechanisms that underpin its emergence and evolution. To this end, we develop a multi-country general equilibrium model of trade that incorporates firms and countries heterogeneity as well as asymmetric information and financial frictions. Within this framework, the export decisions of firms give rise to an international trade network that mirrors the structure of real-world trade flows. Thus, the model, by encompassing both within and between country heterogeneity, facilitates the investigation of a range of stylized facts pertaining to firm exporting behavior and globalization. Once the network is established, the paper aims at capturing the effects of financial shocks on trade flows and their network-based spillovers. The introduction of a credit market in a trade model provides novel insights on the influence of monetary and financial factors on trade patterns. |
| Keywords: | trade, productivity, net worth, financial frictions, network analysis |
| JEL: | F11 F12 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:frz:wpaper:wp2024_26.rdf |
| By: | Alejandro G. Graziano; Yuan Tian; Alejandro Graziano |
| Abstract: | Economy-wide shocks affect demand, supply, and intermediary sectors simultaneously. We dissect the impact of the Covid-19 pandemic on international trade by combining information from customs records, smartphone-based human mobility, and container ship port calls. We find that local disruptions to domestic demand reduced import quantities, while local disruptions to foreign supply and at seaports increased import prices and reduced quantities. On net, local disruptions during the pandemic were a negative supply shock, and the residual structural factors were a positive demand shock. The resulting excess import demand contributed to the rise in domestic inflation. |
| Keywords: | international trade, local disruptions, human mobility, shipping costs, Covid-19 pandemic, inflation |
| JEL: | F10 F14 F16 I12 I18 R41 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11322 |
| By: | Hinh T. Dinh |
| Abstract: | President Biden's announcement of new tariffs on China, though not economically significant on its own, symbolizes the deepening decoupling of the U.S. and Chinese economies. These tariffs, supported by both major political parties, represent the latest step in a broader strategy that favors policy interventions over traditional free-market principles and aims to protect domestic workers, maintain technological leadership, and prioritize economic security. This policy brief discusses the factors behind this shift in U.S. economic policy, including the experiences from the first and second China shocks. This shift, along with China's subsequent export policy reactions, will have important implications for the trade policies of developing countries. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:pb_28_24 |
| By: | Riaz, Kainat; Siddique, Hafiz Muhammad Abubakar; Audi, Marc; Sumaira, Sumaira |
| Abstract: | With the expansion of trade policies in the 1980s, countries began prioritizing foreign trade in their economic strategies, recognizing financial development as a key component. Financial development significantly influences macroeconomic performance and enhances economic growth by positively impacting exports. This study explores the relationship between financial development and export performance in South Asian countries, using panel data from 1990 to 2022. The analysis employs OLS fixed-effects models, FMOLS, DMOLS, and Pedroni co-integration tests. Results from the pooled OLS and fixed-effects models indicate that financial development, foreign direct investment, GDP, and population are key drivers of export performance. The Pedroni co-integration test confirms a long-term relationship among these variables. The findings suggest that promoting appropriate financial development and expanding financial market access are crucial for supporting businesses and boosting export performance in the region. |
| Keywords: | Financial Development, FDI, Export Performance, South Asia |
| JEL: | E0 G0 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122474 |
| By: | Nisha Taneja (Indian Council for Research on International Economic Relations (ICRIER)); Sanjana Joshi (Indian Council for Research on International Economic Relations (ICRIER)); Sanya Dua; Alina Siddiqui |
| Abstract: | The International North-South Transport Corridor (INSTC) has emerged as a crucial alternative route for global trade in the context of recent geopolitical disruptions. With shipping lines through the Red Sea facing rising risk of attacks related to the ongoing Israel-Hamas conflict and the Suez Canal being prone to blockages, the INSTC offers a more efficient and costeffective alternative for transporting goods between India, Russia, and the Central Asian countries. This policy brief examines India's export potential to the INSTC member countries, emphasizing the untapped export opportunities that could be instrumental in achieving India's ambitious target of reaching US$ 2 trillion in exports by 2030. The policy brief also highlights the challenges in fully operationalizing the corridor, including the need for improved inter-modal transfers, enhanced banking and insurance services, and stronger hinterland connectivity. Addressing these challenges and leveraging the INSTC's potential could significantly expand India's trade in the region. |
| Keywords: | INSTC, export potential, shipping disruptions, icrier |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:ppaper:24 |
| By: | Andrzej Cieslik (University of Warsaw); Mahdi Ghodsi (The Vienna Institute for International Economic Studies, Vienna University of Economics and Business) |
| Abstract: | In this paper, we study the effects of international regulatory convergence in non-tariff measures on the cross-border investment of multinational firms. We verify two main research hypotheses derived from the modified knowledge-capital model of the multinational enterprise. The first hypothesis postulates that when regulatory divergence with numerous regulatory measures in the destination emerges, trade cost also increases – stimulating horizontal multinational activity. The second hypothesis states that regulatory convergence could reduce the trade costs between the two trading partners, facilitating vertical multinational activity. To verify these hypotheses, we use firm-level data from the Orbis database for 2004–2020 and the Poisson pseudo-maximum likelihood (PPML) estimation technique. Our estimation results for the full sample of firms show that greater regulatory divergence is negatively associated with the extent of multinational activity. In addition, the convergence of technical barriers to trade seems more important than the convergence of sanitary and phytosanitary measures. Moreover, more productive firms can overcome problems associated with both technical barriers to trade and sanitary and phytosanitary distances. Finally, we find significant heterogeneity across sectors that varies according to technology intensity. |
| Keywords: | : foreign direct investment, knowledge-capital model of multinational firms, non-tariff measures, regulatory divergence, technical barriers to trade, sanitary and phytosanitary measures |
| Date: | 2023–12–22 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2023-21 |
| By: | Avi Woodward-Kelen |
| Abstract: | This paper seeks to explore the multifaceted incentives faced by potential migrants across developed countries, focusing on the empirical examination the drivers of, and barriers to, migration. Leveraging census microdata from OECD countries, this paper adapts methodologies from Clemens et al. (2019) to quantify wage disparities and employs a quasi-gravity trade model to analyze migration elasticity in relation to wage gaps, natural barriers (geographical and cultural differences), and policy constraints. A straightforward application of the Roy-Borjas model finds no evidence of selection bias on unobservable characteristics, although some migrant groups systematically outperform host-country natives. I find that migration patterns are highly similar to patterns of international trade in their sensitivity to distance, and my variance decomposition analysis finds that natural barriers are approximately as good as wage gaps are in predicting the variance in migration decisions. |
| JEL: | F22 F66 J61 J71 K37 O15 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:lis:liswps:884 |
| By: | Matteo Maggiori; Chris Clayton; Jesse Schreger |
| Abstract: | Hegemonic powers, like the United States and China, exert influence on other countries by threatening the suspension or alteration of financial and trade relationships. We show that the mechanisms that generate gains from integration, such as external economies of scale and specialization, also increase these countries' power to exert economic influence because in equilibrium they make other relationships poor substitutes for those with a global hegemon. Smaller countries can insulate themselves from geoeconomic pressure from hegemons by pursuing anti-coercion policy: shaping their economies in ways that insulate them from undue foreign pressure. This policy faces a tradeoff between gains from trade and economic security. We show that while an individual country can make itself better off, uncoordinated attempts by multiple countries to limit their dependency on the hegemon lead to unwinding of the global gains from integration and inefficient fragmentation of the global financial and trade system. We study a leading application focusing on financial services as both tools of coercion by the hegemon and an industry with strong strategic complementarities at the global level. We provide estimates of geoeconomic power for the US and China and show empirically that the geoeconomic power of the United States relies strongly on financial services while that of China loads more on manufacturing trade. |
| Keywords: | geoeconomics, geopolitics, economic security, economic statecraft, payment systems |
| JEL: | F02 F5 F12 F15 F33 F36 F38 P43 P45 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1224 |
| By: | Sergii Meleshchuk; Yannick Timmer |
| Abstract: | In this paper, we show that a reduction in capital goods prices induced by trade policies can stimulate both investment and labor. We exploit a quasi-natural experiment in the form of a trade reform in Colombia to study how firms with differential exposure to reductions in capital goods tariffs react in terms of their investment and labor decision. Firms that see a larger decline in the input tariff for capital goods increase investment and labor for production, as well as their labor share. Reductions in input tariffs are passed through to input prices for all goods. However, only lower prices for capital, not for other goods, translate into more investment and employment of production workers. |
| Keywords: | investment, tariffs, capital goods, price of capital, employment, trade reform, Colombia |
| JEL: | D22 D25 E22 E24 F13 F14 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11285 |
| By: | Hinh T. Dinh |
| Abstract: | This paper examines the implications of the U.S.-China trade war for developing countries, particularly in light of the 2024 U.S. presidential election. The study traces the origins and escalation of the trade conflict, analyzing its multiple impacts on global trade patterns and economic growth. While some developing countries have benefited from trade diversion and supply-chain shifts, others, especially resource-exporting nations and the least-developed countries, have faced significant challenges. The paper presents data showing that almost every country group, except OECD countries, has experienced a decline in its trade-to-GDP ratio in the wake of the trade war, with heavily indebted poor countries and least-developed nations suffering the most. The paper outlines three potential scenarios based on the outcome of the U.S. election: a shift towards reconciliation, continuation of current trends, or increased protectionism. Each scenario presents unique challenges and opportunities for developing countries. The study also explores the concept of ‘friend-shoring’ and its potential impact on Africa, highlighting the continent's notable absence from major friend-shoring initiatives, and the risks this poses to its economic prospects. In response to these challenges, the paper proposes a range of strategies for developing countries, including regional integration, South-South cooperation, strategic protectionism, economic diversification, and investment in education and innovation. The paper concludes by emphasizing the need for developing countries to remain agile in the face of uncertainty, balancing strategic autonomy with productive engagement in the global economy. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:pp_14-24 |
| By: | Xiaodan Yu; Giovanni Dosi; Maria Enrica Virgillito; Can Huang; Lanhua Li |
| Abstract: | By means of a fine-grained dataset linking exported product-level and firm-level data, this pa- per reconstructs the Chinese accumulation regimes at the microlevel in the period 2000-2013. After documenting a few macro stylized facts on the Chinese export-led accumulation regime in terms of the trend of Chinese exports in international markets, and the appreciation in the terms of trade in manufacturing products, the paper gives evidence of a process of restructuring of exporting firms towards more complex products and sectors, against any hypothesis of a purported price dumping in international markets. The positive relationship between technological content of the exported product and pricing markup strategies confirms the Sylos-Labini hypothesis linking prices and technological advantage, yielding the formation of international oligopolies able to exercise forms of market power and setting prices well-above any competitive level. As such, the trend in export prices has signalled the progressive capacity of the Chinese firms to orient the patterns of international market penetration, particularly in most complex productions. |
| Keywords: | Chinese exports, product/firm level export prices, pass-through, international oligopolies, profitabilities |
| Date: | 2024–11–09 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2024/29 |
| By: | Kauhanen, Antti; DeVaro, Jed |
| Abstract: | Abstract This brief examines the economic impacts of skilled immigration on firms, innovation, and labour markets. Research shows that skilled immigration generally has positive effects on firm performance, productivity, and innovation. Immigrant inventors play a crucial role in innovation, with evidence showing they produce a disproportionate share of patents and have positive spillover effects on native collaborators. Contrary to common fears, most studies find that skilled immigration does not negatively impact native workers’ wages or employment on average. In fact, it can benefit natives with complementary skills. The availability of skilled immigrant labour also influences firms’ location decisions, with restrictions on immigration leading to increased offshoring of jobs. While the fiscal impacts of immigration are debated, traditional accounting methods suggest a positive fiscal impact for highly educated immigrants. However, these estimates often fail to account for indirect effects like productivity gains and innovation. Overall, the evidence indicates that skilled immigration is a valuable tool for addressing productivity challenges and innovation needs, particularly in countries facing declining working-age populations. |
| Keywords: | Productivity, Innovations |
| JEL: | J61 J31 D24 |
| Date: | 2024–10–28 |
| URL: | https://d.repec.org/n?u=RePEc:rif:briefs:140 |
| By: | Otaviano Canuto |
| Abstract: | Multiple shocks faced by the global economy over the past three years have apparently shaken the conventional wisdom on gains from economic integration, and have sparked widespread calls for protectionist and nationalist policies. Is there already evidence of some ‘deglobalization’, or do the factors that underlie globalization remain strong enough despite the shocks? So far, there are no signs of an overall reversal in the long-term trend of greater global trade integration. However, a partial realignment seems to be underway, reflecting the more durable side of those recent shocks. This is probably leading to higher costs and prices on the margin, in the case of realignments done to overcome shocks of a geopolitical nature. The answer seems to be that global trade has been resilient, although it is undergoing some realignment. |
| Date: | 2023–11 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:pb_44_23 |
| By: | Crescenzi, Riccardo; Ganau, Roberto |
| Abstract: | This paper looks at inward foreign direct investment (FDI) and regional labour productivity in the aftermath of the Great Recession, exploring two FDI-induced effects. The first effect is linked with a capacity of FDI per se to trigger short-term productivity gains in response to a global shock. The second effect is associated with the degree of industrial diversification of these investment flows. The results suggest that it is not the amount of foreign investment received per se that matters for productivity recovery but its composition. A low degree of FDI diversification helped regions to gain productivity after the shock. The effect is stronger in regions with an industrial profile concentrated in a limited number of sectors, particularly in services. FDI can support regional recovery, but in the short run, it does so by matching and reinforcing existing regional specialisation profiles and to the benefit of services-oriented regions. |
| Keywords: | inward FDI; industrial profile; regional growth; European Union |
| JEL: | F20 R11 R12 |
| Date: | 2024–10–23 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125406 |
| By: | Taiji Furusawa; Chang Sun; Heiwai Tang; Jiaxu Zhang |
| Abstract: | We build a general equilibrium model of endogenous communication, quality control and trade. We derive a structural gravity equation from the model and show that exogenous communication costs raise the costs of quality control and have a larger impact on products with a lower elasticity of substitution. In our empirical application, we estimate the impact of direct flight connectedness on communication costs using the gravity equation. We overcome the identification challenge using an instrumental variable constructed based on the discontinuity of direct flights at around 6, 000-mile distance due to air travel regulations. We find that air connectedness increases trade, especially for products with a low elasticity. We combine the empirical estimates and our equilibrium model to quantify the aggregate impact of air connectedness. |
| Keywords: | international direct flights, elasticity of substitution, face-to-face communication |
| JEL: | F10 R40 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11364 |
| By: | Otaviano Canuto; Sandra Rios; Renato Baumann; Abdelaaziz Ait Ali; Mahmoud Arbouch |
| Abstract: | This paper was originally published on t20brasil.org The resurgence of Neo protectionism as a reality is creating a pressing need to establish New Industrial Policies (NIPs) capable of striking a balance between Global Value Chains (GVC) managers' quest for efficiency and policy makers' need for more increasing resilience or national security in a turmoiled geopolitical landscape. Furthermore, although NIPs might pursue legitimate non-economic objectives, they are often captured by vested interests, resulting in protectionist measures. These policies produce negative spillovers, jeopardizing other countries’ development perspectives. This policy brief posits that countries embracing industrial policies with trade diversion components must allocate efforts to implement additional trade liberalization in sectors where the affected exporting countries have comparative advantages as compensation for the negative spillovers their unilateral domestic policies impose on third countries. This highlights the need to establish a structured system that penalizes protectionist countries for exceeding predetermined limits on subsidies and distortive measures. This policy brief also recommends that advanced economies implementing industrial policies with high amounts of embodied subsidies contribute to an international fund dedicated to financing developing economies' access to new green technologies. This approach acknowledges the undeniable push towards aggressive industrial policies, yet simultaneously strives to establish a framework to temper this emerging trend. This mechanism aligns with the principles of economic fairness and encourages nations to adopt less distortive behaviors in their pursuit of economic security or resilience to shocks. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:tf04_st_06 |
| By: | Matilde Bombardini; Andres Gonzalez-Lira |
| Abstract: | The latest resurgence in the U.S. of policies aimed at reducing imports and bolstering domestic production has included the expansion of Buy American provisions. While some of these are new and untested, in this paper we evaluate long-standing procurement limitations on the purchase of foreign products by the U.S. Federal Government. We use procurement micro-data to first map and detect employment effects of government purchases and then calibrate a quantitative trade model adapted to include features relevant to Buy American: a government sector, policy barriers in final and intermediate goods, labor force participation, and external economies of scale. We show that, while current Buy American provisions on final goods purchase have created up to 100, 000 jobs at a cost of between $111, 500 and $137, 700 per job, the recently announced tightening of the policy on the use of foreign inputs will create fewer jobs at a higher cost of $154, 000 to $237, 800 per job. We also find scant evidence of the use of Buy American rules as an effective industrial policy. |
| Keywords: | Buy American, public procurement, trade restrictions, domestic content |
| JEL: | F10 F13 H41 H57 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11339 |
| By: | Ariel Burstein; Sarah Lein; Jonathan Vogel; Sarah Marit Lein; Jonathan E. Vogel |
| Abstract: | Consumers access foreign goods by purchasing them domestically or shopping abroad. We present new facts on cross-border shopping by Swiss households showing, for example, that prices of identical products are lower in neighboring countries, cross-border shopping shares fall with distance to the border, and price gaps and cross-border shopping shares rose following the 2015 Swiss Franc appreciation. We use a simple model of cross-border shopping to quantify how variation across space in cross-border shopping results in heterogeneous changes in cost-of-living in response to changes in international prices such as the 2015 Swiss Franc Appreciation and the 2020 Covid-19-related closing of the border. |
| Keywords: | cross-border shopping, cost of living, household heterogeneity |
| JEL: | E31 F10 F41 F60 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11373 |
| By: | Hung Tran |
| Abstract: | Heightened geopolitical rivalry has greatly complicated the challenges facing the Global South. Countries identifying with the Global South now have to deal with the long-standing problem of promoting changes in the current international political and economic system to better serve their development needs, while navigating the geopolitically driven fragmentation of trade and investment flows. Moreover, the strategic approaches that could be adopted to deal with those challenges are influenced by the vague definition of the ‘Global South’ itself. Further complicating the picture is the fact that China and Russia have played very ambiguous roles—siding with developing countries in the desire for change, but representing one side of the geopolitical competition for global influence. Against the backdrop of an ill-defined Global South, developing countries need to examine the various approaches pursued by major countries. This can inform their efforts to calibrate an appropriate strategy for themselves, depending on their specific circumstances. |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:pb_07_24 |
| By: | Mina Baliamoune |
| Abstract: | Greater female participation in the labor market and in international trade have been recognized as important drivers for economic growth and essential targets in the context of the United Nations Sustainable Development Goals (SDGs). However, achieving both targets simultaneously will be difficult, if not impossible, in most Middle East and North African (MENA) countries without additional policies to eliminate the remarkably high levels of gender inequality in the labor market. In such countries, women are either excluded from the gains from trade or bear most of the burden of adjustment to greater integration in the global economy. Policymakers should recognize the impacts of greater integration into global trade on women’s labor-market outcomes, and should implement resolute policy measures to alleviate (if not eliminate) these impacts. |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:pb_06-24 |
| By: | Arpita Mukherjee (Indian Council for Research on International Economic Relations (ICRIER)); Ketaki Gaikwad; Anushka Pal |
| Abstract: | This paper presents India's strength as a producer and exporter of agri-products, examines the policies towards building a sustainable food system and their impact, analyses best practices and suggests how they can be scaledup/replicated. It identifies regulatory and other issues and makes policy recommendations that will help develop a sustainable food system, take the country from food security to nutrition security, help enhance quality production, exports and earnings of farmers and enable India to engage better and benefit from trade agreements. |
| Keywords: | Sustainable Food System, Trade policy-India, food security, nutrition security, icrier |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:ppaper:25 |
| By: | Luca Macedoni; Ariel Weinberger |
| Abstract: | This paper investigates the positive international spillover effects of non-discriminatory product regulations, such as quality standards. We incorporate regulations into a multi-country general equilibrium framework with firm heterogeneity and variable markups. We model regulations as a fixed cost that any firm selling to an economy must pay, consistent with stylized facts that we present. We demonstrate that in the presence of variable markups, the fixed cost generates a positive spillover on the rest of the world as it induces entry of high-quality firms, and it improves the terms of trade of the non-imposing countries. We argue that the benefits of such regulations are not fully realized under non-cooperative policy settings, leading to a call for international cooperation in setting regulations. We estimate our model to quantify the effects of regulations on consumers’ welfare, the extent of the positive externalities across countries, the relative importance of the entry of high-quality firms and of the terms of trade effect of regulations, and the value of cooperation. |
| Keywords: | allocative efficiency, international spillover, quality standards, variable markups, trade policy |
| JEL: | F12 F13 L11 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11287 |
| By: | Paolo Bertoletti; Federico Etro |
| Abstract: | The textbook of international economics by Krugman, Obstfeld and Melitz (2022) introduces the gains from trade under monopolistic competition with a simple linear demand model. We use its representative consumer foundation to decompose the welfare gains from a market expansion into competitive effects, variety effects and selection effects. |
| Keywords: | Gains from trade, Monopolistic competition, Heterogeneous firms |
| JEL: | D11 D43 F12 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:frz:wpaper:wp2024_22.rdf |
| By: | Silvana Tenreyro; Ludovica Ambrosino; Jenny Chan |
| Abstract: | How does trade fragmentation affect inflationary pressures? What is the response of monetary policy needed to sustain inflation at target? To answer these questions, we develop a heterogeneous agent, open-economy model featuring imperfect international risk-sharing. The model captures both the demand and supply side effects of fragmentation. It illustrates how the impact of fragmentation on inflationary pressures and the appropriate policy response depends not only on the direct effect of higher import prices on supply but, crucially, on how aggregate demand adjusts in response to lower real incomes and productivity stemming from fragmentation. |
| Keywords: | monetary policy, trade fragmentation, open economies, inflation, heterogeneity, globalisation |
| JEL: | F12 F15 F41 F62 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1225 |
| By: | Flore Gubert |
| Abstract: | The potential synergy between development and migration has become a key feature of most international migration politics. However, this relationship is far from evident. Flore Gubert helps better understand the complexity of this relationship through the comparison of two regional contexts (Mexico and North Africa), and shows how the political and economic context prevailing in the countries of origin modifies the link between migration and development. This Note de l'Ifri is the first contribution to The European migration policies from a Southern perspective project, supported by the OCP group. |
| Date: | 2010–09 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:none |
| By: | Enrique Martínez García; Braden Strackman |
| Abstract: | This study offers new insights into exchange rate pass-through (ERPT) using U.S. import price indexes by country-of-origin, covering two decades of monthly data. Focusing on the largest U.S. trading partners, our analysis shows that ERPT is more muted than previously estimated, with freight costs having no measurable impact on import prices and foreign production costs exerting only limited influence. We also observe significant heterogeneity in countries’ short-run responses, shaped by differences in trade composition and pricing strategies. Consistent estimates across common dynamic panel estimators underscore the robustness of these findings. The results suggest that exchange rate fluctuations may have a weaker direct effect on U.S. inflation than earlier studies implied, underscoring the need to reconsider current models of pricing behavior and inflation dynamics. |
| Keywords: | import prices; Exchange rate pass-through; dynamic panel estimation |
| Date: | 2024–10–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:99030 |
| By: | Gabriele Lucchetti (ROCKWOOL Foundation Berlin); Alessandro Ruggieri (CUNEF Universidad) |
| Abstract: | This paper studies how aggregate labor market conditions affect the intragenerational assimilation of immigrants in the hosting country. Using data from the American Community Survey, we leverage variation in the forecast errors for national and local unemployment rates in the US at the time of arrival of different cohorts of immigrants to identify short- and long-run effects of recessions on their careers. We document that immigrants who enter the US when the labor market is slack face large and persistent earnings reductions: a 1 p.p. rise in the unemployment rate at the time of migration reduces annual earnings by 3.9 percent on impact and 1.4 percent after 12 years since migration, relative to the average US native. This effect is not homogeneous across migrants: males without a college education from low-income countries are the only ones who suffer a scarring effect in their assimilation path. Change in the employment composition across occupations with different skill contents is the key driver: were occupational attainment during periods of high unemployment unchanged for immigrants, assimilation in annual earnings would slow down on average by only 3 years, instead of 12. Slower assimilation costs between 1.7 and 2.5 percent of lifetime earnings to immigrants entering the US labor market when unemployment is high. |
| Keywords: | immigration, earnings assimilation, low-skill jobs, business cycle |
| JEL: | E32 J15 J31 J61 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2421 |
| By: | Andres, Pia |
| Abstract: | Low cost solar energy is key to enabling the transition away from fossil fuels. Despite this, the European Union followed the United States’ example in imposing anti-dumping tariffs on solar panel imports from China in 2013, arguing that Chinese panels were unfairly subsidised and harmed its domestic industry. This paper examines the effects of Chinese import competition on firm-level innovation in solar photovoltaic technology by European firms using a sample of 10, 137 firms in 15 EU countries over the period 1999–2020. I show that firms which were exposed to higher import competition innovated more if they had a relatively small existing stock of innovation, but less if their historical knowledge stock fell within the top 10th percentile of firms in the sample. This suggests that newer firms were more able to respond to increased competition by innovating, while firms with a large historical stock of innovation may have been locked into old technological paradigms. As firms with a smaller knowledge stock tended to innovate more overall, trade with China appears to have been beneficial in encouraging innovation among the most innovative firms. However, I also find evidence that import competition increased the probability of exit among firms in the sample. |
| JEL: | R14 J01 |
| Date: | 2024–10–07 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125249 |
| By: | Michal Burzynski; Giovanni Peri |
| Abstract: | We analyze the implications of non-EU immigration for wage distribution and inequality among European workers, by focusing on their migration across local labor markets and within- and across-occupational mobility. To quantify the role of each channel, we build a multi-region, multi-occupation and multi-sector model of labor markets that replicates the regularities of labor mobility across spatial and occupational cells in Europe observed in the data. We find that non-EU immigration increases wages of the majority of European workers, while generating significant sorting across occupations (job upgrading) and inducing negative self-selection of natives into inactivity. The overall level of income inequality rises (especially the between-occupation component), fueled by natives’ mobility across jobs. The sorting of native workers across regions induced by immigration is of lesser importance for welfare and inequality, but shapes the spatial distribution of overall effects. |
| Keywords: | Immigration; Welfare; Sorting; Self-selection |
| JEL: | C68 J24 J31 J62 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:irs:cepswp:2024-09 |
| By: | Rim Berahab |
| Abstract: | The Carbon Border Adjustment Mechanism (CBAM) has emerged as an important policy tool in the European Union's (EU) efforts to combat climate change and prevent carbon leakage. By put ting a price on carbon emissions embedded in certain goods imported into the EU, the CBAM has the potential to impact economies worldwide, including Morocco. This policy brief examines recent CBAM developments and assesses their implications for Morocco's economy and climate change efforts. It analyzes the challenges that the Moroccan economy may face, including implications for costs , competitiveness, compliance requirements, supply chain adjustments, and increased risk exposure. The brief also highlights the opportunities available to Morocco, and the importance of implementing targeted policies, strengthening the regulatory framework, promoting capacity-building initiatives, and fostering cooperation to navigate the CBAM transition period effectively . By understanding the complexities of CBAM and adopting proactive strategies, Morocco can position itself to capitalize on the opportunities and overcome the challenges presented by this transformative policy. |
| Date: | 2023–07 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:pbcoen:pb_29_23 |
| By: | Silvia Albrizio; Hippolyte W. Balima; Bertrand Gruss; Eric Huang; Colombe Ladreit |
| Abstract: | This paper investigates public perceptions and support for policies aimed at integrating immigrant workers into domestic labor markets. Through large-scale surveys involving 6, 300 respondents from Canada, Italy, and the United Kingdom, we provide new insights into attitudes toward migrant integration policies and the impact of different information provisions on belief updating. We identify three key factors that shape policy support: pre-existing stereotypes about immigrants, awareness of labor market integration policies for migrants, and, most critically, the perceived economic and social impact of these policies. Our findings reveal that providing information about the economic effects of integrating immigrants in the labor market significantly alters perceptions and increases support for these policies. Notably, explanations of the economic mechanisms underlying these policies are more effective than simply presenting policy effects or real-life stories of integration challenges. The survey also identifies the primary barriers to policy support, with fairness considerations toward unemployed native workers emerging as the top concern. It reveals that addressing individuals’ specific concerns through tailored mitigation measures can enhance support for policies aimed at better integration migrants. Nevertheless, a significant challenge remains in overcoming mistrust in the government’s commitment and ability to effectively implement these policies and accompanying measures. |
| Keywords: | Labor market integration policies; Survey; Perceptions; Immigration; Online experiment; Political Economy; integration policy; shape policy support; policy effect; mitigation policy; support variable; integration migrant; Migration; Labor markets; Labor market policy; Global |
| Date: | 2024–10–16 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/217 |
| By: | James Cabral; Walter Steingress |
| Abstract: | The arrival of immigrants increases demand for housing and puts upward pressure on shelter prices. Using instrumental variables based on the ancestry composition of residents in US counties, we estimate the causal impact of immigration on local shelter prices. We show that the impact of immigrants is heterogeneous across locations. The increase in shelter prices is greater in counties where immigrants have higher levels of education and in counties that issue fewer building permits. We also find that the house prices respond more to immigration than rent prices do. The larger issuance of building permits for multi-unit homes than for single-unit homes can reconcile the different price reactions. Based on empirical estimates, we find that the predicted contribution of immigration to US shelter price growth is small, around 2%, because the arrival of immigrants accounts for a small share in local population changes. When we apply our estimates to population movements across counties within the United States, our model can predict 50% to 60% of observed shelter price growth over the past 30 years. |
| Keywords: | Housing; Inflation and Prices; International topics; Regional economic developments |
| JEL: | J61 R23 R31 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocawp:24-40 |
| By: | Mustafa Özer; Jan Fidrmuc |
| Abstract: | Large-scale immigration waves can have adverse effects on physical and mental health of the natives. We investigate the impact of the unprecedented influx of Syrian refugees after 2011 on the mental health of native Turks. Our results suggest that immigration may adversely affects the mental health of natives. The adverse effects, however, are conditioned by the underlying political environment: they are strong in opposition-controlled provinces but limited in areas controlled by the Justice and Development Party (AKP) of president Erdoğan. At the individual level, we observe adverse effects of immigration among married, older, less-educated, and employed women, for women with unemployed husbands, and for children with young or less-educated mothers or unemployed fathers. We believe these individual-level patterns reflect the combined effect of increased demand for health-care services and increased competition at the labor and marriage markets. |
| Keywords: | health, mental health, immigration, instrumental variable, natural experiment |
| JEL: | F22 I12 J15 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11399 |
| By: | Marcus Vinicius de Freitas |
| Abstract: | China is the largest developing country. Africa is the continent with the largest number of developing countries. The China-Africa economic relationship has developed rapidly over the last two decades. China has increased its investment in Africa over the last four decades. Flows surged from $75 million (2003) to $5 billion (2021). This has had both positive and negative impacts on Africa. Infrastructure improvement, job creation, and overall economic growth can be listed as positive results, leading to improved connectivity, trade, and transportation in a continent where infrastructure integration has always been challenging. Creating such opportunities in Africa has supported lower unemployment rates, particularly among young people, which is fundamental in a continent that enjoys a positive demographic bonus. |
| Date: | 2023–08 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:pb_30-23 |
| By: | Eduardo Andrade; Otaviano Canuto |
| Abstract: | Most high-income countries will experience declines in their populations over the next few decades. Some negative consequences of aging are on the horizon: greater fiscal imbalances and risks of economic stagnation. Immigration may by a way for those countries to mitigate the tendency. On the source side of immigration flows, brain drain is a risk. The policy paper presents the case of Japan, a nation that has grappled with the consequences of a declining and aging population for several years, as an example for other countries destined to confront similar circumstances in the forthcoming decades. Population aging is a strong trend in place. Some negative consequences of aging are on the horizon: greater fiscal imbalances and the risk of economic stagnation. Most high-income countries will experience a decline in their populations over the next few decades, and immigration is a way to offset this tendency. On the source side of immigration flows, ‘brain drain’ is a risk. |
| Date: | 2024–04 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:pp_03-24 |
| By: | Jackson, Bella |
| Abstract: | The Age of Mass Migration saw unprecedented flows of Italian migrants to the US and Argentina, mostly directed to NYC and Buenos Aires. Droller, Fizsbein and Pérez claim that Italians in Argentina were more skilled than those in America. If so, why did higher-skilled Italians move to Argentina over America when real wages were higher in America than Argentina? I assemble datasets using Argentine and American censuses and wage data to compare literacy rates and occupational compositions of Italian immigrants between these countries and cities. I create a regression model to contrast the returns to skills between Italians in Argentina and America and I determine skill premia for both Italian cohorts using income data. I find that Italian immigrants in Argentina were more skilled than Italian immigrants in America, due to higher literacy rates and a higher-skilled occupational composition. I argue that the skill scarcity in Argentina, and higher returns to skills and skill premia than America, explains the greater appeal of Argentina for skilled Italian migrants. I stress the importance of considering returns to skills and skill premia when studying migratory flows between destination countries. |
| Keywords: | gender pay gap; gender equality; economic growth; human development; South Korean growth; marital status; trade unions |
| JEL: | J24 J61 |
| Date: | 2024–10–21 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125829 |
| By: | Hung Tran |
| Abstract: | The Global South features prominently in the context of geopolitical rivalry and efforts by developing countries to change the current international economic and financial architecture. While there are questions about whether some countries—such as China or Russia—should be considered parts of the Global South (GS) , it is obvious that Africa is at the center of the group. Different aspects of Africa—its potential, its reality, and its efforts to realize its potential—embody the challenges and the prospects of the GS in general. More specifically, the difficulties Africa faces, how it will deal with them, its progress or lack of progress, and the changes it would like to see in the current international economic and financial system to help it overcome the obstacles to development, help make clear what the GS is all about. Africa’s desirable action plan constitutes a comprehensive agenda GS countries can rally around. On the other hand, the various fault lines inherent in Africa typify the lack of cohesiveness that has kept the GS from speaking with one voice, able to pull its weight in international fora. Instead, Africa, and similarly the GS, have been viewed by major powers as arenas of competition for influence. As such, how Africa deals with these problems will offer benchmarks to judge how the GS has progressed. In other words, Africa embodies the agenda of the GS; its progress drives that of the GS. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:pb_32_24 |
| By: | Isabelle Tsakok |
| Abstract: | If the recent peaceful transfer of power in Madagascar heralds a new trend, then the Malagasy people can dream big. For decades, the exercise of economic-cum-political power in the hands of a tiny elite has held the entire nation hostage. Today, the high poverty rate—around 80% (2021) stands in stark contrast to the natural resource abundance of this huge enormous island. There is hope, however, that with political stability, the Plan d’Émergence Madagascar (PEM) President Andry Rajoelina will undertake critical investments and reforms the Plan d’Émergence Madagascar (PEM) under President Andry Rajoelina will undertake key critical investments and reforms. If these initiatives persist, Madagascar can grow and exploit the historic market opportunities offered by the African Continental Free Trade Area (AfCFTA). Major sectors like agriculture and agri-business; tourism; textile and apparel industry hold promise for making a major significant contribution to poverty reduction in the short to medium terms, thus strengthening the current fragile recovery towards a more food secure and resilient Madagascar. |
| Date: | 2022–11 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:pbecon:pb_64-22 |
| By: | Trung V. Vu |
| Abstract: | This paper establishes a statistically and economically significant cross-country relationship between national responses to climate change and genetic distance, which is a proxy for countries’ dissimilarities in cultures, ancestry, and historical legacies associated with long-term exposure to divergent historical trajectories. It finds that countries that are genetically distant to the world-leading nation-state of climate change mitigation tend to experience barriers to the cross-border diffusion of climate change policies and hence exhibit worse responses to climate change. A potential explanation is that climate change polices are more likely to spread between closely related countries with more similar preferences for the provision of the public goods of environmental and climate protection. The findings imply that strengthening climate change mitigation requires overcoming obstacles to international policy diffusion. |
| Keywords: | genetic distance, long-term relatedness, climate change, policy diffusion |
| JEL: | O11 O13 O33 Q54 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2024-66 |
| By: | Matthieu Boussichas (FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Patrick Guillaumont (FERDI - Fondation pour les Etudes et Recherches sur le Développement International) |
| Abstract: | The financial difficulties faced by many poor and vulnerable countries in ensuring their sustainable development have been exacerbated by the major crises the world has encountered over the past four years. These crises have highlighted the need for a profound reform of the international development finance architecture. To contribute to this objective, Ferdi established in 2022 an eponymous chair led by a group of independent and highly experienced French-speaking personalities. The reflections of this group, notably in preparation for the Summit for a New Global Financing Pact in Paris in June 2023, have resulted in the organization of eight conferences on the key issues of development finance and the publication of more than twenty working papers and briefs, from which FERDI has proposed ten recommendations for the reform of this architecture. |
| Keywords: | Development financing, Vulnerable countries, international architecture of development finance |
| Date: | 2024–10–22 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04748395 |
| By: | Rim Berahab; Uri Dadush |
| Abstract: | The recently signed African Continental Free Trade Agreement represents a countercurrent to protectionist tendencies across the Atlantic and the Pacific, and may well move the economic integration of the African continent forward. Translating the vision into action, however, will call upon signatories to undertake deeper domestic reforms and to confront specific challenges related to the agreement itself. This brief explains why the agreement is important for Africa and identifies policy implications for Africa and for third countries |
| Date: | 2018–04 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:pb%20 |