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on International Trade |
|
Issue of 2025–05–19
thirty papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Marchal, Léa; Ourens, Guzmán; Sabbadini, Giulia |
| Abstract: | We show that high-skilled immigrants earn higher wages than comparable natives in exporting firms, while low-skilled immigrants do not. Using matched employer-employee and customs data from Portugal, we document a reversal of the migrant-native wage gap among high-skilled workers in exporting firms. We develop a model with heterogeneous firms and directed search, in which high-skilled immigrants lower export costs through destination-specific knowledge. The model yields an information premium that explains the wage gap reversal. We provide evidence consistent with this mechanism using information on the origin country of the workers and the destination country of the firm's exports. Our results identify a novel channel through which trade reduces wage inequality conditional on the skill level and origin country of the employees, and provide new micro-level evidence on the role of workers in shaping firm-level internationalisation. |
| Keywords: | Export, Firm, Immigrant, Wage |
| JEL: | F14 F22 F16 J15 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:dicedp:316450 |
| By: | Aaron B. Flaaen; Fariha Kamal; Eunhee Lee; Kei-Mu Yi |
| Abstract: | Global value chains (GVC) are a pervasive feature of modern production, but they are hard to measure. Using confidential microdata from the U.S. Census Bureau, we develop novel measures of the linkages between U.S. manufacturing establishments’ imports and exports. We document three new GVC patterns. First, for every dollar of exports, imported inputs represent 13 cents in 2002 and 20 cents by 2017, substantially higher than what aggregate data suggests. Second, we find strong complementarities between input and output markets reflected in “round-trip” trade linkages where an establishment sources inputs from and exports output to the same country. Third, we find a strong positive association between regional trade agreements and GVC trade flows. The aggregate data used to build global input-output tables requires proportionality assumptions that we find mute these relationships. Finally, with a simple model, we show that the round-trip results are consistent with a notion of firm and country-specific fixed costs that are at least partially common between sourcing (imports) and foreign sales (exports). |
| JEL: | F1 F14 O51 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33724 |
| By: | Irene Iodice; Camille Reverdy; Irene Iodice |
| Abstract: | This paper examines how EU Technical Barriers to Trade (TBTs) reshape firms’ global supply chains, extending Grossman et al. (2024) to incorporate adaptation costs between sourcing partners. To test the model’s predictions, we construct a novel dataset linking EU TBTs to French firm-level import data, trade agreement depth, and a new text-based index of regulatory dissimilarity. We find that greater regulatory distance with the EU significantly reduces both the likelihood and volume of imports. EU TBTs trigger substantial trade diversion: firms shift sourcing toward harmonised suppliers (value +4.4%, quantity +2.1%, entry +2.1pp) and away from non-EU partners (quantity –4.3%, exit +1.3pp, entry –2.6pp). This diversion is significantly weaker for products with high relationship-specific investments, underscoring the role of switching costs in supply chain reconfiguration. |
| Keywords: | NTMs, TBTs, sourcing decisions, trade diversion, economic integration. |
| JEL: | F13 F14 F15 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11829 |
| By: | Tiago Cavalcanti; Pedro Molina Ogeda; Emanuel Ornelas |
| Abstract: | We examine the indirect effects of the US-China trade war on Brazil’s labor market. Using industry-specific tariff changes and the sectoral employment distribution across local labor markets, we construct a measure of regional exposure to the trade conflict. Following higher exports to China, our findings reveal that regions more exposed to Chinese retaliatory tariffs on US exports experienced a relative increase in formal employment and wage bills. In contrast, American tariffs on Chinese exports had no significant impact on Brazilian labor markets. These results contribute to a better understanding of the intricate worldwide implications of bilateral trade wars. |
| Keywords: | trade war, trade diversion, local labor markets, Brazil. |
| JEL: | D31 F14 F16 F66 J23 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11839 |
| By: | Bojan Shimbov (University Jaume I, Institute of International Economics & Department of Economics); Andrea Éltető (Institute of World Economics, CERS Hungarian Academy of Sciences); Maite Alguacil (University Jaume I, Institute of International Economics & Department of Economics) |
| Abstract: | Producing and incorporating technologically complex goods in the production process is a fundamental pillar to achieving long-term economic development. In this sense, integration into the global production and trade networks is viewed by many countries as a way to achieve this technological improvement. This paper examines the relationship between global value chain (GVC) integration and technology absorption through trade in high-tech products of Central and Southeast European countries over the period 1996-2019. We construct a GVC participation measure applying the latest Broad Economic Categories (BEC) classification that distinguishes between generic and specific intermediate goods. We also analyse the technology structure of exports at a country level and the sectoral level. Using panel data estimation techniques, we find that higher participation in GVCs enhances the export of high-tech products at both country and sectoral levels. This result is robust to different regression models including the use of lagged control variables and instrumental variables. |
| Keywords: | Global Value Chains, Technology Structure of Exports, Central and Southeastern European countries |
| JEL: | F14 F60 C23 C26 |
| Date: | 2024–12–15 |
| URL: | https://d.repec.org/n?u=RePEc:aoh:conpro:2024:i:5:p:95-119 |
| By: | Norris Keiller, Agnes |
| Abstract: | In 2016, the UK voted to leave the European Union and growth in UK manufacturing investment ground to a halt. This paper uses administrative trade data to investigate the causal relationship between these events. We exploit firm-level customs data from 2005 on-wards to quantify firms' exposure to EU and non-EU trade in inputs and outputs. Focusing on investment as a forward-looking, dynamic outcome (since the UK did not leave the EU until 2021), we relate firms' investment to their pre-referendum EU exposure. This analysis shows firms' exposure to EU trade had a negative impact on investments post-referendum, especially in 2021. Estimated impacts are stronger for import exposure than for export exposure and there is some evidence of depressed investment from exposure to non-EU imports, likely due to the large depreciation in sterling that followed the vote. Had the UK voted to remain in the EU, these estimates imply manufacturing investment would have been over 7% higher, about £2.4 billion annually between 2016 and 2021. |
| Keywords: | firm level; investment; international trade; European Union; manufacturing; Brexit |
| JEL: | F14 L60 F50 D20 |
| Date: | 2024–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126796 |
| By: | Aldaba, Rafaelita M. |
| Abstract: | Amid the evolving US-China tariff realignment and the broader restructuring of global value chains, this paper evaluates the vulnerability and strategic positioning of the Philippines alongside four other ASEAN economies—Indonesia, Malaysia, Thailand, and Vietnam. For the ASEAN-5, the key challenge lies in minimizing exposure to import flooding from displaced Chinese goods and potential exclusion from global value chains if competitiveness falters, while also capitalizing on trade and investment diversion opportunities. Using a Tariff Exposure Composite Index (TECI), the assessment reveals that the Philippines and Malaysia fall within the moderate-to-low risk tier, owing to relatively low reciprocal tariff rates and strong exemption coverage—particularly for high-value electronics. Indonesia is classified as moderate risk but is more vulnerable due to limited exemption coverage and a dependence on low-tech, commoditized exports. Meanwhile, Vietnam and Thailand are in the high-risk tier, driven by steep tariffs, significant US export dependence, and only moderate levels of tariff exemption. Absent a coordinated and forward-looking policy response, the Philippines and its ASEAN neighbors risk becoming passive bystanders in an increasingly fragmented trade landscape. However, with strategic alignment of trade and industrial policy, the deployment of robust trade defense tools, and deeper ASEAN collaboration, these economies can reframe the current disruption as a platform to reposition themselves as high-trust, tariff-resilient production hubs in the new global trading order. Comments on this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph. |
| Keywords: | US reciprocal tariffs;global value chain;industrial policy |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:phd:dpaper:dp_2025-06 |
| By: | Cody Kallen |
| Abstract: | With the rise of geopolitical tensions, public commentary and new research have raised concerns about the reallocation of economic activities along geopolitical lines. Early evidence suggests that trade patterns, supply chains, and investment are shifting away from China and toward alternative countries. |
| Date: | 2025–04–10 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfn:2025-04-10 |
| By: | Bhaumik, Sumon Kumar; Driffield, Nigel; Estrin, Saul; Razeq, Zarlasht M. |
| Abstract: | This paper examines the interplay of geopolitics, multinational enterprise (MNE) strategies, and host-country policies in shaping foreign direct investment (FDI) flows. We move beyond the traditional focus on MNE decisions by incorporating insights from international relations theory to analyze how geopolitical alignment influences MNE global strategies and host-country policy responses. We develop a framework that considers three main dimensions related to home and host countries: their political alignment, which affects their respective availability of outside options, and the technology gap between them and the political system in the host country. On this basis, we explore the dynamic interplay between international geopolitical agendas, MNE investment strategies, and local investment promotion agency (IPA) policy choices. Our analysis shows that while home–host geopolitical alignment can facilitate FDI and simplify policy choices, particularly in democracies, the absence of alignment necessitates a more nuanced IPA response. Our research indicates that IPA policies must consider geopolitical alignment, benefits distribution across various stakeholders, and the need to foster embeddedness and long-term engagement. |
| Keywords: | international politics; investment policies; technological capabilities; political alignment |
| JEL: | J50 |
| Date: | 2025–04–22 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127373 |
| By: | Johansson, Eleanor (The Swedish University of Agricultural Sciences); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN)) |
| Abstract: | It has been suggested that an intensified trade war between China and the US could reduce CO2 emissions associated with exports. We develop an export-greenfield-endogenous merger model, showing that significantly increased tariffs can enable domestic firms to undertake entry-deterring acquisitions. This forces foreign firms to remain exporters, which, in turn, leads to higher emissions. Strong competition policies and support for green technologies can help address this issue, resulting in lower emissions. Furthermore, we show that implementing an emissions trading system combined with a carbon border adjustment mechanism has effects comparable to those of increased tariffs. |
| Keywords: | Tariff war; CO2 emissions; M&A; Endogenous mergers emission trading system; Carbon Border Adjustments; Competition policy |
| JEL: | F23 L40 Q56 Q58 |
| Date: | 2025–05–07 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1526 |
| By: | Adrien Auclert; Matthew Rognlie; Ludwig Straub |
| Abstract: | We study the short-run effects of import tariffs on GDP and the trade balance in an open-economy New Keynesian model with intermediate input trade. We find that temporary tariffs cause a recession whenever the import elasticity is below an openness-weighted average of the export elasticity and the intertemporal substitution elasticity. We argue this condition is likely satisfied in practice because durable goods generate great scope for intertemporal substitution, and because it is easier to lose competitiveness on the global market than to substitute between home and foreign goods. Unilateral tariffs do tend to improve the trade balance, but when other countries retaliate the trade balance worsens and the recession deepens. Taking into account the recessionary effect of tariffs dramatically brings down the optimal unilateral tariff level derived in standard trade theory. |
| JEL: | E0 F10 F40 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33726 |
| By: | Costas Arkolakis; Federico Huneeus; Yuhei Miyauchi |
| Abstract: | We study the aggregate implications of production network formation in a quantitative multi-location general equilibrium trade model. Firms search for suppliers and buyers across locations subject to matching frictions, generating a gravity structure of production networks. We develop sufficient statistics for global and regional welfare and characterize the deviations from the fixed network environment, including the role of inefficiency and amplification effects of search and matching. We calibrate our multi-sector model to Chilean domestic and international firm-to-firm trade data and show that our model can rationalize the observed increase in domestic supplier linkages after Chile’s recent trade agreements. Abstracting from endogenous networks reduces Chile’s aggregate welfare losses by 20 percent when import costs are raised to their pre-agreement levels, consistent with inefficiently low equilibrium levels of search. Fixing the trade elasticity, the welfare gains from trade relative to municipality autarky drop by 40 percent due to amplification effects of search. |
| Keywords: | production networks, welfare gains from trade, search and matching. |
| JEL: | F10 R13 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11833 |
| By: | Felipe Benguria; Felipe Saffie |
| Abstract: | We study the role played by Chinese state–owned firms during the US–China trade war. Based on measures constructed from Chinese firm–level customs microdata, we show that the presence of state–owned enterprises (SOEs) in Chinese imports led to a large negative impact on US exports in addition to the effect of tariffs. Abstracting from general equilibrium effects, while tariffs account for an 8% decline in US exports to China, the SOE effect accounts for a 4% decline. This SOE effect was concentrated toward the end of 2018 and start of 2019, point at which a vast majority of products had already been targeted by tariffs. Further, the SOE effect was concentrated among agricultural goods and industrial supplies, as well as among industries located in US regions with a high share of Republican votes. We also find that US exports were rerouted to the rest of the world in response to Chinese tariffs, but not in response to reduced imports by Chinese SOEs. |
| JEL: | F1 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33599 |
| By: | Kimberly A. Clausing; Jonathan M. Colmer; Allan Hsiao; Catherine Wolfram |
| Abstract: | We study carbon border adjustment mechanism (CBAM) policies, as currently being implemented by the EU and UK. Policy discussions have cited three motivations and one concern. CBAMs can improve domestic competitiveness in regulated markets, reduce emissions leakage to unregulated markets, and encourage other countries to tax carbon. But CBAMs may particularly disadvantage lower-income trading partners. We evaluate these forces with a quantitative equilibrium model and plant-level data on aluminum and steel production worldwide. Our data cover the most emissions-intensive and heavily traded sectors targeted in the first phase of EU and UK implementation. We find that CBAMs can effectively boost competitiveness, curb leakage, and encourage regulation, while also avoiding disproportionate impacts on lower-income countries. |
| JEL: | F13 H23 O19 Q56 Q58 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33723 |
| By: | Bojan Shimbov (University Jaume I, Institute of International Economics & Department of Economics); Inmaculada Martínez-Zarzoso (University Jaume I, Institute of International Economics & Department of Economics); Maite Alguacil (University Jaume I, Institute of International Economics & Department of Economics) |
| Abstract: | The main goal of this paper is to analyze the impact of carbon pricing, as a means to reducing carbon dioxide (CO2) emissions, on international trade in goods using a pane dataset of OECD and other developing countries with data over the period 2007 to 2018. We use Poisson pseudo-maximum likelihood regressions (PPML) with multi-dimensional fixed effects to estimate a gravity model of trade with panel data. To conduct our empirical analysis, we combine data on emissions from fuel combustion, which account for approximately 80 percent of global human-induced CO2 emissions and have been the main target of carbon pricing, with detailed international trade data using the HS 6-digit codes and information on the market-based policies applied by the countries over the sample period. Our findings confirm that, regardless of the environmental stringency variable used, pollution constraints have a significant impact on trade flows, with this effect being particularly pronounced in the most polluting industries. |
| Keywords: | Environment and trade, Environmental policy, Pollution haven hypothesis, Gravity models, OECD |
| JEL: | F18 H23 Q52 Q56 Q58 |
| Date: | 2024–12–15 |
| URL: | https://d.repec.org/n?u=RePEc:aoh:conpro:2024:i:5:p:62-87 |
| By: | Haonan LI; Yasuyuki TODO |
| Abstract: | This study investigates the direct effect of a country's participation in China’s Belt and Road Initiative (BRI) on its exports to China, as well as its indirect effect on other countries' exports to China. Using an event study approach, staggered difference-in-differences methodology, and spatial econometric models, we find that participation in the BRI significantly increases member countries’ exports to China, partly because of improvements in infrastructure. We also find evidence showing that countries without strong pre-existing political ties with China are more likely to experience greater export gains after joining the BRI. Furthermore, employing the Spatial Durbin Model, we find that the BRI has a significantly negative indirect effect on exports of countries with a manufacturing share similar to those of BRI members. This result likely reflects heightened competitive pressures, as the BRI increases exports to China from members. However, when using a spatial weight matrix constructed based on geographic distance, we find no significant indirect effect, suggesting that the positive effect of the BRI does not spill over to geographic neighbor countries through infrastructure development. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25038 |
| By: | Felipe Brugués; Ayumu Ken Kikkawa; Yuan Mei; Pablo Robles |
| Abstract: | This paper assesses the impact of the North American Free Trade Agreement on Mexican manufacturing plants’ output prices and markups. We distinguish between Mexican goods that are exported and those sold domestically, and decompose their prices separately into markups and marginal costs. We then analyze how these components were affected by the reductions in Mexican output tariffs, intermediate input tariffs, and U.S. tariffs on Mexican exports. We find that domestically sold products saw a decline in prices as Mexican plants faced more competition and gained access to cheaper inputs. Prices of exported goods fell only slightly as plants increased their markups in response to a favorable competitive environment due to declines in U.S. tariffs. |
| JEL: | F12 F14 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33516 |
| By: | Rodolphe Desbordes; Markus Eberhardt; Mario Larch |
| Abstract: | We study the causal effect of country-specific democratic regime change on bilateral trade flows, extending standard structural gravity empirics to ‘heterogeneous gravity’ estimated at the country-pair level. Our original difference-in-differences implementation accounts for selection into regime change, multilateral resistance, globalisation effects, and spatial dependence. We initially find average effects of 46% higher exports for countries after thirty years in democracy, but demonstrate that these effects are driven by the democratic dividend for income: the causal chain runs from democracy to economic prosperity to trade, and democracy appears to have a limited ‘direct’ effect on trade flows.K |
| Keywords: | trade gravity model, democratic regime change, monadic variables, heterogeneity, panel data, interactive fixed effects |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:not:notgep:2025-02 |
| By: | Defever, Fabrice; Riaño, Alejandro; Varela, Gonzalo |
| Abstract: | This paper evaluates the impact of two large export finance support schemes on firm-level export performance. The Export Finance Scheme (EFS) and the Long-Term Finance Facility for Plant & Machinery (LTFF), provide loans at subsidized interest rates for Pakistani exporters to finance working capital and the purchase of machinery and equipment respectively. We combine customs data with information on firms' participation in each program between 2015 and 2017 and use matching combined with difference-in-differences to estimate the effect of the subsidies on firms' export values, the number of products exported and the number of destinations they serve. We find that both programs deliver a large and positive impact on export growth rates - primarily along the intensive margin - and do so in an effective way relative to the direct financial cost of the subsidies. |
| Keywords: | trade finance; export subsidies; working capital; machinery and equipment; export margins; Pakistan |
| JEL: | G21 F13 F14 |
| Date: | 2024–08–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126843 |
| By: | Conconi, Paola; Cucu, Florin; Gallina, Federico; Nordotto, Mattia |
| Abstract: | The European Union (EU) has long been accused of suffering from a "democratic deficit". The European Parliament (EP), the only EU institution directly elected by citizens, is seen as having limited powers. Moreover, its members (MEPs) are often portrayed as unresponsive to the interests of their constituents due to the second-order nature of European elections: instead of being shaped by EU policies, they are driven by domestic politics. In this paper, we provide evidence against these Eurosceptic arguments using data on a key policy choice made by MEPs: the approval of free trade agreements. First, we show that MEPs are responsive to the trade policy interests of their electorate, a result that is robust to controlling for a rich set of controls, fixed effects, and employing an instrumental variable strategy. Second, we carry out counterfactual exercises demonstrating that the EP's power to reject trade deals can help explain why only agreements with broad political support reach the floor. Finally, against the idea that European elections are driven solely by domestic politics, we find that the degree of congruence between MEPs' trade votes and their electorate's interests affects their re-election chances. |
| Keywords: | EU democratic deficit; European Parliament; roll-call votes; trade agreements |
| JEL: | F13 D72 |
| Date: | 2024–10–15 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126839 |
| By: | Heblich, Stephan; Redding, Stephen J.; Zylberberg, Yanos |
| Abstract: | We examine the distributional consequences of trade using the New World Grain Invasion that occurred in the second half of the 19th century. We use a newly-created dataset on population, employment by sector, property values, and poor law transfers for over 10, 000 parishes in England and Wales from 1801-1901. In response to this trade shock, we show that locations with high wheat suitability experience population decline, rural-urban migration, structural transformation away from agriculture, increases in welfare transfers, and declines in property values, relative to locations with low wheat suitability. We develop a quantitative spatial model to evaluate the income distributional consequences of this trade shock. Undertaking counterfactuals for the Grain Invasion, we show that geography is an important dimension along which these income distributional consequences occur. |
| Keywords: | international trade; income distribution; geography |
| JEL: | F14 F16 |
| Date: | 2024–09–12 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126842 |
| By: | Wang, Hanyi |
| Abstract: | This paper examines carbon leakage through supply chain recalibration in response to European carbon policies. Using input-output data and a high-frequency identification approach for carbon policy shocks, this paper investigates whether stringent carbon regulations in Europe affect the imports of carbon-intensive inputs from major emerging economies lacking similar policies. The findings reveal a temporary increase in the rate of change of imports from emerging countries relative to all inputs in the carbon-intensive sectors following carbon policy shocks, with effects peaking after two years before dissipating. While not directly quantifying emissions transfer, this study suggests some evidence of short-term input substitution patterns consistent with carbon leakage through international supply chains. |
| Keywords: | trade & investment, climate change |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:diedps:316405 |
| By: | Maria Bas; Lionel Fontagné; Irene Iodice; Gianluca Orefice |
| Abstract: | This paper investigates the role played by firms' managerial skills in the heterogeneous reaction of exporters to common exogenous changes in their international competitiveness (here captured by changes in the real exchange rate). Relying on a simple theoretical framework, we show that firms with better managerial skills have higher profits, market power, and are able to adapt their markup more when faced with a competitiveness shock. We test this prediction relying on detailed firm-product-destination level export data from France for the period 1995-2007 matched with specific information on the firms' share of managers. Our findings show that managerial intensive firms have larger exporter price elasticity to real exchange rate variations. The effect is not trivial: in the wake of a depreciation, exporters whose management intensity is one standard deviation higher than the average, increase their prices by 51% to 73% more than the average exporter. This finding is robust to controlling for the alternative explanations suggested by the previous literature to explain the heterogeneous pass-through of firms. |
| Keywords: | Exchange Rate Pass-through;Heterogeneous Pricing-to-market;Managerial Skills |
| JEL: | F12 F14 F31 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cii:cepidt:2025-04 |
| By: | Takagi, Shinji |
| Abstract: | The paper discusses the little-known exchange rate system of Japanese- occupied North China during the Second Sino-Japanese War, whereby exporters were given the right to import in the form of a piece of yellow paper, which could be sold in the secondary market. In an environment of rapid inflation where North China's yuan was pegged to the Japanese yen and devaluation was not politically feasible, the system incentivized exports by allowing the exporters to offset their losses with the profits from selling goods imported, or the right to import goods, at the overvalued exchange rate. Following the start of the Pacific War, the system evolved to become a major scheme of facilitating trade between North and Central China under Japanese occupation. The paper, utilizing archived classified documents, reconstructs analytically how the system operated. Further, our analysis based on monthly average data confirms that the secondary market pricing of yellow paper broadly mimicked the operation of a flexible exchange rate. The system died a natural death when exploding inflation in Central China eliminated the export disincentive in North China. |
| Keywords: | linked trade, Japanese-occupied China, yen bloc, special yen, Second Sino Japanese War |
| JEL: | F31 F33 E42 N25 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:agi:wpaper:02000206 |
| By: | Stefania Miricola; Armando Rungi; Gianluca Santoni |
| Abstract: | This study examines how multinational enterprises (MNEs) structure ownership chains to coordinate subsidiaries across multiple national borders. Using a unique global dataset, we first document key stylized facts: 54% of subsidiaries are controlled through indirect ownership, and ownership chains can span up to seven countries. In particular, we find that subsidiaries further down the hierarchy tend to be more geographically distant from the parent and often operate in different time zones. This suggests that the ease of communication along ownership chains is a critical determinant of their structure. Motivated by these findings, we develop a location choice model in which parent firms compete for corporate control of final subsidiaries. When monitoring is costly, they may delegate control to an intermediate affiliate in another jurisdiction. The model generates a two-stage empirical strategy: (i) a trilateral equation that determines the location of an intermediate affiliate conditional on the location of final subsidiaries; and (ii) a bilateral equation that predicts the location of final investment. Our empirical estimates confirm that the ease of communication at the country level significantly influences the location decisions of affiliates along ownership chains. These findings underscore the importance of organizational frictions in shaping global corporate structures and provide new insights into the geography of multinational ownership networks. |
| Keywords: | Multinational Firms;Ownership Structure;Corporate Control |
| JEL: | F23 L22 L23 G34 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cii:cepidt:2025-05 |
| By: | Michael Koch; Antonella Nocco |
| Abstract: | This paper introduces a novel mechanism by emphasizing benefits for firms through participation in buyer networks among firms that source the same locally produced inputs. In a first step, we utilize register-based data from Denmark to generate a firm-specific buyer network variable which relies on firms’ industrial input structures and imports. Utilizing this proxy we provide evidence of cost savings from network participation, as larger buyer networks reduce firms’ input demand. Subsequently, we develop a trade model incorporating vertical linkages and introduce network effects that result in savings in intermediate costs. Our theory posits that the magnitude of these savings may be associated with the effectiveness of knowledge transmission among network participants. Consequently, firms operating in regions with efficient knowledge transmission networks may realize greater savings in intermediate input costs, leading to increased profits from local and export sales. In a last step, we provide empirical evidence supporting our theoretical predictions by demonstrating the positive impact of buyer networks based on relationship-specific products on domestic firm revenues. |
| Keywords: | new trade theory, vertical linkages, network effects. |
| JEL: | F12 F15 R12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11815 |
| By: | Horioka, Charles Yuji |
| Abstract: | The finding of Feldstein and Horioka (1980) that domestic saving and domestic investment are highly correlated across countries despite the rapid globalization and liberalization of financial markets in recent decades has been regarded as a Puzzle or Paradox. However, in this paper, we show that countries as a whole may not be able to transfer their capital abroad and that the Feldstein-Horioka Finding of domestic saving and domestic investment being highly correlated across countries may arise even if there are no frictions in financial markets and even if individual investors can freely transfer their capital abroad if there are frictions in goods markets such as transport costs, tariffs, nontariff barriers, the cost of regulatory compliance, etc. In fact, there is evidence that frictions in goods markets are a more serious impediment to countries as a whole being able to transfer their capital abroad than frictions in financial markets, especially in the short run. |
| Keywords: | Capital controls, fallacy of composition, Feldstein-Horioka Finding, Feldstein-Horioka Puzzle or Paradox, frictions in financial markets, frictions in goods markets, global interest rate, globalization and liberalization of financial markets, interest parity, interest rate equalization, international capital flows, international capital mobility, saving-investment correlations, saving retention coefficient, trade costs, trade frictions |
| JEL: | F15 F21 F32 F36 F41 G15 |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:agi:wpaper:02000074 |
| By: | Drivas, Kyriakos; Anagnosti, Afroditi |
| Abstract: | Innovation and exports are closely related concepts that are frequently explored in the academic literature, particularly in the fields of economics, business strategy, and intellectual property management. The purpose of this paper is to explore these concepts via two complementary approaches. First, while the relationship between innovation and exports is well established, the specific contributions of different stages of innovation remain underexplored. We therefore use the principle of relatedness and examine how different stages of innovation—namely technology, market, and design activities—are related to export specialisation. The results show that technology- and market-related capabilities serve as key drivers of new export specialisation. Second, we conducted an in-depth survey of Greek inventors with the aim to identify the motives, challenges and opportunities they face throughout the complex process of patenting and valorisation. The study reveals significant differences in the patenting motivations of Greek inventors according to their affiliation. Independent inventors and university-affiliated researchers see patents primarily as tools for commercialisation, exploiting them through licensing or sales. In contrast, large companies focus on strategic patenting to protect products and block competitors. |
| Keywords: | innovation; export; patents; inventors; motives to file IPRs |
| JEL: | R14 J01 L81 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128033 |
| By: | Imaduddin Abdullah; Andy Sumner |
| Abstract: | This paper examines Indonesia's upgrading within the global nickel value chain. Indonesia's transformation from a major nickel ore exporter into an integrated producer of refined nickel products offers important lessons for resource-rich developing countries seeking economic diversification. Drawing on evidence from Indonesia's strategic shift towards midstream and downstream manufacturing, this paper examines how policy choices and state intervention can reshape a country's position in global value chains. |
| Keywords: | Structural transformation, Industrialization, Industrial policy, Indonesia |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-29 |
| By: | Takagi, Shinji |
| Abstract: | The paper uses the panel data methodology to reassess the scholarly consensus in the economic history literature ("silver-standard myth") that attributes Japan's export boom of the late nineteenth century to the country's fortuitous adoption of the silver standard. The paper, based on the annual panel data of Japanese trade flows with five gold- and five silver-standard countries for 1885-97, finds that the growth of exports was consistently higher for silver- than for gold-standard destinations (though the difference was statistically not significant), refuting the near-consensus view that the falling relative price of silver stimulated exports to gold-standard countries. This finding should be both logical and intuitive. First, given the higher rate of inflation in Japan, the yen's real exchange rate did not depreciate during the silver-standard era. Second, Japan, as a small open economy, was a price-taker in world markets. The expansion of Japanese exports can best be understood as resulting from Japan's increased capacity to produce goods, a surplus of which the country was able to sell at given world prices. |
| Keywords: | silver standard, Japan and the silver standard, early industrialization in Japan, impact of the silver standard on Japanese trade |
| JEL: | F33 E42 N15 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:agi:wpaper:02000146 |