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on International Trade |
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Issue of 2025–09–01
nine papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Kym Anderson; Glyn Wittwer |
| Abstract: | The announcements by President Trump in April 2025, of unilateral hikes of 10-50 percentage points on US import tariffs on all countries’ goods, are under threat of coming into force on 8 July 2025. This article estimates their likely effects on trade in alcoholic beverages, using a global model of national beverage markets. Various scenarios are compared. They suggest that if the tariff hike was restricted to just 20% on goods from the European Union, the value of global trade in each of the three beverages would shrink by one-tenth. But the US tariff hikes are to apply to all countries’ goods, which is estimated to shrink global exports by 13% for wine, 22% for spirits and 33% for beer. In that broader scenario, most countries’ wine exports would shrink, but exports of beer and spirits would expand for some countries thanks to the trade divergence generated by the varying tariff hikes. If the increasing uncertainty associated with these developments led to a cumulated 2% drop in consumer spending, virtually all wine-exporting countries would sell less wine to both the US and the rest of the world. That is, wine trade destruction would outweigh trade diversion. |
| JEL: | D12 F13 F14 Q17 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pas:papers:2025-09 |
| By: | Dumont, Michel; Michel, Bernhard; Rayp, Glenn |
| Abstract: | Various crises as well as ongoing geopolitical tensions have reduced trust in the international supply of goods. To inform policy in this context, we propose a methodology to determine for which goods Belgium’s imports and exports are highly concentrated among a limited number of non-EU countries, whether these goods are strategic and whether the dependence is persistent. We also look at indirect dependence within global supply chains and estimate the impact of potential disruptions on the Belgian economy. Belgium's import and export dependence on non-EU countries has remained fairly constant during the years 2014-2023. We find that the importance of the United States as a trading partner has decreased while that of China has increased. In addition, Belgium’s indirect dependence on non-EU countries turns out to be substantial, for both imports and exports. According to our results, the loss in activity due to a disruption in the imports of strategic goods with strong and persistent dependence on non-EU countries would amount to 2% of Belgian manufacturing value added. For disruption in exports, this would be 0.5%. |
| Keywords: | imports and exports, global supply chains, non-EU dependence, strategic goods |
| JEL: | C67 F14 F15 F23 F52 F68 L23 L52 |
| Date: | 2024–12–03 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125112 |
| By: | Wei Luo (GeospatialX Lab, Geography Department, National University of Singapore, Singapore); Siyuan Kang (GeospatialX Lab, Geography Department, National University of Singapore, Singapore); Qian Di (Vanke School of Public Health, Tsinghua University, Beijing) |
| Abstract: | US-China trade tensions, the COVID-19 pandemic, and the Russia-Ukraine conflict have disrupted and reshaped global supply chains. Existing studies caution that these tensions may not meaningfully reduce U.S. dependence on China-linked supply chains. This study examines the drivers of this unmet reallocation under overlapping geopolitical and public health disruptions. It investigates how these shocks jointly reconfigured bilateral trade and global value chain (GVC) participation and positioning among the U.S., China, and major trading partners during 2016-2023. Using monthly bilateral trade data across all sectors and multi-regional input-output tables for GVC decomposition, we combine a multi-period event-study with structural analysis to evaluate trade-flow disruptions and shifts in participation and functional positioning within GVCs. We find that China's exports remained robust, expanded across global markets, and sustained a rise in GVC participation, becoming more embedded in upstream segments through increased intermediate shipments to Asia and Europe. Meanwhile, U.S. imports increasingly shifted toward "China+1" partners, especially ASEAN, whose trade structures remain closely tied to Chinese upstream supply chains. These strengthening triangular relationships reveal how global reallocation and GVCs have evolved around the U.S. and China across successive shocks. Based on the evidence, we propose a supply chain resilience framework defined by three interacting dimensions: the level of GVC participation, the functional position within the value chain, and a country's capacity to re-couple in the post-shock landscape, conditioned by market diversification, economic complexity, and institutional capability. These findings carry significant implications for trade policy and industrial strategy in an era of geopolitical and geoeconomic fragmentation. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.06828 |
| By: | Christian Volpe-Martincus (IADB); Kerry Loaiza-Marín (Department of Economic Research, Central Bank of Costa Rica); Sandro Zolezzi-Hernández (CINDE); Keyssi Calderón-Medina (CINDE) |
| Abstract: | Empirical evidence shows that MNEs create jobs, refine the productive structure, and help improve the productivity of the host country. It is therefore not surprising that any governments make significant efforts across policy areas to attract these firms’ operations to their countries. In this regard, little is known about whether and how changes in domestic regulations and procedures that determine the easiness of doing business affect MNEs’ activities in and integration into global value chains from the host country. In this paper, we are filling in this gap in the literature using firm-level revenue data combined with country-level data on the number of days required to export, import, and start a business over the period 2006-2019. Our results suggest that lower levels of trade and investment facilitation in host countries are associated with lower levels of foreign affiliates’ revenues therein. These results are robust to using several samples. The negative effect of longer times to trade on foreign affiliates’ revenues is smaller for Costa Rica than for other countries but the opposite holds for longer times to start a business, especially in the case of service sectors. This latter result poses an important policy recommendation for the country. If it improves the regulatory framework and lowers costs to facilitate FDI flows at the firm level, this investment facilitation dimension would bring an extra boost to affiliate revenues relative to other host countries, which would create new incentives to MNEs to look for Costa Rica as a destination for their investments. ***Resumen: La evidencia empírica muestra que las empresas multinacionales (EMN) crean empleo, perfeccionan la estructura productiva y contribuyen a mejorar la productividad del país anfitrión. Por lo tanto, no es de extrañar que los gobiernos realicen importantes esfuerzos en todos los ámbitos políticos para atraer las operaciones de estas empresas a sus países. A este respecto, poco se sabe sobre si los cambios en la normativa y los procedimientos nacionales que determinan la facilidad para hacer negocios afectan a las actividades de las EMN y a su integración en las cadenas de valor mundiales. En este documento, se llena este vacío en la literatura utilizando datos de ingresos a nivel de empresa combinados con datos a nivel de país sobre el número de días necesarios para exportar, importar e iniciar un negocio durante el período 2006-2019. Los resultados sugieren que niveles más bajos de facilitación del comercio y la inversión en los países anfitriones están asociados con niveles más bajos de ingresos de las filiales extranjeras en ellos. Estos resultados son robustos al utilizar varias muestras. El efecto negativo de los plazos más largos para comerciar sobre los ingresos de las filiales extranjeras es menor en el caso de Costa Rica que en el de otros países, pero ocurre lo contrario con los plazos más largos para iniciar un negocio, especialmente en el caso de los sectores de servicios. Este último resultado plantea una importante recomendación de política pública para el país. Si se mejora el marco normativo y se reducen los costos para facilitar los flujos de IED a nivel de empresa, esta dimensión de facilitación de la inversión aportaría un impulso adicional a los ingresos de las filiales en relación con otros países anfitriones, lo que crearía nuevos incentivos para que las EMN buscaran Costa Rica como destino de sus inversiones. |
| Keywords: | Trade and Investment Facilitation, Panel Data, Multinationals, Economic Policy, Costa Rica, Política económica, Multinacionales, Datos de panel, Facilitación de comercio e inversión |
| JEL: | F61 L60 L80 O19 |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:apk:doctra:2401 |
| By: | Choi, Yewon; Fernandes, Ana Margarida; Grover, Arti; Iacovone, Leonardo; Olarreaga, Marcelo |
| Abstract: | This paper examines the impact of trade promotion organizations on exports during the COVID-19 pandemic using a World Bank survey. The results suggest that increased trade promotion organization budgets significantly boosted exports during downturns but had no effect during the recovery phase. Interestingly, e-commerce programs adopted by trade promotion organizations negatively affected exports during downturns as they diverted resources away from productive support, especially for sectors not intensive in online trade. These findings suggest that countercyclical trade promotion organizations budgets may enhance trade resilience during similar global shocks. |
| Date: | 2025–08–11 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11182 |
| By: | Ms. Nan Li; Sergii Meleshchuk; Qiuyan Yin; Dennis Zhao; Robert Zymek |
| Abstract: | This paper introduces the Bilateral Trade in Services (BiTS) database. It draws on a range of sources to provide the broadest-possible, consistent coverage of bilateral services trade for the period 1985-2023. The database covers bilateral trade across 12 major services categories, 9 of which are further disaggregated into 26 distinct subcategories, all harmonized under a consistent BPM6 classification standard. While historical data is only available for some advanced economies and emerging markets, the bilateral flows contained in BiTS capture most of global services trade from 2000 onwards. We illustrate the uses of this data through two research applications. The first shows that "gravity forces" have become less powerful in explaining services trade patterns over time, due to a shift in the composition of trade towards less distance-sensitive services. The second documents that overall services trade remains resilient to growing geopolitical fissures, but that modern services appear more sensitive to geopolitical alignment than traditional services. |
| Keywords: | bilateral trade; services; gravity; distance elasticity; geoeconomic fragmentation |
| Date: | 2025–08–15 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/163 |
| By: | Claudio Mora-García (Department of Economic Research, Central Bank of Costa Rica); Andy Pearson (INCAE Bussiness School) |
| Abstract: | The medical device sector is a critical driver of Costa Rica's economic development, accounting for 37 percent of total exports as of 2022. This paper analyzes the main enablers and bottlenecks in upgrading along the medical device global value chain into higher value-added segments. The mixed-method approach we use includes documentary analysis, 15 interviews with key stakeholders, and descriptive statistics of different datasets. Results indicate five enablers for upgrading: (i) a strategic location and economic, political, and social stability, education, human talent, and a favorable investment climate allowed companies to establish in Costa Rica; (ii) a shift in the strategy of the investment attraction agency toward supply chain helped identify key suppliers; (iii) the development of specialized skills and talent needed by the industry helped manufacturing more complex devices; (iv) productive development programs helped linkages emerge between multinational enterprises of medical devices and domestic firms; and (v) the existence of specialized skills enabled companies to consider Costa Rica for research and product development processes. The sector also faces three main bottlenecks that hinder its ability to continue upgrading: (i) cultural barriers and informality that restrict backward linkages; (ii) persistent skills shortages, and more bilingual graduates in science, technology, engineering and mathematics are needed; and (iii) lack of incentives that limit the ability to deepen research and development. ***Resumen: El sector de dispositivos médicos es un motor fundamental para el desarrollo económico de Costa Rica, el cual representó el 37% del total de las exportaciones durante el 2022. Este documento analiza los principales facilitadores y obstáculos para la avanzar a lo largo de la cadena global de valor de dispositivos médicos hacia segmentos de mayor valor agregado. Utilizamos un método mixto que incluye análisis documental, 15 entrevistas con actores clave y estadísticas descriptivas de diferentes conjuntos de datos. Los resultados indican cinco facilitadores para la modernización: (i) una ubicación estratégica, estabilidad económica, política y social, educación, talento humano y un clima favorable para la inversión; (ii) un cambio en la estrategia de la agencia de atracción de inversiones hacia la cadena de suministro; (iii) el desarrollo de habilidades y talento especializados que la industria necesitaba; (iv) los programas de desarrollo productivo propiciaron el surgimiento de vínculos entre empresas multinacionales de dispositivos médicos y empresas nacionales; y (v) la existencia de habilidades especializadas. El sector también enfrenta tres obstáculos principales que dificultan su capacidad para aumentar el valor agregado doméstico: (i) las barreras culturales y la informalidad que restringen los vínculos hacia atrás; (ii) la persistente escasez de habilidades y la necesidad de más graduados bilingües en ciencia, tecnología, ingeniería y matemáticas; y (iii) la falta de incentivos que limitan la capacidad de profundizar la investigación y el desarrollo. |
| Keywords: | Costa Rica, Inversión extranjera, Cadena global de valor, Dispositivos médicos, Foreign Investment, Global Value Chain, Medical Devices |
| JEL: | F14 F23 O21 O47 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:apk:doctra:2404 |
| By: | Maczulskij, Terhi; Jurvanen, Outi |
| Abstract: | Abstract This paper examines how firms’ environmental performance responds to product- and destination-specific export demand shocks in their export markets. We draw on unique administrative data for Finnish manufacturing firms from 1999 to 2018, matched with national customs records, greenhouse gas emissions, and energy use. The results show that while export demand shocks significantly increase firms’ export volumes and energy consumption, they do not improve overall environmental performance. Specifically, we find no significant effects on carbon intensity or total energy intensity, although fuel intensity declines, particularly in more polluting industries. Heterogeneity and mechanism analyses further reveal that financially weaker firms experience increases in emissions and carbon intensity, suggesting that financial constraints may limit their ability to adopt cleaner technologies. Overall, the findings highlight the critical role of firm-level characteristics in shaping the environmental consequences of trade shocks and suggest that export-promotion policies should account for firms’ financial capacities to support green investments and sustainable outcomes. |
| Keywords: | Emissions, Energy expenditure, Energy intensity, Export demand shock, Firm-level, Carbon intensity |
| JEL: | D22 F22 O30 |
| Date: | 2025–08–25 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:132 |
| By: | Rabah Arezki; Hieu Nguyen; Rick van der Ploeg |
| Abstract: | When wealth or income rises suddenly, the propensity for that “easy money” to be directed towards unproductive use, “easy spending”, may rise. The cross-country relationship between conspicuous consumption and revenue windfalls is explored by estimating the response of demand for imports of luxury goods resulting from country-specific and plausibly exogenous variation in commodity export prices. The response of imports of luxury goods following a commodity export windfall is found to be bigger than that for non-luxury imports while there is substantial heterogeneity in the magnitude of the response between different categories of luxury import goods. The results also point to a significant increase in tourism from countries experiencing commodity export windfalls to the main luxury shopping destinations abroad. Countries that have higher inequality, weaker control of corruption or less democracy have significantly higher luxury import response following a commodity export windfall. This (luxury) import channel of the resource curse stems from the link between easy money and easy spending when weak mechanisms for resource allocation are in place. |
| Keywords: | conspicuous consumption, commodity prices, institutions, resource curse |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12088 |