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on International Trade |
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Issue of 2026–08–10
28 papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | McCaig, Brian; Pavcnik, Nina; Wong, Woan Foong |
| Abstract: | We investigate a low-income country’s long run employment response to new export opportunities. The U.S.–Vietnam Bilateral Trade Agreement reduced U.S. import tariffs on exports from Vietnam. Employment grew faster in the industries most exposed to the U.S. tariff reductions and this was driven by foreign affiliates of multinationals entering Vietnam. Foreign entrants continue to expand employment long after entry--even after 16 years. Most foreign entrants are exporters and from East Asia, highlighting that opportunities created by bilateral agreements are not just limited to signing parties. Vietnam’s subsequent capacity growth allows it to export to other markets over time. |
| Keywords: | Vietnam |
| JEL: | F13 F14 O14 O19 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19903 |
| By: | Lorenzo Rotunno; Michele Ruta; Priyam Verma |
| Abstract: | This paper examines the global trade and welfare effects of industrial subsidies, employing a multi-country, multi-sector general equilibrium trade model with economies of scale. We first estimate the magnitude of industrial subsidies across countries relying on a novel approach that exploits information on subsidy counts during the period 2015-23. We then quantify the impact of the implied subsidy rates on trade flows and find that subsidies boost net exports in strategic sectors especially for China, while causing export declines in competing economies. Subsidies by the EU and the US produce qualitatively similar but smaller effects, as these economies target relatively more non-strategic sectors. A decomposition of the trade effects highlights the role of economies of scale and productivity changes in explaining sectoral specialization in response to subsidies. Tariff actions in 2018-19 and since 2025 partly offset these trade patterns. While targeting strategic sectors, recent subsidies and import tariffs lower global welfare by creating distortions and negative cross-border externalities. |
| Keywords: | Industrial Policy; Trade Spillovers; sectoral imbalances; Geoeconomics |
| Date: | 2026–07–24 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/155 |
| By: | Kerola, Eeva; McCully, Tuuli; Nuutilainen, Riikka |
| Abstract: | This paper examines whether China has reallocated import sourcing away from West-leaning economies amid heightened geoeconomic tensions and a policy push to strengthen supply chain security. Using monthly bilateral trade data for 121 economies over 2015-2025 and a difference-in-differences framework, we compare changes in countries' shares of China's imports across blocs defined by their official positioning on Taiwan. We find evidence of a relative decline in imports from Westleaning countries beginning in 2018, with divergence strengthening after 2020 and intensifying further in 2022. The pattern is concentrated on a limited set of rawmaterial sectors, especially mineral products and base metals. For goods covered by Western export controls to Russia, we find no evidence of a broader shift in China's sourcing. Overall, China's import realignment appears broad-based across West-leaning source countries, but has so far remained selective across product categories. China's shift toward importing from friendly nations is likely to contribute to larger bilateral trade surpluses with Western economies, provided that China's exports to these markets remain robust. |
| Keywords: | China, international trade, supply chains, fragmentation |
| JEL: | F12 F13 F14 F51 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitp:342408 |
| By: | Cavalcanti, Tiago; Ogeda, Pedro; Ornelas, Emanuel |
| 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: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20161 |
| By: | Chen, Natalie; Novy, Dennis; Solórzano, Diego |
| Abstract: | In 2018 and 2019, the US administration increased tariffs on imports from China. Did these tariffs lead to more US imports from other countries such as Mexico? Using highly disaggregated data on the universe of Mexican firm-level exports, we find evidence of trade diversion from China to Mexico. We then combine the export data with detailed longitudinal employer-employee data to investigate the impact of trade diversion on labor market outcomes for workers employed by Mexican exporters. We find that trade diversion increased the labor demand of exporters exposed to US tariffs against China, resulting in more employment and higher wages, especially for low-wage workers such as female, unskilled, younger, and non-permanently insured employees. The effects were concentrated in technology and skill-intensive manufacturing industries. |
| Keywords: | Employment |
| JEL: | F12 F14 L11 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20296 |
| By: | Auclert, Adrien; Rognlie, Matthew; Straub, Ludwig |
| 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 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 lowers the optimal unilateral tariff derived in standard trade theory. |
| Keywords: | Tariff; Macroeconomics; Monetary policy |
| JEL: | E0 F10 F40 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20165 |
| By: | Alfaro, Laura; Fadinger, Harald; Schymik, Jan; Virananda, Gede |
| Abstract: | Trade and industrial policies restricting critical inputs can inadvertently promote foreign downstream industries via a directed technological response. We provide evidence for this mechanism by examining rare earth elements (REEs) – critical manufacturing inputs with highly concentrated production and low substitutability. We show that China’s REE export restrictions in 2010 induced a surge in global innovation increasing REE input-efficiency and exports in REE-intensive industries. A quantitative trade model with Heckscher-Ohlin-based comparative advantage, directed technological change and input-output linkages rationalizes how input-supply restrictions induce REE-enhancing innovation and expand REE-intensive industries abroad. This directed technological response substantially mitigates foreign welfare losses. |
| Keywords: | Trade policy; Input-output linkages; Global value chains; Industrial policy; Innovation; Directed technological change |
| JEL: | F13 F14 F42 O33 O47 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20315 |
| By: | Fernández-Amador, Octavio; Francois, Joseph; Vogt, Achim |
| Abstract: | We estimate the trade and income effects of regulatory developments concerning standard- like non-tariff measures (NTMs) over 2012–2017 combining structural gravity estimates and general equilibrium projections. The trade cost effects of regulatory changes vary at the country-pair and across sectors. Overall, NTM-related regulatory changes over 2012–2017 increased trade costs in goods, which reduced global trade by 1.4%. The majority of this reduction corresponds to a decline in goods trade equivalent to more than 40% of the actual worldwide decrease of nominal goods trade over this period. Yet, the implied reduction of real income is a small. We highlight significant variation of these effects at the country and sector level and show that excluding pair-specific trade frictions and third-country effects introduces omitted variable bias. Our findings imply that advances in international coordination of technical regulation can further reduce trade frictions and enhance trade and real income. |
| JEL: | F13 F14 F15 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20203 |
| By: | Chupilkin, Maxim; Javorcik, Beata; Plekhanov, Alexander |
| Abstract: | This paper documents two strategies deployed to work around trade sanctions imposed on Russia after its full-scale invasion of Ukraine in 2022. These include trade intermediated through Armenia, Kazakhstan and the Kyrgyz Republic (CCA3) and a simple, yet little-documented, method whereby goods shipped via the sanctioned economy to the neighbouring countries fail to reach their intended destination. Such flows, recorded as exports in their countries of origin but not recorded as imports by destination countries, amounted to around half of total "additional" exports from the EU and the UK to CCA3 in 2022-23. Although the two strategies offset less than 10 percent of the sanctions’ impact, substitution ratios exceeded 50 percent for numerous products. Despite evasion, sanctions have resulted in a substantial increase in unit values of products exported to Russia either directly or indirectly. |
| JEL: | F14 F15 F51 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20097 |
| By: | Harstad, Bård |
| Abstract: | There appears to be a tension between proponents of trade and environmental activists. This paper shows, however, how trade can motivate environmental conservation. I first analyze a standard trade model, where trade-specific investments (e.g., deforestation) causes environmental damage. In this model, a traditional trade agreements will cause more thus deforestation. Next, I investigate the extent to which a contingent trade agreement (CTA), where default tariffs can vary with changes in the production capacity (e.g., forest cover), can motivate conservation. The model permits many products, countries, and collaborators. A numerical example suggests that growth and liberalization can cause Brazil's agricultural area to expand by 27%, but this expansion can be avoided if the EU and the US offer a CTA. |
| Keywords: | International trade |
| JEL: | F13 F18 F55 Q37 Q56 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20037 |
| By: | Andreas MOXNES; Yukiko SAITO |
| Abstract: | Follow FDI refers to the phenomenon whereby a supplier of a multinational firm establishes foreign affiliates in the same countries as their multinational customer, effectively replicating the supply chain abroad. Using novel Japanese data, we show that roughly one third of local affiliate sales (and purchases) are to other Japanese affiliates operating in the same country, indicating that a substantial share of multinational activity takes place within replicated domestic supply chains. Event studies confirm that when a firm starts selling to a multinational in Japan, the supplier is more likely to become a multinational itself. Our findings provide new micro-level evidence on how domestic value chains shape global value chains and the geography of globalization. The results highlight (i) the importance of domestic production networks in mediating access to international markets and (ii) a novel channel through which multinational activity spills over to domestic suppliers. These findings broaden and enhance our understanding of (i) why firms become multinationals, (ii) the dynamics of affiliate sales and (iii) the potential spillover effects of multinational activity. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26055 |
| By: | Arnaud Costinot; Iván Werning |
| Abstract: | We develop a simple and intuitive Pigouvian perspective on optimal trade policy. Our approach unifies a wide range of rationales for taxing trade, from the classical optimal tariff argument to contemporary debates about global carbon emissions and geopolitics. We also clarify when trade policy intervention is warranted and when alternative domestic instruments should be used instead. |
| JEL: | F10 F13 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35461 |
| By: | Estefania Flores, Julia; Furceri, Davide; Ostry, Jonathan D.; Steinberg, Federico |
| Abstract: | This paper examines the macroeconomic and political determinants of non-tariff barriers to international trade based on a new index of such restrictions with broad country and time coverage. We employ a structured empirical approach that integrates multiple methodologies to identify which factors are the most robust correlates of trade reform (defined as meaningful changes in non-tariff barriers). We find that structural factors, both macroeconomic (especially inflation and export concentration) and political (especially democracy, corruption, political polarization and populism) emerge as robust correlates of changes in trade policy. Among these, political and institutional variables explain the largest share of nontariff barrier policy variation. |
| Keywords: | Trade; Non-tariff barriers; Structural reforms; Political economy |
| JEL: | D72 F13 F14 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20248 |
| By: | Desbordes, Rodolphe; Eberhardt, Markus; Larch, Mario |
| Abstract: | We study the causal effect of country-specific democratic regime change on bilateral trade flows, extending structural gravity empirics to 'heterogeneous gravity' estimated at the country-pair level. Our difference-in-differences implementation accounts for selection into regime change, multilateral resistance, globalisation effects, and spatial dependence. We 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. |
| JEL: | P16 F13 F14 C23 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20034 |
| By: | Rodriguez-Clare, Andres; Ulate, Mauricio; Vasquez, Jose P. |
| Abstract: | We use a dynamic trade and reallocation model with downward nominal wage rigidities to quantitatively assess the economic consequences of the recent increase in the U.S. tariffs on imports from Mexico, Canada, and China, as well as the “reciprocal†tariff changes announced on “Liberation Day†and retaliatory measures by other countries. Higher tariffs trigger an expansion in U.S. manufacturing employment, but this comes at the expense of declines in service and agricultural employment, with overall employment declining as lower real wages reduce labor-force participation. For the United States as a whole, real income falls around 1% by 2028, the last year we assume the high tariffs are in effect. Importantly, our analysis disaggregates the U.S. into its 50 states, while incorporating cross-state redistribution of the tariff-generated fiscal revenue, allow- ing us to analyze which states gain or lose more from the shock. Around half of the states lose, with some states experiencing real income declines of more than 3%. Turning to cross-country results, some close U.S. trading partners—like Canada, Mexico, China, and Ireland—suffer the largest real income losses. |
| Keywords: | Canada; Mexico; China |
| JEL: | F10 F11 F13 F16 F40 F42 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20246 |
| By: | Dix-Carneiro, Rafael; Goldberg, Pinelopi Koujianou; Meghir, Costas; Ulyssea, Gabriel |
| Abstract: | We examine the effects of international trade in the presence of a set of domestic distortions giving rise to informality, a prevalent phenomenon in developing countries. In our quantitative model, the informal sector arises from burdensome taxes and regulations that are imperfectly enforced by the government. In equilibrium, smaller, less productive firms face fewer distortions than larger, more productive ones, potentially leading to substantial misallocation. We show that in settings with a large informal sector, the gains from trade are significantly amplified, as reductions in trade barriers imply a reallocation of resources from initially less distorted to more distorted firms. We confirm findings from earlier reduced-form studies that the informal sector mitigates the impact of negative labor demand shocks on unemployment. Nonetheless, the informal sector can exacerbate the adverse real income effects of economic downturns, amplifying misallocation. Last, our research sheds light on the relationship between trade openness and cross-firm wage inequality. |
| Keywords: | Trade; Informality |
| JEL: | F14 F16 J46 O17 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20250 |
| By: | Andrew B. Bernard; Teresa Fort; Valerie Smeets; Frederic Warzynski |
| Abstract: | This paper uses a unique offshoring survey to show that firms import the same goods they manufacture at home after they relocate production to low-wage countries. Instead of ceasing domestic production, offshorers produce higher-priced domestic varieties and increase both the shares and levels of their employment in innovation-related occupations. These responses highlight an under-explored aspect of globalization: the opportunity to offshore production of low-end varieties and focus domestic activities on the development, production, and marketing of high-quality or technologically advanced versions. |
| Keywords: | globalization, offshoring, reorganization |
| JEL: | L25 F14 F61 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12820 |
| By: | Marta Domínguez-Jiménez (CEMFI, Centro de Estudios Monetarios y Financieros); Santiago Etchegaray (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | Why do some economies experience a pronounced manufacturing phase during structural transformation, while others move more directly into low-skilled services? This paper shows that financial underdevelopment, by shaping export competitiveness and domestic investment demand, is a quantitatively important driver of flat-manufacturing paths. Motivating evidence links financial depth to manufacturing activity and export performance. We then quantify the mechanism in a dynamic multi-country model of structural transformation and trade, where financial underdevelopment both weakens competitiveness in finance-dependent sectors and lowers demand for manufacturing-intensive investment goods. Moving flat-manufacturing economies halfway to the financial frontier closes over a quarter of the observed flat–steep peak gap; it raises real output per worker by 13 to 17 percent and real consumption per worker by 8 to 12 percent. Paired with lower nonfinancial trade costs, the same financial improvement closes almost three quarters of the peak gap, as finance shapes the manufacturing response that openness amplifies. |
| Keywords: | International trade, Financial frictions, Structural transformation. |
| JEL: | F12 F14 F36 F43 O14 O16 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:cmf:wpaper:wp2026_2607 |
| By: | Khalil, Makram; Strobel, Felix; Rouillard, Pierre M. |
| Abstract: | We find that whether US import tariffs have supply-side effects or demand-side effects on US manufacturing sectors depends on where the affected sectors are located in the US production network. Using local projections in a panel of US manufacturing sectors, we find that US import tariffs —including the 2018-19 tariff hikes— led to sectoral output contractions via two different channels: (1) Tariff increases act as negative supply shifters for sectors that use goods from tariff-facing sectors as input in production and thus face rising input costs. (2) Tariff increases act as negative demand shifters for sectors whose customer sectors suffer negative supply side effects due to tariffs and reduce their production. We show that these results are consistent with a stylized production network model featuring complementarities in production. Overall, our finding suggests that tariffs markedly reduce US manufacturing production and that the role of input–output linkages is key for understanding the transmission of import tariff shocks to output and producer prices. JEL Classification: E23, E32, F13 |
| Keywords: | input-output tables, sectoral production and prices, trade policy, United States |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263258 |
| By: | Joseph E. Gagnon (Peterson Institute for International Economics); Nishtha Agrawal (Peterson Institute for International Economics) |
| Abstract: | Global trade imbalances have gained attention following President Donald Trump's reelection, with China's trade surplus increasing and the US trade deficit remaining historically high. This paper estimates models that can explain nearly half of the historical imbalances, with a large share of the imbalances arising from government policies. The evidence strongly suggests that governments can buy current account surpluses. The paper extends previous research (Gagnon and Sarsenbayev 2021) by six years and roughly 1, 000 observations. |
| Keywords: | current account, fiscal balance, foreign exchange intervention, official financial flows |
| JEL: | F32 F41 F42 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:iie:wpaper:wp26-13 |
| By: | Alfaro, Laura; Brussevich, Mariya; Minoiu, Camelia; Presbitero, Andrea |
| Abstract: | Finding new international suppliers is costly, so most importers source inputs from a single country. We examine the role of banks in mitigating trade search costs during the 2018-2019 U.S.-China trade tensions. We match data on shipments to U.S. ports with the U.S. credit register to analyze trade and bank credit relationships at the bank-firm level. We show that importers of tariff-hit products from China were more likely to exit relationships with Chinese suppliers and to find new suppliers in other Asian countries. To finance their geographic diversification, tariff-hit firms increased credit demand, drawing on bank credit lines and taking out loans at higher rates. Banks offering specialized trade finance services to Asian markets eased both financial and information frictions. Tariff-hit firms with specialized banks borrowed at lower rates and were 15 pps more likely and 3 months faster to establish new supplier relationships than firms with other banks. We estimate the cost of searching for suppliers at $1.9 million (or 5% of annual sales revenue) for the average U.S. importer. |
| Keywords: | Financial frictions; Bank lending; Supply chains; Trade policy |
| JEL: | G21 F34 F42 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20164 |
| By: | Jackson, Karen; Luck, Phillip; Shepotylo, Oleksandr |
| Abstract: | Russia's full-scale invasion of Ukraine in February 2022 raised a critical question: do military alliances strengthen or fracture trade ties when war breaks out? This paper shows they strengthen them. Using monthly bilateral trade data through August 2025, we find that NATO members traded approximately 9-15% more with one another after the invasion relative to non-NATO pairs - a premium that persisted and grew through 2025. These effects are not limited to the war period: applying a disaggregated structural gravity framework over 1948-2022, we estimate that NATO accession generates 12-27% increases in bilateral exports, concentrated in dual-use, differentiated, and intermediate goods consistent with defence-industrial supply-chain. Moreover, there is synergy between security and economic cooperation as the effect of NATO is strenghened by the EU membership. |
| Keywords: | trade, geopolitics, NATO, security |
| JEL: | F14 F53 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitp:342407 |
| By: | Gurevitch, Tamara; Herman, Peter; Toubal, Farid; Yotov, Yoto |
| Abstract: | We examine the implications of linguistic fractionalization on trade and welfare, focusing on the United States. Our model identifies the direct and indirect effects of fractionalization on international and domestic trade and welfare. We construct a novel dataset to show that changes in fractionalization impact trade, leading to significant economic consequences. To highlight the general equilibrium implications, we conduct simulations on language policy-induced changes in the shares and the composition of Hispanic speakers within the United States, showing the importance of considering language policies, as they can yield substantial economic benefits but also sizable economic consequences stretching beyond national borders. |
| Keywords: | Ethnolinguistic fractionalization |
| JEL: | D60 F14 F19 C54 Z13 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20048 |
| By: | Alvarez, Bastien; Orefice, Gianluca; Toubal, Farid |
| Abstract: | This paper examines how trade liberalization-induced labor demand shocks affect wages and non-wage working conditions. Using exogenous trade shocks from EU enlargement and worker-level data, we find that export liberalization increases temporary contracts and atypical work schedules, particularly for production workers. However, it has no significant effect on wages, which may reflect firms’ ability to expand employment without raising pay due to labor supply elasticity and unemployment. Import liberalization weakly affects working conditions but, consistent with previous studies, lowers wages as firms face stronger competition and reduced labor demand. |
| Keywords: | Wages; Employment |
| JEL: | F15 F16 J30 J51 J81 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20047 |
| By: | Manova, Kalina; Moxnes, Andreas; Perelló, Oscar |
| Abstract: | This paper examines intermediation in production networks to unpack the firm attributes and matching costs that govern firm-to-firm networks and the gains from trade. Exploiting rich customs data for Chile, we show that exporters of all sizes use intermediaries, mix trade modes across buyers, and set lower prices on intermediated flows. We rationalize these facts in a model of network formation with suppliers of heterogeneous productivity and matchability, buyers of heterogeneous productivity, and intermediaries that reduce matching costs for a brokerage fee. Empirical evidence on trade activity across firms and countries corroborates the model, and informs how geographic distance, logistics and customs efficiency, formal institutions, and cultural-linguistic similarity shape network costs. Model estimation reveals that sellers’ attributes are negatively correlated, such that intermediaries enable highly productive sellers with low matchability to reach smaller buyers. This amplifies the welfare gains from intermediation due to wider and deeper network connectivity. |
| Keywords: | Production networks; Intermediation; Productivity; Matching costs |
| JEL: | F10 F12 F14 F23 L11 L14 L81 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20044 |
| By: | Francois, Joseph; Hoekman, Bernard; Manchin, Miriam; Santi, Filippo |
| Abstract: | The literature on preferential trade agreements (PTAs) has mainly focused on the trade effects of non-trade provisions (NTPs) addressing environmental or labor policies. Using a dataset covering more than 120 countries and several decades, we employ a synthetic difference-in-difference estimator to study whether such provisions are accompanied with changes in associated sustainability-related performance indicators in developing countries. Given the importance the EU places on using trade to pursue sustainability goals, we differentiate between EU and other PTAs. The analysis is motivated by two arguments that have influenced the design of deep PTAs: (i) legally enforceable NTPs are more effective in improving nontrade outcomes in developing countries; and (ii) acceptance of NTPs will be accompanied by (more) aid from high-income partners. We find limited support for these arguments. Enforceable provisions have no effect on performance indicators, whereas non-enforceable provisions in non-EU PTAs are accompanied by deterioration in several outcome measures. Enforceable provisions are associated with less aid; we only find a positive relationship between EU aid and nonenforceable environmental provisions. |
| Keywords: | Official development assistance |
| JEL: | F13 F15 O19 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19917 |
| By: | OECD |
| Abstract: | Despite the rapid growth of cross-border trade in services, the evidence on how trade affects workers remains predominantly focused on manufacturing. This paper sheds new light on underexplored channels through which services trade reshapes labour markets, highlighting nuanced impacts not captured by aggregate employment effects. Expansions in services trade are found to be associated with shifts in demographic workforce composition. They are also linked to greater labour market dynamism, reflected in shorter job durations, but not to higher likelihood of switching between sectors or entering and exiting employment, nor of greater reliance on temporary contracts. At the regional level, services trade contributes to higher employment by drawing workers into the labour force and an increased probability of workers moving between regions. Moreover, jobs created by services trade are not limited to the tradable services sectors, as they generate positive spillovers to non-tradable services through sizeable local job multipliers. Collectively, the findings of this paper underscore the importance of services trade as a driver of local labour market dynamics and provide new evidence relevant for debates on gains from trade in an increasingly interconnected world. |
| Keywords: | Employment effects, Job multipliers, Labour market, Regional development, Services tradability |
| JEL: | F14 F16 F66 J21 L80 |
| Date: | 2026–08–11 |
| URL: | https://d.repec.org/n?u=RePEc:oec:traaab:301-en |
| By: | Milet, Emmanuel; Olarreaga, Marcelo |
| Abstract: | Building on Hausmann, Hwang and Rodrik (2007), we provide a methodology to estimate the degree of inclusiveness of an export product along three economic dimensions: income equality, gender equality and formality in the labour market. Using this measure of product inclusiveness, we construct a measure of a country’s export bundle inclusiveness by taking an export-weighted sum of the product inclusiveness measure. Finally, we find that a 1 percent increase in export inclusiveness, conditional on total export value and a measure of the country’s overall inclusiveness, leads to a 0.17 percent increase in GDP per capita growth. |
| Keywords: | Economic growth |
| JEL: | F14 O1 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20284 |