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on International Trade |
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Issue of 2026–01–05
sixteen papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Onogwu, Daniel; Olushola, Adalumo |
| Abstract: | This study investigates the effects of geopolitical risk, foreign direct investment (FDI), exchange rate dynamics, and international sanctions on the sectors’ global value chains (GVCs) participation for the Russian economy. Panel data across eight selected sectors was used. Data were analyzed using descriptive and Difference-in-Difference method. The study finds no significant impact of geopolitical risks on sectoral GVC participation. This implies there is an evidence of short term resilience or perhaps internal substitution strategies. However, a rise in exchange rate (depreciation) significantly increase GVC forward participation. FDI as a percentage of GDP exhibit a positive but statistically weak influence on forward GVC participation, highlighting the partial effectiveness of investment-led integration under sanctions. Policy interventions on the treated sectors did not yield measurable gains in trade integration following sanctions. Stark disparities exist in the sectoral analysis. Capital-intensive and export-oriented sectors like petroleum and electricity recorded significantly higher GVC participation relative to wood, while textiles and food processing lagged behind, indicating evidence of vulnerabilities in low-tech and domestically dependent industries. It is recommended that policy meant to stabilize domestic currency and promote a competitive currency should be prioritized to maintain Russia’s GVC integration under sanctions. However, long term sustainability hinge on sector-specific strategies and her ability to restore foreign direct investment. |
| Keywords: | Difference-in-Differences; Economic Resilience; Exchange Rate; Geopolitical Risk; Global Value Chains (GVCs) |
| JEL: | E02 F15 |
| Date: | 2025–12–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127130 |
| By: | Hongyan Zhao |
| Abstract: | This paper develops a multi-country, multi-sector trade model with input-output linkages to analyze the global macroeconomic effects of the United States'(US) 2025 tariff policies. The model incorporates endogenous labor supply and captures the transmission of tariff-induced shocks through global value chains (GVCs). By simulating both short-run and long-run adjustments, the analysis demonstrates how trade shocks are amplified by sectoral interdependence and labor market dynamics. The results reveal substantial short-run output losses and inflationary pressures, especially for economies deeply integrated into US supply chains, while long-run reallocations partially mitigate-but do not fully offset-these impacts. |
| Keywords: | tariffs, global supply chains, inflation, output, trade war |
| JEL: | F13 F41 E31 C68 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1316 |
| By: | David Rodríguez-González (Department of Economics, Universidad EAFIT (Colombia)); Elena Huergo (ICAE – Department of Economic Analysis, Universidad Complutense de Madrid (Spain)); Mery Patricia Tamayo (Department of Economics, Universidad EAFIT (Colombia)) |
| Abstract: | This paper examines how the strength of intellectual property rights (IPR) affects offshoring between countries at different development stages. Using a panel dataset covering offshoring flows between 60 origin and 76 destination countries from 2000–2011—measured through intra-industry trade in intermediate inputs—we estimate several econometric models addressing heterogeneity, zero flows, endogeneity, and trade persistence. We find that stronger IPR protection reduces a country’s outward offshoring, especially in developing economies, while it increases inward offshoring, particularly in high-tech industries and when the destination is developing. These results show the varied role of IPR in shaping global production networks and suggest that strengthening IPR—especially in developing countries—can enhance participation in global value chains and promote technology transfer. |
| Keywords: | Offshoring flows, IPR, Development, Technology transfer. |
| JEL: | F14 F23 O34 O38 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ucm:doicae:2508 |
| By: | Susanne Keller; Sebastian Krautheim |
| Abstract: | Massive protests against - and spectacular failures of - international trade negotiations are an important element of the globalization backlash developed economies have experienced over the last two decades. We analyze a model of endogenous social identity where the government chooses between accepting or rejecting a trade agreement involving the recognition of a lower precautionary standard. We show that protests by an NGO against the trade agreement can alter the social identity equilibrium, feeding back into the political process and possibly resulting in a polarization of society. We focus on two possible outcomes: the trade agreement may either be maintained, but at lower welfare gains than initially expected (the "CETA-case"), or it may be abolished altogether (the "TTIP-case). |
| Keywords: | trade negotiations, standards, social identity, NGOs, globalization backlash, TTIP, CETA |
| JEL: | F13 F68 L31 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12337 |
| By: | Maczulskij, Terhi |
| Abstract: | Abstract This paper examines how firms’ innovation activity responds to product- and destination-specific export demand shocks in their export markets. I draw on unique administrative data for Finnish manufacturing firms from 1999 onwards, matched with national customs records, patent data, and innovation and R&D surveys. The analysis reveals that positive export demand shocks significantly increase patenting activity and the likelihood of introducing new product innovations, while negative shocks reduce patenting and exports. The study finds that these innovation responses are dynamic, with patent applications rising in the short term and granted patents materializing over longer horizons. Heterogeneity analysis shows that more productive and financially stronger firms benefit disproportionately from export demand expansions. This pattern suggests that financial constraints may limit the ability of firms to adopt new innovations even as they expand production. |
| Keywords: | Export demand shock, Firm-level, Innovation, Manufacturing |
| JEL: | F14 O19 O30 |
| Date: | 2025–12–22 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:134 |
| By: | Barthélémy Bonadio; Zhen Huo; Elliot Kang; Mr. Andrei A Levchenko; Nitya Pandalai-Nayar; Hiroshi Toma; Petia Topalova |
| Abstract: | We adopt a data-driven approach to measure trade decoupling over 2015-2023. Countries are classified into three groups according to changes in their data-inferred trade costs with the US and China: those shifting toward the US bloc, those shifting toward the China bloc, and those with no change in alignment. We document that while cross-bloc trade costs rose, they were accompanied by falling within-bloc trade costs, with average trade costs falling marginally in line with global trade resilience. We use a quantitative model to compute the real income effects of this reconfiguration of trade costs. Model simulations suggest that real income in the median country in the world, and the median country within each bloc, rose by 0.4-0.6%. Finally, we find a modest amount of bloc misalignment: the median country would be better off switching blocs. These results suggest that trade decoupling may not follow trade-driven economic interests. |
| Keywords: | decoupling; fragmentation; global value chains |
| Date: | 2025–12–12 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/263 |
| By: | Jonas Adolph; Wilhelm Kohler; Gernot Müller |
| Abstract: | We develop a simple model that jointly determines the level of trade and the extent of trade-disruption risk associated with geopolitical conflict. Any pair of countries is likely to settle into one of two steady states: (i) a low level of trade coupled with high trade-disruption risk, or (ii) a high level of trade coupled with low trade-disruption risk. Intermediate cases are unstable. Examining bilateral trade flows between 1966 and 2015, we find, first, that the extent of trade varies systematically with trade-disruption risk and, second, that trade between country pairs tends to converge over time toward these polar cases. |
| Keywords: | sourcing, interstate conflict, trade disruption risk, global value chains, multiple equilibria |
| JEL: | F13 F14 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12311 |
| By: | Ricardo Correa; Andrea Fabiani; Matias Ossandon Busch; Miguel Sarmiento |
| Abstract: | We study the role that cross-border firm-to-firm credit plays in financing exporters. Exploiting the exogenous shock of US tariffs on Chinese goods in 2018–2019, we examine the response of Colombian firms – bystanders not targeted by trade policy – to redirected US demand. Using credit registry information for cross-border and domestic non-financial firm financing, we find that almost 40 percent of the total credit sourced by exporters came from cross-border firm-to-firm credit at end-2019, which represented 80 percent of their cross-border credit. In contrast to traditional trade credit, which is typically short-term, firm-to-firm credit has an average maturity of almost 2 years, and has characteristics resembling bank lending. Our findings highlight an overlooked financial channel underpinning the international trade network. |
| Keywords: | trade disruptions, cross-border credit, firm-to-firm credit, global value chains |
| JEL: | G21 F34 F42 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1315 |
| By: | Ziran Ding (University of St Andrews); Adam Hal Spencer (University of Bonn); Zinan Wang (Tianjin University) |
| 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 firm 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: | 2024–11–26 |
| URL: | https://d.repec.org/n?u=RePEc:san:econdp:2504 |
| By: | Florencia Airaudo; Francois de Soyres; Ece Fisgin; Alexandre Gaillard; Keith Richards; Ana Maria Santacreu; Henry L. Young |
| Abstract: | A large empirical literature, including Gopinath et al. (2025), finds that geopolitical distance has become an increasingly important determinant of bilateral trade flows. This work has fueled debate about the consequences of fragmentation and the extent to which global value chains are being reshaped. |
| Date: | 2025–12–12 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfn:2025-12-12 |
| By: | Iacopo Maria Taddei; Giorgia Giovannetti |
| Abstract: | Industrial indicators display an inverted U-shaped relationship with income levels across both developed and developing economies. However, there is growing evidence that the deindustrialization process is accelerating in less developed countries, giving rise to the phenomenon of premature deindustrialization. This process has been shown to be one of the main drivers of growth slowdowns, particularly in middle-income economies, preventing countries from catching up and leaving them trapped in the so-called middle-income trap. Some East Asian countries, such as South Korea and Taiwan, have nevertheless managed to avoid this outcome by engaging non-linearly in global value chains, following a pattern often referred to as the ‘in–out–in again’ hypothesis. This paper provides an empirical assessment of how this alternative industrialization pathway can shield economies from the risk of premature deindustrialization, sustaining growth in middle-income countries. Using a panel of 47 emerging and developing economies over the period 1995–2020, we examine how this discontinuous engagement in global trade affects manufacturing employment and output shares, as well as countries’ capacity to move up the value chain and export more complex products. Our findings suggest that the ‘in-out-in again’ global value chain insertion pattern has been an effective mechanism for avoiding the middle-income trap in East and South Asian economies, while offering little indication of its role in preventing premature deindustrialization. |
| Keywords: | Premature deindustrialization; middle-income trap; GVC; in-out-in again. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:cca:wpaper:752 |
| By: | Liser, Florizelle; Treiber, Laird |
| Abstract: | This paper examines whether the African Growth and Opportunity Act—the United States’ unilateral trade preference program for Sub‑Saharan Africa—has served as an effective instrument for development and what its modernization should entail. The study synthesizes 25 years of the African Growth and Opportunity Act experience using U.S. International Trade Commission and related trade statistics, complemented by sectoral and country case studies. The findings indicate that while overall U.S.–Africa two‑way trade remains modest ($48.7 billion in 2024, below its 2008 peak), the African Growth and Opportunity Act’s impacts have been more substantial in non‑oil sectors where tariff preferences are largest. In textiles and apparel—facing most favored nation tariffs of roughly 15-32 percent—the African Growth and Opportunity Act has supported more than 1 million formal jobs, with women comprising 75-90 percent of plant workforces in several countries. Regional value chains have deepened, notably in Southern Africa’s automotive industry, where South Africa’s African Growth and Opportunity Act–eligible auto exports (~$2.6 billion) integrate components from neighbors such as Botswana and Lesotho. Nonetheless, supply‑side bottlenecks, limited firm awareness, and uncertainty from time‑limited reauthorizations and annual eligibility reviews have constrained uptake. The policy implications are threefold: (i) reauthorize the African Growth and Opportunity Act on a long horizon to reduce uncertainty and encourage investment; (ii) align with the African Continental Free Trade Area by facilitating regional cumulation and considering inclusion of North Africa; and (iii) evolve toward a more reciprocal—but still preferential and development‑oriented—framework that couples market access with support to address logistics, standards, and competitiveness constraints. |
| Date: | 2025–12–18 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11277 |
| By: | Schiff, Maurice |
| Abstract: | I examine whether trade can improve the impact of population growth on natural resources (NR) and welfare over time. Under autarky, population growth results in NR and welfare collapse over time for any value of the returns to scale in the manufacturing sector, ϕ. Under trade, NR and welfare are unchanged (increase) (collapse) over time for ϕ = (>)( |
| Keywords: | Population growth, Renewable natural resources (NR), Trade vs autarky, Impact on NR and welfare |
| JEL: | F16 F18 Q27 Q56 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1700 |
| By: | Filippo Bontadini; Valentina Meliciani; Maria Savona; Ariel Wirkierman |
| Abstract: | The aim of this paper is to quantitatively assess the propagation of supply shocks across European regions, triggered by the COVID-19 pandemic and diffused through Global Value Chains (GVCs). By taking advantage of the cross-country variation in policy responses to the pandemic, as well as the heterogeneity in regional productive structures, we document how downstream transmission of shocks via GVC-induced backward linkages yields differences in terms of regional resilience. By combining and adapting datasets at the NUTS2 level, classifying EU regions according to the risk of falling into a development trap, and embedding inter-regional, inter-industry indicators in a regression model estimated with a local projection method, we show that regional responses of real value added to foreign (i.e., inter-country) and domestic (i.e., intra-country yet inter- and intra-regional) shocks are far from homogeneous. The nuanced picture emerging from our findings warns against withdrawing from GVCs as an attempt to insulate from foreign shocks, as this might hamper the very forces that allow dynamic regions to withstand them. |
| Keywords: | global value chains, inter-regional connectivity, regional economic resilience, COVID-19 pandemic supply shocks, regional development trap risk |
| JEL: | C32 C67 F62 R11 R15 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12316 |
| By: | Lu, Yue; Ma, Minghui; Liu, Kehan; Tang, Yao |
| Abstract: | Using a two-country Melitz model, we analyze how China's massive railway expansion generates trade gains via vertical linkages. Domestic gains stem from both a composition effect in which improved domestic market access enabled by railway encourages downstream firms to source more inputs domestically and hence raise the domestic value added ratio (DVAR), and a scale effect in which better market access boosts the output level. Intermediate good producers in the foreign country also benefit despite the composition effect, as the scale effect associated with expanded demand from Chinese firms dominates. We test the theoretical predictions with panel data on Chinese manufacturing firms in 2000-2007, addressing endogeneity using a control function approach. Our main empirical findings confirm: (1) Improved upstream access increases exporters' DVAR (explaining 11.57% of its interquantile variation) along with higher value added and revenue; (2) Better access to downstream buyers boosts upstream intermediate producers' value added, profits, and revenue; (3) Foreign intermediate good producers benefit from increased import varieties and quantities of Chinese firms. |
| Keywords: | railway infrastructure, domestic value added ratio, intermediate inputs |
| JEL: | F1 R4 |
| Date: | 2025–10–28 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126901 |
| By: | Nguyen, Thao Trang (RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn); Domini, Giacomo; Grazzi, Marco; Moschella, D.; Treibich, Tania (RS: GSBE MORSE, Macro, International & Labour Economics) |
| Abstract: | We examine the effects of adopting automation technologies on the export performance of French manufacturing firms during the 2002–2019 period. Adoption is identified through imports of automation-related capital goods, and its effects are estimated by means of a staggered difference-in-differences method. Our results indicate that automation significantly improves export outcomes, such as export value, the export to sales ratio and particularly the number of destination countries. However, its effect on the number of exported products is limited. These results are primarily driven by single-product firms, which expand their product portfolios, often toward more complex products, and increase their presence in high-income countries. Multi-product firms, instead, tend to streamline their product offerings while targeting low-income markets. These findings underscore the distinct mechanisms of learning effects and resource reallocation that shape automation strategies and drive export success. |
| JEL: | L11 L22 L25 O14 |
| Date: | 2025–11–28 |
| URL: | https://d.repec.org/n?u=RePEc:unm:unumer:2025028 |