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on International Trade |
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Issue of 2025–12–22
eleven papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Meng Yu Ngov; Pierre-Louis Vezina; Trang Thu Tran; Gaurav Nayyar |
| Abstract: | When countries subsidize the production and innovation of green goods, does it make it easier for others to join their value chains? We explore this question using Viet Nam’s solar panel industry as a case study, using firm-to-firm transaction data to map out its value chain. We find that Viet Nam imports solar parts and components at substantially lower prices from subsidizing countries: about 30% cheaper than from non-subsidizing countries and nearly 50% cheaper from China, where all key inputs are subsidized. We also find that Chinese FDI firms - which account for around 75% of exports and 50% of jobs among all solar producers - export solar panels at around 38% cheaper than other solar panel exporters in Viet Nam. Lastly, we find that local suppliers of solar panel parts and components linked to these firms experience positive productivity gains. Together, the results are consistent with subsidy spillovers that operate through cheaper intermediate inputs, transmission of cost advantage through multinational production networks, and productivity spillovers to local firms. |
| Keywords: | global value chains, green subsidies, FDI |
| JEL: | F14 F23 Q42 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:csa:wpaper:2025-14 |
| By: | Martin Bernstein; Josefin Meyer; Kevin O’Rourke; Moritz Schularick |
| Abstract: | Do trade dependencies leave countries vulnerable to geopolitical coercion? We study the economic costs of trade and financial sanctions, from 1920 to the present. We first develop a continuous measure of sanction intensity, using bilateral commodity-level data to calculate the importance of specific flows that fall under sanctions. We find that sanctions inflict relatively small costs on average: sanctioning 1% of GDP worth of imports or exports leads to approximately 0.3 percentage points of lost GDP over a 5-year period and a 0.1 percentage point increase in unemployment. However, we show that sanctions are far more costly for countries whose trade is highly concentrated, and for countries that rely heavily on exporting primary commodities. Low income and developing countries appear most vulnerable to trade sanctions, while high income financial centers and some EU countries are among the most exposed to financial sanctions. |
| Keywords: | Trade sanctions, trade dependencies, financial sanctions, effects of sanctions |
| JEL: | F13 F14 F41 F51 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2148 |
| By: | Francesco Amodio; Fadzayi Chingwere; Jonas Hjort; Anton Reinicke |
| Abstract: | We study how strategic inputs—petitions, evidence, and lobbying claims—shape the making and incidence of trade policy. South Africa's International Trade Administration Commission provides a rare, docketed forum where any stakeholder can seek product-specific tariff changes and must justify them with evidence, creating a transparent record of arguments, evaluations, and conditions. |
| Keywords: | Trade, Tariffs, Labour market, Negotiation, Difference-in-differences |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-102 |
| By: | Fernando Broner; Alberto Martin; Josefin Meyer; Christoph Trebesch |
| Abstract: | How do shifts in the global balance of power shape the world economy? We propose a theory of alignment-based “hegemonic globalization, ” built on two central premises: countries differ in their preferences over policies (such as the rule of law or regulatory frameworks) and trade between any two countries increases with the degree of alignment in these policies. Hegemons promote policy alignment and thereby facilitate deeper trade integration. A unipolar world, dominated by a single hegemon, tends to support globalization. However, the transition to a multipolar world can trigger fragmentation, which is particularly costly for the declining hegemon and its closest allies. To test the theory, we use international treaties as a proxy for alignment and compile a novel “Global Treaties Database, ” covering 77, 000 agreements signed between 1800 and 2020. Consistent with the theory, we find that hegemons account for a disproportionate share of global treaty activity and that treaty-signing is a leading indicator of increasing bilateral trade. |
| Keywords: | Hegemon, globalization, trade integration, international coercion, international treaties, cooperation, multipolar world |
| JEL: | F02 F15 F50 F51 F55 F60 P45 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2149 |
| By: | Wenyin CHENG; Tao LIANG; Bo MENG; Hongyong ZHANG |
| Abstract: | China is now the world’s largest exporter, with average export prices ranging from only 40% to 60% of those in other countries. This paper examines whether industrial subsidies can explain China’s export performance and global competitiveness. Using firm-level subsidy data and inter-provincial input-output tables with firm ownership information, we measure both direct subsidies and indirect subsidies from upstream industries. Our analysis yields several key findings: (1) Direct subsidies significantly increase both Chinese firms’ probability of exporting (extensive margin) and their export volume (intensive margin), with a larger effect on the intensive margin. (2) Notably, indirect subsidies (especially those from first-tier upstream industries) also play an important role in boosting exports. (3) Both domestic and foreign-invested firms benefit from direct subsidies, though the effects of upstream subsidies vary by firm ownership. (4) Contrary to expectations, subsidies do not lead to lower export prices. Instead, both direct and indirect subsidies are positively associated with product quality, thereby reducing quality-adjusted prices. The mechanism analysis suggests that export growth and quality upgrading are driven by (i) direct subsidies through increased R&D and imported inputs, and (ii) indirect subsidies through domestic intermediate inputs. Overall, the findings indicate that government support may promote quality upgrading and strengthen the global competitiveness of Chinese exporters. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25119 |
| By: | Serrano-Domingo, Guadalupe (Department of Economic Analysis, Faculty of Economics, University of Valencia, Avda dels Tarongers, s/n, Campus dels Tarongers, E-46022 Valencia, Spain.); Requena-Silvente, Francisco (Department of Applied Economics II, Faculty of Economics, University of Valencia, Avda dels Tarongers, s/n, Campus dels Tarongers, E-46022 Valencia, Spain.); María A. Martín-Montaner, Joan (Institute of International Economics, University Jaume I of Castellón, Castellón, Spain.); Raúl Mínguez (Camara de Comercio de España and Universidad Nebrija de Madrid, Spain.) |
| Abstract: | We use a dose-response function to investigate how the level of imports of intermediate inputs affects the level of exports using the universe of Spanish two- way trading manufacturers in the year 2004. First, we find a positive but non- linear import-export nexus. Second, low levels of imports don’t significantly boost exports—but as import levels reach the median range, the positive impact becomes much more pronounced. Third, the impact varies by the level of income of the country-of-origin of imports; the larger effect on total exports is linked to imports coming mainly but not exclusively from high-income countries. Finally, higher imports from high-income countries lead firms to export more to these countries relative to low-income countries while the opposite is not observed. |
| Keywords: | Exports performance, Imports of intermediate inputs, Dose-Response function, Spanish firms |
| JEL: | F14 F23 L25 C14 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eec:wpaper:2516 |
| By: | Manh-Duc Doan (Development and Policies Research Center (DEPOCEN), Suite 305 - 307, 12 Trang Thi Street, Hoan Kiem, Hanoi) |
| Abstract: | Exploiting a quasi-natural experiment–the Vietnam-U.S. Bilateral Trade Agreement (BTA)–I investigate the impact of trade liberalization on children's human capital investment in Vietnam. Using regional variation in export tariff uncertainty due to the BTA, I find that children in provinces more exposed to tariff reductions were more likely to engage in work rather than attend school, and this effect persisted for 20 years after the BTA. Additionally, the effects were more pronounced among boys, older children, rural children, and those with less-educated parents. These negative effects are driven by the increase in job opportunities, i.e., the child labor incidence, and the wage premium in the higher exposure provinces. The findings indicate that trade liberalization has increased the opportunity cost of education. These results remain robust across various alternative estimations. |
| Keywords: | trade agreement, tariff reduction, schooling, child labor, Vietnam |
| JEL: | F14 F16 J24 O12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:dpc:wpaper:0197 |
| By: | Ziran Ding; Adam Hal Spencer; Zinan Wang |
| Abstract: | Amid ongoing geoeconomic tensions, industrial policy has emerged as a prominent tool for policymakers. What are the dynamic and welfare effects of these policies? How does the short-sightedness of policymakers influence their choice of instruments? What are the distributional consequences of these protectionist measures? We address these questions with a dynamic two-country general equilibrium framework that incorporates ï¬ rm heterogeneity, trade, and the offshoring of tasks. By calibrating the model to the contexts of the US and China, we explore the effects of three popular industrial policies: import tariffs, domestic production subsidies, and entry subsidies. Our findings indicate that, from an initial state free of interventions, myopic policymakers are incentivized to subsidize production, while more forward-looking ones favor imposing import tariffs. Although all of these policies initially reduce wage inequality, some result in aggregate welfare losses, either in the short run or the long run. |
| Keywords: | macroeconomic dynamics, firm heterogeneity, trade, trade-in-tasks, industrial policies, welfare, global value chains |
| JEL: | F23 F41 F51 F62 L51 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2025-67 |
| By: | Jinhu Li (Yale University); Andrew B. Bernard (Dartmouth College and NBER); Teresa C. Fort (Dartmouth College and NBER) |
| Abstract: | This paper studies the role of production location in firm export decisions. We document a set of new facts using a custom-built, geo-located dataset of firms, plants, and customs transactions in China. Exporter firms, defined by their first export transaction, are more likely to have plants in coastal locations at the time of their entry into exporting. They are also more likely to open new plants in coastal locations post-entry. We rationalize these facts in a model where a firmÕs production decisions are guided by location-specific export costs. Estimates of the structural model highlight the importance of lower fixed costs of exporting in coastal regions. A counterfactual exercise shows that a policy to equalize the fixed costs across coastal and non-coastal locations would lead to an increase in the number of exporters and aggregate exports, with gains accruing almost entirely to firms in non-coastal locations. |
| Date: | 2025–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2471r1 |
| By: | Joseph NEGRINE; Christopher FINDLAY; Shiro ARMSTRONG |
| Abstract: | Japan, once the global leader in semiconductors, has re-emerged as a major player in industrial policy for chips amid supply chain shocks and rising geopolitical competition. This paper examines the historical trajectory of Japan’s semiconductor industry, its decline from dominance in the 1980s and its current revival strategies. We analyze the drivers of past success and the subsequent erosion of competitiveness due to trade disputes, structural rigidities and missed transitions to new business models. Against this backdrop, the paper describes Japan’s recent interventions, including subsidies, tax incentives and public–private partnerships, with a particular focus on the Japan Advanced Semiconductor Manufacturing fabrication plants in Kumamoto and the Rapidus project in Hokkaido. These initiatives highlight contrasting models of international collaboration and domestic technological ambition, raising questions about risk, sustainability and integration with global value chains. We assess progress to date, challenges in financing, human capital, technological feasibility and the implications of Japan’s strategy for global semiconductor governance. The paper concludes by distilling lessons for effective industry policy, emphasizing openness, diversification, performance-linked support and the importance of international cooperation in avoiding subsidy races while building resilient ecosystems. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25116 |
| By: | Rodríguez-Clare, Andrés; Ulate, Mauricio; Vasquez, Jose |
| Abstract: | We present a dynamic quantitative trade and migration model that incorporates downward nominal wage rigidities and show how this framework can generate changes in unemployment and labor participation that match those uncovered by the empirical literature studying the “China shock.” We find that the China shock leads to average welfare increases in most U.S. states, including many that experience unemployment during the transition. However, nominal rigidities reduce the overall U.S. gains by around two thirds. In addition, there are 18 states that experience welfare losses in the presence of downward nominal wage rigidity that would have experienced gains without it. |
| JEL: | R14 J01 J1 |
| Date: | 2025–11–26 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127629 |