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on International Trade |
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Issue of 2025–10–27
seventeen papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Oscar Claveria (AQR-IREA, University of Barcelona); Mihály Tamas Borsi (Universitat Ramon Llull) |
| Abstract: | This paper examines trade relations between China and the European Union from 2000 to 2022, focusing on the role of trade policy uncertainty alongside key economic and institutional factors. Using an extended gravity model, the results show that China’s economic growth is a dominant driver of trade flows. The study introduces a novel proxy for China’s trade policy uncertainty, finding that it significantly influences bilateral trade. Results are robust to different specifications. Additionally, the results indicate that while non-eurozone EU countries demonstrate higher trade flows with China, the immediate impact of China’s Belt and Road Initiative on EU trade remains limited. Given the anticipatory nature of trade policy uncertainty and its relationship with economic growth, the findings highlight the usefulness of trade uncertainty indicators as tools for the early detection of shifts in trade patterns, offering valuable insights for policymakers to design strategies that promote greater stability and economic integration |
| Keywords: | international trade; economic growth; uncertainty; China; European Union; gravity model JEL classification:C33; F13; F14; O24 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:aqr:wpaper:202506 |
| By: | Omar Neme Castillo ("Instituto Politécnico Nacional, Escuela Superior de Economía, Mexico " Author-2-Name: Cesaire Chiatchoua Author-2-Workplace-Name: "Instituto Politécnico Nacional, Escuela Superior de Economía, Mexico " Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | " Objective - Nearshoring processes are identified as central to (re)industrialization, which, however, depends on the position within Global Value Chains (GVCs) and the structural characteristics of the economies. The objective of this paper is to estimate the effect of nearshoring on industrialization for a group of 75 countries over the period 2010-2021, differentiated by their integration into GVCs. Methodology/Technique - It is hypothesized that countries with a greater weight in GVCs benefit most from industrial relocation. The econometric methodology employs dynamic panel data, accounting for potential simultaneity and endogeneity between variables (S-GMM). Findings - The analysis incorporates economic and technological variables. A nearshoring index is proposed and discussed based on central elements of globalization, such as foreign and domestic value added, foreign direct investment flows, and pressures on supply chains. The findings corroborate the hypothesis of nearshoring by reindustrialization. Therefore, industrial policy in the context of globalization must consider the absorption and integration capacities in global value chains to support industrial development. Novelty - The paper contributes to the debate on whether nearshoring is generating a significant boost to global industrialization. Type of Paper - Empirical" |
| Keywords: | Nearshoring; nearshoring index; industrialization; global value chains; S-GMM. |
| JEL: | F10 F60 L00 O14 |
| Date: | 2025–09–30 |
| URL: | https://d.repec.org/n?u=RePEc:gtr:gatrjs:jmmr351 |
| By: | Samuel Hardwick |
| Abstract: | Trade agreements are often understood as shielding commerce from fluctuations in political relations. This paper provides evidence that World Trade Organization membership reduces the penalty of political distance on trade at the extensive margin. Using a structural gravity framework covering 1948 to 2023 and two measures of political distance, based on high-frequency events data and UN General Assembly votes, GATT/WTO status is consistently associated with a wider range of products traded between politically distant partners. The association is strongest in the early WTO years (1995 to 2008). Events-based estimates also suggest attenuation at the intensive margin, while UN vote-based estimates do not. Across all specifications, GATT/WTO membership increases aggregate trade volumes. The results indicate that a function of the multilateral trading system has been to foster new trade links across political divides, while raising trade volumes among both close and distant partners. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.17303 |
| By: | Andrea González (Universidad de Buenos Aires. Facultad de Ciencias Económicas. Buenos Aires, Argentina. CONICET – Universidad de Buenos Aires. Instituto Interdisciplinario de Economía Política (IIEP). Buenos Aires, Argentina.); Juan Carlos Hallak (Universidad de Buenos Aires. Facultad de Ciencias Económicas. Buenos Aires, Argentina. CONICET – Universidad de Buenos Aires. Instituto Interdisciplinario de Economía Política (IIEP). Buenos Aires, Argentina.); Leonardo Iacovone (World Bank.); Santiago Llamas (Analysis Group.); Martín Rossi (Universidad de San Andrés. Buenos Aires, Argentina.) |
| Abstract: | We evaluate an RCT-based export consulting program (Good Exporting Practices) run by Argentina’s national EPA. While average effects are null, impacts are large and significant on the extensive margin for a subset of properly selected firms. |
| Keywords: | Exports; Practices; RCT; Consulting; Management |
| JEL: | F10 F13 F14 H41 L25 O25 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:ake:iiepdt:2025-97 |
| By: | Alfredo D'Angelo; Marco Grazzi; Le Li; Daniele Moschella |
| Abstract: | The termination of an exporter-importer (E-I) relationship could challenge the company's export process. What are the consequences on the company's export performance in the foreign country? What role does export experience play in this relationship? The paper explores the overlooked phenomenon of E-I relationship termination and provides robust empirical evidence that the event has negative consequences on the firm's export performance in the foreign country. Despite this unsurprising, yet previously untested finding, our study shows a second important remark i.e., if the exporting firm has prior export experience, it is then able to cope with the negative effect of the termination event. Moreover, we find that the positive effect of prior export experience is only present in the early years of exporting. The results are based on a large longitudinal sample of French firms exporting to foreign buyers in EU countries. Findings are discussed along an in-depth case study to enhance robustness and comprehensiveness. |
| Keywords: | Exporter-Importer (E-I) relationship termination; Critical event; Export experience; Export performance |
| Date: | 2025–10–17 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2025/34 |
| By: | Leo C.H. Lam; Ana Maria Santacreu |
| Abstract: | We study when unilateral export controls are optimal by quantifying how geopolitical rivalry reshapes trade in ideas. Empirically, cross-border technology flows are far more sensitive than goods trade to geopolitical distance, especially where IPR is weak, and these penalties intensify after 2017. Motivated by this evidence, we build a growth–trade model in which geopolitical distance raises breach risk in licensing; firms partially reprice risk via higher royalties but cannot fully insure quantities. In a consumption-only benchmark, a permanent rise in US–China geopolitical distance yields modest net gains for the United States, implying no benchmark motive for controls. Once governments place weight on national security, measured as relative technological leadership, controls can be welfare-improving despite efficiency costs. When the probability of Chinese retaliation rises with control tightness, the optimal policy is strictly interior (tighter than laissez-faire yet below a full ban). |
| Keywords: | geopolitics; international trade; strategic rivalry; technology transfer |
| JEL: | F63 O14 O33 O34 |
| Date: | 2025–10–21 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedlwp:101980 |
| By: | Giovanni Dosi; Federico Riccio; Maria Enrica Virgillito |
| Abstract: | This paper brings new compelling regional-level evidence on the environmental degradation brought about by intra-European value chains. The paper postulates the presence of pollution havens derived as a consequence of the European production integration. We identify a neat elites-ghettos divide in carbon emission intensity per unit of production across EU regions: while capital-city and Northern regions form a carbon elites club, of contained emissions, Eastern regions converge towards systematically higher intensities. We build the intra-EU emission network, looking at the CO2 embodied in its backwards linkages to account for the extent to which the divide derives from GVC participation. The flow analysis reveals a steady decline in domestic multipliers, but persistently higher carbon intensity in foreign intermediates, with the Eastern regions dominating the most polluting linkages. The elites-ghettos regions are characterised by opposite emission paths: while the first export CO2 via the outsourcing of the most-polluting production activities toward the East, the latter import CO2 via the production of high-emission intermediaries for the West. In fact, convergence clubs display distinct specialisation profiles, with mid-stream manufacturing regions structurally locked into higher emission intensity. Overall, the paper highlights a discarded dimension of GVCs, that is, the environmental lock-in paths for regions embedded into GVCs to serve as pollution havens for the European carbon elite. |
| Keywords: | CO2 emissions; Global Value Chains; Club convergence; Regional specialisation; Carbon leakage |
| Date: | 2025–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2025/31 |
| By: | Ali, Nadia (Columbia University); De Giorgi, Giacomo (University of Geneva); Rahman, Aminur (Asian Development Bank); Verhoogen, Eric (Columbia University) |
| Abstract: | Many countries seek to promote exports by subsidizing market access, but evidence on such efforts has been mixed. We present the first randomized evaluation of a government financial-support program explicitly targeting exports, the Tasdir+ program in Tunisia. The program offered matching grants for fixed market-access costs but not variable costs. Tracking outcomes in administrative data, we find positive effects on exports on average. We find limited impacts on the number of destinations or exported products, which were stated policy targets. The finding that the fixed-cost subsidies expanded exports on the intensive margin but not the extensive margins of destinations or products stands in contrast to the predictions of several workhorse trade models. |
| Keywords: | intensive margin, market access, export promotion |
| JEL: | F14 O14 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18184 |
| By: | Aaron B. Flaaen; Ali Hortaçsu; Felix Tintelnot; Nicolás Urdaneta; Daniel Xu |
| Abstract: | This paper examines the effects of tariffs along the supply chain using product-level data from a large U.S. wine importer in the context of the 2019-2021 U.S. tariffs on European wines. By combining confidential transaction prices with foreign suppliers and U.S. distributors as well as retail prices, we trace price impacts along the supply chain, from foreign producers to U.S. consumers. Although pass-through at the border was incomplete, our estimates indicate that U.S. consumers paid more than the government received in tariff revenue, because domestic markups amplified downstream price effects. The dollar margins per bottle for the importer contracted, but expanded for distributors/retailers. Price effects emerge gradually along the chain, taking roughly one year to materialize at the retail level. Additionally, we find evidence of tariff engineering by the wine industry to avoid duties, leading to composition-driven biases in unit values in standard trade statistics. |
| JEL: | F13 F14 L66 L81 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34392 |
| By: | Stephan Heblich; Stephen J. Redding; Yanos Zylberberg |
| Abstract: | We provide new evidence on the income distributional consequences of trade using the New World Grain Invasion in the 19th Century and variation in agroclimatic suitability for wheat across locations within England and Wales. We show that this large-scale agricultural trade shock led to structural transformation away from agriculture and a redistribution of population from rural to urban areas. We develop a quantitative spatial model to rationalize our empirical findings and evaluate the aggregate implications of this international trade shock. We use our model to undertake counterfactuals for the Grain invasion, holding constant other exogenous determinants of economic activity. We find modest aggregate welfare gains combined with much larger income distributional effects, with geography an important dimension along which these income distributional effects occur. |
| Date: | 2025–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:25/790 |
| By: | Cecilia Carvalho; Daniel Monte; Emanuel Ornelas |
| Abstract: | Members of the World Trade Organization are increasingly disregarding its rules, raising concerns about the future of the multilateral trading system. To analyze the sustainability of the rules-based trade regime, we develop a dynamic framework of stochastic asynchronous games where the leading country determines the trade regime and leadership changes over time. We show that transitioning from a power-based to a rules-based regime requires the presence of a hegemonic power - i.e., a country significantly larger than all others. Non-hegemonic leading countries benefit from a power-based regime, but may nevertheless uphold rules anticipating that they can lose their dominance in the future. We find that the long-term viability of a rules-based equilibrium hinges on the cost of establishing it, which must be neither too small nor too large, on countries' discount factors and on the degree of turnover in world leadership, both of which must be sufficiently large. In a bipolar state, free-riding and market-power forces further undermine the feasibility of rules-based equilibria. We also highlight the trade-offs that a redesign of the WTO rules must face to remain viable. If the leading country becomes shortsighted, the system needs to become more efficient, offer more latitude to the leading country, or even exclude it from the system. |
| Keywords: | hegemonic stability theory, World Trade Organization, trade agreements |
| JEL: | F02 F13 F53 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12203 |
| By: | Giovanni Dosi; Federico Riccio; Maria Enrica Virgillito |
| Abstract: | This paper examines how the fragmentation of production across Global Value Chains (GVCs) generates both economic and environmental inequalities. Building on the "smile curve" framework (Mudambi, 2008; Meng et al., 2020), we show that developing countries specialize in low-value-added, high-emission production stages, while advanced economies capture high-value, low-emission activities like R&D and design (Riccio et al., 2025). Using OECD ICIO and CO2 emissions data, we demonstrate that GVC integration exacerbates a "double harm": production workers -particularly in middle-stage manufacturing- face wage suppression, while these same stages exhibit higher carbon intensity per unit of value added. This aligns with the Pollution Haven Hypothesis (Cole, 2004), as emissions are displaced to regions with weaker regulations. Our analysis reveals an environmental smile curve, where environmental and economic downgrading co-occur in middle segments of GVCs, reinforcing global inequalities. These disparities intensify with deeper GVC penetration, challenging the decoupling narrative of green growth. By integrating labour and emissions data, we provide novel evidence of how GVCs structurally embed unequal ecological and economic burdens. |
| Keywords: | Smile Curve, Ecological Economics, Global Value Chain, Embodied emissions, Environmental and Income Inequality. |
| Date: | 2025–10–21 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2025/35 |
| By: | Peter B. Dixon; Maureen T. Rimmer |
| Abstract: | Computable General Equilibrium (CGE) modelling started with the publication in 1960 of Johansen's model of Norway. It continues to the present time as an active research and policy field. In a recent count, there were 33, 000 people in the GTAP CGE modelling network alone. This paper identifies GEMPACK software, developed in Australia for solving large scale CGE models in the Johansen school, as one of the factors contributing to the enduring popularity of CGE. The paper tells the story of how GEMPACK came into existence, how it works, and how it relates to Johansen. The paper was prepared for a workshop on bridging the gap between CGE and New Quantitative Trade (NQT) models. In illustrating GEMPACK and showing connections between CGE and NQT, we present a GEMPACK solution and analysis of Eaton and Kortum's seminal NQT model, published in Econometrica in 2002. |
| Keywords: | GEMPACK CGE software, GEMPACK and GAMS, New Quantitative trade modelling, Eaton and Kortum |
| JEL: | C68 F11 F13 C63 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cop:wpaper:g-357 |
| By: | Giulia Aliprandi; Alice Chiocchetti; Manon Francois; Laure Heidmann |
| Abstract: | Using exhaustive microdata on the worldwide activity of multinational firms from Country-by-Country Reports linked to employer-employee data, we study how profit shifting affects workers' earnings. We estimate that large French multinationals shift 19% of their foreign profits annually to low-tax jurisdictions, resulting in €10.3 billion shifted out of France and €3.7 billion in lost tax revenues. Exploiting France's mandatory profit-sharing policy, which mechanically links subsidiary-level reported profits to workers' compensation, we show that profit shifting reduces annual employees' earnings by 2.6%. Low-income workers are disproportionately affected, the bottom 10% losing 3.2% of wages compared to 2.3% for top 10% earners. Changing the profit-sharing formula to account for global, rather than subsidiary-level, profitability would increase wages by 1.9% overall and 4.1% for workers in profit-shifting subsidiaries. |
| Keywords: | multinational firms, profit shifting, tax revenue, incidence |
| JEL: | F23 H25 H26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12202 |
| By: | Gabriel Baratte (ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris); Lionel Fontagné (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne, Banque de France); Raphael Lafrogne-Joussier (INSEE - Institut national de la statistique et des études économiques (INSEE), CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - GENES - Groupe des Écoles Nationales d'Économie et Statistique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - GENES - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | In an increasingly uncertain environment, firms are differently exposed to shocks and may or may not bear the cost of reorganizing their value chain by reshoring or offshoring. This paper draws on a survey of French firms about the decision to reorganize part of their value chain between January 2018 and December 2020. Reorganizations prove to be infrequent, made by firms employing a higher proportion of skilled workers, in manufacturing rather than in services, with a predominance of multinational firms. Even though high-skill firms are reorganizing more, reorganized business functions are less skill-intensive, but more intensive in routine tasks. Activities more intensive in intangible capital are more likely to be reorganized within firm's boundaries. Last, besides reshoring in France, activities are located close to France when offshored. India, combining low-average wage and a large endowment of high-skilled workers, receives a disproportionate share of skill intensive activities. |
| Abstract: | Dans un environnement de plus en plus incertain, les entreprises sont différemment exposées aux chocs et supportent ou non le coût de la réorganisation de leur chaîne de valeur en relocalisant ou en délocalisant. Cet article s'appuie sur une enquête menée auprès d'entreprises françaises sur la décision de réorganiser une partie de leur chaîne de valeur entre janvier 2018 et décembre 2020. Les réorganisations s'avèrent peu fréquentes, réalisées par des entreprises employant une plus grande proportion de travailleurs qualifiés, dans l'industrie manufacturière plutôt que dans les services, avec une prédominance d'entreprises multinationales. Même si les entreprises hautement qualifiées se réorganisent davantage, les fonctions réorganisées sont moins intensives en compétences, mais plus intensives en tâches routinières. Les activités plus intensives en capital immatériel sont plus susceptibles d'être réorganisées à l'intérieur des frontières de l'entreprise. Enfin, outre la relocalisation en France, les activités sont localisées à proximité de la France lorsqu'elles sont délocalisées. L'Inde, qui combine un salaire moyen peu élevé et une importante dotation en travailleurs hautement qualifiés, reçoit une part disproportionnée des activités à forte intensité en compétences. |
| Keywords: | Chaînes d'approvisionnement, Relocalisation, Délocalisation, Supply-chains, Reshoring, Offshoring |
| Date: | 2024–11–19 |
| URL: | https://d.repec.org/n?u=RePEc:hal:cesptp:hal-05316482 |
| By: | Sebastián Bustos (Harvard Growth Lab, Harvard University); Miguel Ángel Santos (School of Government and Public Transformation, Tecnológico de Monterrey) |
| Abstract: | The global resurgence of industrial policy has revived the appeal of downstream diversification (beneficiation)—adding value to raw materials—as a development strategy. Despite this intuitive appeal, empirical evidence of its effectiveness remains scarce, with few real-world success stories. We address this gap through a novel empirical analysis of export product co-location and new relatedness metrics to explain observed diversification patterns. Our results show that product co-location patterns are driven primarily by similarities in occupational structures. Industries sharing high-skill occupations (and, to a lesser extent, non-tradable inputs) are strong predictors of diversification. Conversely, relatedness metrics based on value-chain linkages (existing upstream inputs) have weak to no predictive power. These findings suggest rethinking development strategies focused on adding value to raw materials. Instead, countries should promote industries that build on existing know-how—particularly those with similar occupational structures or non-tradable capabilities already present in the economy. |
| Keywords: | Foreign industrial policy, productive diversification, beneficiation, knowledge-based development, export relatedness, occupational structures, economic complexity, value chains, development strategy |
| JEL: | O14 O25 O33 F14 L16 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:gnt:wpaper:13 |
| By: | Bülte, Christopher; Buse, Rebekka |
| Abstract: | We quantify the economic costs in the UK since the Brexit referendum and discern them from the effects of the COVID-19 pandemic. The simultaneous effects of COVID-19 and Brexit are disentangled by evaluating pandemic-related indices relative to economic losses. These losses are measured with a synthetic control method, allowing for a causal interpretation of Brexit. We demonstrate that the UK has suffered exceptionally during the pandemic and that these additional losses are attributed to the long-term economic effects of Brexit. |
| Keywords: | Brexit, COVID-19, Economic effects, Synthetic controls |
| JEL: | H0 I1 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kitwps:329635 |