|
on International Trade |
| By: | Nobuaki YAMASHITA (Aoyama Gakuin University, Swinburne University of Technology); Doan Thi Thanh HA (Economic Research Institute for ASEAN and East Asia (ERIA)) |
| Abstract: | The United States (US)–China trade war created new export opportunities for countries connected with the US and China by global value chains. We focus on the case of Vietnamese firms and examine a third-country effect by exploiting the firm-level variations in the extent of connections to the US and China with global value chains. |
| Keywords: | Global value chains (GVCs), Viet Nam, US–China trade war |
| Date: | 2024–09–26 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-24 |
| By: | Sebastián Villano (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía) |
| Abstract: | Globalization and international trade have been longstanding focal points in economic research and global political agendas. However, the recent surge in protectionist policies has necessitated a reevaluation of the role of trade in the global economy. This research aims to scrutinize the process of international economic integration among various countries in recent decades, with a particular emphasis on Latin American economies. A comprehensive analysis of trade costs across countries is imperative for comprehending the dynamics and patterns of this integration. To accomplish this objective, novel indicators have been devised leveraging comprehensive databases and utilizing Structural Gravity Models with the latest available data. The results underscore the diverse nature of reductions in trade costs across regions and countries. Geography and asymmetry play a pivotal role in comprehending trade costs. Typically, developed economies experience lower trade costs, while emerging economies in Asia have notably gained from globalization. Conversely, Latin America has encountered obstacles in enhancing global market access through trade tariff policies. Additionally, upon comparing the gains attained by exporters against those of consumers, it becomes apparent that globalization has conferred more consistent advantages upon exporters, whereas consumers have encountered greater variability in the benefits. Notably, Asian consumers have emerged as primary beneficiaries, in contrast to Latin American consumers who have experienced comparatively modest advancements. Within Latin American countries, heterogeneity stands out as its primary characteristic, with economies displaying varying outcomes in reducing trade costs. While some have shown progress, others lag behind without significant advancements, remaining more isolated. |
| Keywords: | Trade costs, Latin America, Integration, Structural gravity indicators |
| JEL: | F02 F13 F14 F15 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ulr:wpaper:dt-12-24 |
| By: | Holger Breinlich; Martina Magli |
| Abstract: | Services account for one-third of global trade, yet little is known about the impact of trade restrictions on services trade. To make progress in this area, it is crucial to understand through which Modes services are traded (cross-border, movement of people, foreign investment or consumption abroad) and how firms substitute among these Modes. We provide novel micro-level evidence on firms’ mode choices, combining detailed data on UK firms’ trade and affiliates’ sales. We also estimate the substitution between trade Modes using Brexit as an exogenous shock, finding that UK firms increasingly relied on local affiliate sales to serve the EU market after 2016. This shift protected firm-level services exports from expected higher trade barriers after Brexit, but at the cost of lower domestic employment. |
| Keywords: | trade shocks, services trade, modes of supply, Brexit |
| JEL: | F13 F14 F16 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11331 |
| By: | Burman, Akanksha (World Bank); Egger, Peter (ETH Zürich); Freeman, Rebecca (Bank of England); Maur, Jean‑Christophe (World Bank); Rocha, Nadia (Inter American Development Bank); Theodorakopoulos, Angelos (Aston Business School and CBP/Aston) |
| Abstract: | We analyse the impact of policy-driven (eg tariffs) and non‑policy-driven (eg conflicts, natural disasters) trade shocks on intermediate versus final goods components of gross production for low, middle, and high-income country groups. Further, we examine the role of direct versus indirect, and foreign versus domestic, channels in transmitting these shocks. Results indicate that tariffs and conflicts impact the composition of gross production by changing its intermediate input component, and these changes are driven predominantly by indirect and foreign channels. Trade protectionism in high‑income countries dampens low‑income countries’ global supply chain (GSC) network participation, but not that of middle‑income countries. Further, it increases their domestic input contribution to output, at the expense of developing nations. On the other hand, trade liberalisation in low and low‑middle‑income countries increases their level of GSC involvement, with the adjustment taking place in high‑income countries through an increase in their use of foreign intermediates. |
| Keywords: | Global supply chain networks; shock transmission; hidden exposure; resilience; counterfactual scenarios |
| JEL: | F13 F14 F15 F63 |
| Date: | 2024–08–30 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:1092 |
| By: | Kazuma Inagaki |
| Abstract: | This paper studies how investment in R&D and export technology amplifies the welfare gains from trade liberalization. I develop a dynamic heterogeneous firm international trade model with investment in productivity-enhancing R&D and export technology. I find that R&D investment combined with a dynamic export technology enhances the welfare gains from trade liberalization. I quantitatively demonstrate that the welfare gain from trade liberalization in the dynamic trade model with elastic R&D is above 30% higher than that with inelastic R&D. By contrast, in a static trade model, the elasticity of R&D has a small impact on welfare gain. These findings suggest that static trade models may provide an even poorer approximation of dynamic trade models than we thought. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1261 |
| By: | Beshkar, Mostafa (Department of Economics, Indiana University); Chang, Pao-Li (School of Economics, Singapore Management University); Song, Shenxi (Lazada South East Asia) |
| Abstract: | This paper introduces a quantitative framework to analyze the WTO’s reciprocity principle. Utilizing two polar bargaining environments, we measure terms-of-trade concessions among WTO members and examine how shifts in applied tariffs and economic fundamentals affect bilateral and multilateral balance of concessions. We find significant disparities in concessions, largely driven by the rise in trade imbalances since the early 1990s. Notably, although US-China bilateral tariffs suggest considerable terms-of-trade benefits for China, under a hypothetical balanced trade scenario, their relationship evolves towards near reciprocity following China’s accession to the WTO. Furthermore, in contrast to the significant gains in its relationship with the US, China experiences a terms-of-trade loss in its bilateral relationships with other WTO members. Lastly, we offer insights into the magnitude of concessions exchanged by countries at different levels of development. |
| JEL: | C51 C54 F13 F14 F15 |
| Date: | 2024–05–30 |
| URL: | https://d.repec.org/n?u=RePEc:ris:smuesw:2024_005 |
| By: | Ingo Borchert (University of Sussex Business School, CITP, UKTPO); Mattia Di Ubaldo (University of Sussex Business School, CITP, UKTPO) |
| Abstract: | A key feature of the EU’s Generalized System of Preferences (GSP) scheme is its graduation mechanism, whereby preferential market access for imports to the EU is withdrawn from beneficiaries in sectors in which they are considered to be sufficiently competitive. This paper estimates the effect of competitiveness-related preference removals by exploiting ‘surprise graduations’ that arose from the 2014 GSP reform and could not realistically have been foreseen. We find a strongly negative impact on affected countries and products’ export performance to the EU, with trade values dropping by nearly 35% on average after three years. The effect differs appreciably across affected GSP beneficiaries, with the fall in EU imports ranging from -24% from India to -67% from Nigeria. Graduations are found to bite where it would hurt beneficiary countries the most, namely in products for which the GSP had enabled export success. At the same time, we also find evidence of a positive spillover effect to closely related non-GSP eligible products, exports of which nearly double as developing country exporters redirect production towards non-graduated products. |
| Keywords: | GSP, graduations, trade policy, preferences |
| JEL: | F13 F14 F15 F63 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:sus:susewp:1224 |
| By: | Peter Egger; Reto Foellmi; Ulrich Schetter (Center for International Development at Harvard University); David Torun |
| Abstract: | We introduce incumbency effects into a tractable dynamic model of international trade. The framework nests the canonical Melitz (2003)-Chaney (2008) model as a special case. The key novelty is that fixed costs of market access decrease with tenure. As a consequence, there is less market exit and entry in response to a shock. We derive a gravity equation and show that, ceteris paribus, countries that liberalized their trade relationship earlier trade more today. We provide supporting evidence for the underlying mechanism and derive an augmented ACR formula (Arkolakis et al., 2012) for the gains from trade that accounts for incumbency effects. A quantitative analysis suggests that our mechanism can explain up to 25% of countries’ home shares and that the gains from trade are, on average, 10% larger when accounting for incumbency effects. The analysis further reveals novel distributional effects of trade that benefit real wages but reduce profits. |
| Keywords: | incumbency effects, sunk cost of market access, gravity equation, gains from trade, home bias, path dependence |
| JEL: | F12 F14 F15 F17 |
| Date: | 2023–07 |
| URL: | https://d.repec.org/n?u=RePEc:glh:wpfacu:219 |
| By: | Sufian Jusoh; Intan Murnira Ramli (Economic Research Institute for ASEAN and East Asia (ERIA)) |
| Abstract: | The Association of Southeast Asian Nations (ASEAN) Member States are some of the most important foreign direct investment destinations in the world. Investment in ASEAN Member States covers all four pillars of investment typology: natural resources, market-seeking, export oriented, and strategic assets. Key sectors – such as semiconductors, tourism, consumer products, e-commerce, banking, and commodities (e.g. nickel) – are expected to benefit from this trend. Many of the investors in ASEAN are multinational enterprises, and multinational enterprises earning €750 million or more in two of the four fiscal years, are now subject to the Global Minimum Tax (GMT) in more than 140 jurisdictions around the world. With the introduction of the GMT, ASEAN Member States must rethink their incentives and investment promotion strategies to maintain their competitive edge over other foreign direct investment destinations around the globe. Latest Articles |
| Date: | 2024–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:pb-2024-04 |
| By: | Felbermayr, Gabriel; Hinz, Julian; Langhammer, Rolf J. |
| Abstract: | Following the upcoming U.S. elections, the EU should prioritize defending the multilateral trade system, as a collapse in global economic cooperation could impact Europe up to four times more than direct U.S. tariffs alone. Potential U.S. trade policies under either a Harris or second Trump administration are expected to remain protectionist, though Harris would likely adopt a more multilateral stance, while Trump could intensify tariffs and weaken the WTO's role. If the U.S. imposes broad tariffs-such as a 10% surcharge on imports and a 60% tariff on Chinese goods-global trade could shrink by 2.5% initially, with greater contractions if trade partners retaliate. While some EU sectors, like high-tech, may see short-term output gains due to relative competitiveness, EU GDP would still decline, with Germany facing GDP losses of up to €6 billion and significant impacts in key sectors like automotive and pharmaceuticals. In the most severe scenario, a breakdown of the WTO or fragmentation into competing geopolitical blocs would lead to profound economic losses. EU GDP could fall by up to 0.5%, with Germany's output declining by 3.2%, while China would bear the greatest losses. Given the high stakes, the EU's priority must be to uphold the global trade system, as the costs of fragmentation far exceed those of a bilateral dispute with the U.S. |
| Abstract: | Nach den bevorstehenden US-Wahlen sollte die EU der Verteidigung des multilateralen Handelssystems Priorität einräumen, da ein Zusammenbruch der globalen wirtschaftlichen Zusammenarbeit Europa bis zu viermal stärker treffen könnte als direkte US-Zölle allein. Die potenziellen Handelspolitiken der USA unter einer möglichen Harris- oder zweiten Trump-Administration werden voraussichtlich protektionistisch bleiben, wobei Harris eher einen multilateralen Ansatz verfolgen dürfte, während Trump die Zölle verstärken und die Rolle der WTO weiter schwächen könnte. Sollte die USA umfassende Zölle erheben - etwa eine 10%-Abgabe auf alle Importe und einen 60%-Zoll auf chinesische Waren - könnte der globale Handel zunächst um 2, 5 % schrumpfen, mit größeren Einbrüchen bei Gegenmaßnahmen von Handelspartnern. Während einige EU-Sektoren wie der Hochtechnologiebereich kurzfristig aufgrund relativer Wettbewerbsvorteile profitieren könnten, würde das BIP der EU dennoch sinken. Deutschland würde einen Rückgang des BIP um bis zu 6 Milliarden Euro verzeichnen, mit erheblichen Einbußen in Schlüsselbranchen wie der Automobil- und der Pharmaindustrie. Im schwerwiegendsten Szenario würde ein Zusammenbruch der WTO oder die Aufteilung in konkurrierende geopolitische Blöcke zu erheblichen wirtschaftlichen Verlusten führen. Das BIP der EU könnte um bis zu 0, 5 % sinken, während die Wirtschaftsleistung Deutschlands um 3, 2 % zurückgehen würde; China würde die größten Verluste hinnehmen müssen. Angesichts dieser hohen Risiken sollte die EU ihre Bemühungen auf die Sicherung des globalen Handelssystems konzentrieren, da die Kosten einer Fragmentierung die Risiken eines bilateralen Konflikts mit den USA bei Weitem übersteigen. |
| Keywords: | Trade wars, WTO, tariffs, decoupling, fragmentation, Handelskriege, WTO, Zölle, Entkopplung, Fragmentierung |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkpb:305305 |
| By: | António Afonso; José Alves; Lucas Menescal; Sofia Monteiro |
| Abstract: | After computing the Gini and Herfindahl-Hirschman indexes for exports and imports partner concentration for a set of 31 European countries between 1995 and 2023, we analyse the role of macroeconomic, institutional and uncertainty effects on the partner concentration (diversification) of exports and imports. From our analysis, we disentangle different effects, namely that while global GDP leads to an increase in concentration in both exports and imports, internal rates of return increase exports diversification, reducing it for imports. Additionally, European uncertainty reduces the concentration of the product countries’ origin/destination for imports and exports, respectively. Our results provide a comprehensive set of results that enable public authorities and firms to minimize their risks when trading with the exterior. |
| Keywords: | Exports; Imports; Gini index; Herfindahl-Hirschman index; Determinants of concentration. |
| JEL: | C33 E02 F14 F32 F41 G15 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp03562024 |
| By: | Kazunobu HAYAKAWA (Bangkok Research Center, Institute of Developing Economies, Thailand); Sasatra SUDSAWASD (National Institute of Development Administration, Thailand) |
| Abstract: | Since the latter half of the 2010s, China’s exports to the United States (US) have gradually decreased due to the US-China trade war and other factors, such as lockdown measures in China to combat COVID-19. This decrease has resulted in increasing exports from third countries, including Thailand, to the US market by substituting China’s exports, i.e. trade diversion. Against this backdrop, this study empirically investigates how the changes in exports to the US driven by the change in China’s exports to the US affect wages in Thailand. Especially, we examine the heterogeneous effects according to workers’ characteristics. To this end, we conduct regression analyses using individual-level quarterly data from the first quarter of 2017 to the second quarter of 2023. Our main finding is that the wage gap between low- and middle-skilled workers decreased, whilst the gap between middle- and highskilled workers increased. Namely, the increased exports to the US caused ‘wage polarisation’ in Thailand. We also find that the increase in exports to the US contributed to expanding the wage gap by age but narrowing it by gender. |
| Keywords: | US-China trade war; wages; Thailand |
| JEL: | F15 F53 |
| Date: | 2024–09–26 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-26 |
| By: | Tekilu Tadesse Choramo; Jemal Abafita; Yerali Gandica; Luis E C Rocha |
| Abstract: | Global and regional integration has grown significantly in recent decades, boosting intra-African trade and positively impacting national economies through trade diversification and sustainable development. However, existing measures of economic integration often fail to capture the complex interactions among trading partners. This study addresses this gap by using complex network analysis and dynamic panel regression techniques to identify factors driving economic integration in Africa, based on data from 2002 to 2019. The results show that economic development, institutional quality, regional trade agreements, human capital, FDI, and infrastructure positively influence a country's position in the African trade network. Conversely, trade costs, the global financial crisis, and regional overlapping memberships negatively affect network based integration. Our findings suggest that enhancing a country's connectivity in the African trade network involves identifying key economic and institutional factors of trade partners and strategically focusing on continent-wide agreements rather than just regional ones to boost economic growth. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.21019 |
| By: | Magdolna Sass (Institute of World Economics, HUN-REN Centre for Economic and Regional Studies) |
| Abstract: | Foreign Direct Investment played a crucial role in the economic transition of the post- socialist countries. EU membership prospects positively affected FDI inflows in the nineties and the integration process promoted FDI directly and indirectly as well, through enterprise restructuring, labour market impact, sectoral reforms, regulatory quality, rule of law, and specific aspects of the business environment. FDI flows added new, competitive capacities and technologies to the region, however, FDI-related benefits remained below the expectations. The Central and East-European countries could mainly offer their low wages in the intra-EU distribution of production and most of them lacked competitive local firms. These economies based their growth strategies on FDI and it still plays a determining role, especially in certain export-oriented sectors. |
| Keywords: | FDI, European Union, New Member States |
| JEL: | F2 P33 |
| URL: | https://d.repec.org/n?u=RePEc:iwe:workpr:277 |
| By: | Xu, Shuanglei (School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China); Deng, Youyi (School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China); Nepal, Rabindra (School of Business, Faculty of Business and Law, University of Wollongong, New South Wales, Australia); Jamasb, Tooraj (Department of Economics, Copenhagen Business School) |
| Abstract: | Since the Russian-Ukrainian conflict, the European Union (EU)’s energy imports have faced challenges, and energy security has come to the fore. Focusing on the EU and its relations with major energy trading countries, we adopt a social network approach (SNA) and exponential random graph model (ERGM) to analyze the energy trade impact of the conflict. We use data from a sample of 47 countries from 2014-2023 to explore the characteristics of the structural evolution of the EU’s conventional and renewable trade networks and the influencing mechanisms behind them. As a result of the conflict and the global trend towards decoupling, the EU’s conventional trade network is undergoing a contraction. Meanwhile, its renewable trade network is thriving, indicating a shift in energy structures; the core-periphery undergoing restructuring, Russia fading out of the core circle of the trade, and the US becoming a key hub connecting all parties. Germany, France, and the Netherlands play the role of important importers as core nodes of the network. Mechanistic analysis shows that mutual plays an important role in multilateral trade; rising geopolitical risks, while posing a barrier to energy imports, have facilitated a boom in renewable trade; economic size and trade openness have positively driven energy trade. Foreign investment, intellectual property rights, and levels of population and urbanization have had a differentiated impact on the two types of energy trade; geographic proximity, linguistic commonality, and free trade agreements positively contribute to the construction and maintenance of energy trade networks. This study depicts the dynamics of EU energy trade under geopolitical turbulence, expands the research methodology in this area, deepens the understanding of energy geopolitics, and informs the transformation of the EU’s energy structure. |
| Keywords: | European Union; Conventional energy trade; Renewable energy trade; Social network; Exponential random graph model |
| JEL: | F18 Q43 |
| Date: | 2024–10–30 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:cbsnow:2024_014 |
| By: | Zechlin, Linus; Marpe, Moritz |
| Abstract: | The rapidly expanding importance of the Chinese economy saw a restructuring of the global trade hierarchy. While this proves challenging for all economic actors, especially peripheral economies are forced to rethink the way they interact and trade with the new emerging economy (EME) powerhouse that is China. In this article, we pay closer attention to the South American (SAC) economies and their specific industrial composition that arguably left them in an unequal relationship with China, placing them in a precarious situation of dependency on low-complexity commodities. Utilising the theoretical framework of economic complexity, we thoroughly assess this asymmetric relationship between SAC and China. Causal linkages are further created by including the findings from this descriptive examination into a structural gravity model of trade. We find that the complexity approach underlines the notion of asymmetry in the Chinese-SAC trade nexus and places the latter in a so-called quiescence trap, a disposition which could be outgrown by a significant increase in productive capabilities. The econometric analysis reinforces this, urging additional research on other developing and emerging economies. |
| Keywords: | International Trade, Economic Complexity, Gravity Theory, China, South America |
| JEL: | F10 F14 O53 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ipewps:305267 |
| By: | Ward, Charley |
| Abstract: | In 1703, the Methuen Treaty removed duties on the exchange of English cloth for Portuguese wine, the trade later immortalised by David Ricardo’s use of it to explain his theory of comparative advantage. While Ricardo described Portugal as productively superior in both goods, he showed how specialisation and trade could still produce a higher level of output and mutual benefits. Ever since, Ricardo’s theory has been used by neoclassical economists as a theoretical tool to assert the logic of free trade. However, a subset of political economists, including Friedrich List, deny that trade liberalisation is always good for growth. These scholars have re-historicised the exchange of English cloth for Portuguese wine, finding that the Methuen Treaty ruined Portugal’s domestic textile industry and left them with a “slow-growing export market for wine.”1 This paper examines historical accounts of the Methuen Treaty and Anglo-Portuguese trade to assess the accuracy of the mainstream and heterodox characterisations of Ricardo’s classic example. It uses articles from prominent 19th and 20th century British, Portuguese, and Brazilian historians to develop a coherent narrative of the circumstances that produced the Methuen Treaty. Ultimately, this paper finds that the treaty was one event in a series that impeded the growth of Portuguese domestic industry, inflated their trade deficit, and produced wealth for the English. This reveals how Ricardo’s theory obscures a very simple insight: that some specialisations are better than others. |
| JEL: | F10 |
| Date: | 2024–02–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125859 |
| By: | Marius Faber; Kemal Kilic; Gleb Kozliakov; Dalia Marin |
| Abstract: | The world economy has become more and more globalized as firms have organized production along global value chains. But more recently, globalization has stalled. This paper shows that higher uncertainty, in combination with better automation technologies, has likely contributed to that trend reversal. We show that plausibly exogenous exposure to uncertainty in developing countries leads to reshoring to high-income countries, but only if industrial robots have made this economically feasible. In contrast, we find no strong evidence of nearshoring or diversification. We address concerns about reverse causality by showing that results hold when using two alternative identification strategies. In a narrative approach, we use only locally generated spikes in uncertainty, for which the narrative around the events suggest that they are plausibly exogenous. In a small open economy approach, we restrict the sample to small developed countries that are unlikely to cause uncertainty in the developing world. Moreover, we show that results are robust to the main threats to identification related to shift-share instruments. |
| Keywords: | global value chains, uncertainty, automation, reshoring, shift-share design |
| JEL: | F14 F15 F16 J23 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11419 |
| By: | Christopher FINDLAY (Australian National University) |
| Abstract: | The COVID-19 pandemic period offered the opportunity to consider the adjustment of elements of the transport system to the shock. This paper reviews the experience of the air freight system. It discusses how initially the pandemic led to rising rates, especially because of restrictions on passenger travel, which in turn induced a supply response that allowed capacity to recover. The consequences for trade costs are also examined using data on product imports by Australia by mode. The rise in trade costs for air freight during the pandemic was significant but less than that for sea freight. The drivers of variation in trade costs at the levels of product and economy of origin are identified, including distance, unit value, and institutional variables. The long run trend is for trade costs to fall in both sea and air freight modes. There is scope for further reduction in costs associated with air freight when supported by innovation in the sector, including the application of digital technology. This shift is facilitated by a number of policy initiatives, including more open policy regimes for air freight services and implementation of commitments in the World Trade Organization’s Trade Facilitation Agreement. |
| Keywords: | air freight, COVID-19, trade costs, services trade restrictiveness |
| JEL: | R41 F14 |
| Date: | 2024–07–03 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-19 |
| By: | Jung HUR (Sogang University); Chin Hee HAHN (Gachon University) |
| Abstract: | This paper examines the impact of the 2011 Japanese earthquake on the sales and purchases of firms that have an intra-firm network with Japan. Using unique firm-level data of the Republic of Korea (henceforth, Korea) and applying a difference-in-differences model, we find two results. First, following the 2011 Japanese earthquake, Japanese subsidiaries in Korea switched their intra-firm sales patterns with a reduction in intra-firm export and an increase in intra-firm domestic sales, compared to non-Japan foreign subsidiaries in Korea. Second, however, the sales or purchases of Korean mother firms with subsidiaries in Japan were negatively affected, compared to either non-foreign direct investment (FDI) firms or FDI firms without subsidiaries in Japan. The results imply that the Japanese subsidiaries in Korea had a relatively resilient and flexible intra-firm network, whilst the Korean firms with subsidiaries in Japan did not. |
| Keywords: | FDI firms, Intra-firm Sales and Purchases |
| JEL: | F10 F23 E32 |
| Date: | 2024–09–26 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-25 |
| By: | Hoyos, Mateo (Center for Research and Teaching in Economics); Coronado, José Alejandro; Martins, Guilherme Klein |
| Abstract: | This paper presents novel empirical evidence on the impact of trade on structural transformation. Leveraging quasi-experimental tariff variation from Brazil's trade liberalization in the 1990s, we examine its effects on regional sectoral employment shares. Building on recent cross-regional macroeconomic literature, we approximate the aggregate effects of trade on structural change by extending the traditional shift-share analysis to include estimates of spatial spillover effects, beyond the commonly reported local or direct impacts. Our findings reveal that Brazilian regions directly exposed to larger tariff reductions experienced a significant decrease in manufacturing employment shares, an increase in the primary sector, and a decline in non-tradables. Spatial spillover effects—whether based on migration or gravity links—are positive for manufacturing and the primary sector but negative for non-tradables. While positive spillovers in manufacturing partially offset local deindustrialization, the net effects remain negative and economically significant. These effects persisted for at least twenty years post-liberalization and are independent of potential confounders, including alternative structural change hypotheses and other shocks to Brazil's economy during the study period. Our results are consistent with the theoretical literature on trade and structural transformation which emphasizes the significance of comparative advantage. |
| Date: | 2024–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:rfqvt |
| By: | George A. Alessandria; Yan Bai; Soo Kyung Woo |
| Abstract: | We study the reasons for the large, coincident increases in unbalanced international trade and overall trade from 1970 to 2019. We show that these two salient features—a rise in net and gross international trade—are largely a consequence of a reduction in intratemporal trade barriers rather than a substantial reduction in the frictions on intertemporal trade or greater asymmetries in business cycles. Beyond explaining changes in the distribution of gross and net trade, the decline in intratemporal trade frictions is consistent with a fall in the dispersion across countries in other key macro time series, including the real exchange rate, terms of trade, export-import ratio, relative spending, and relative GDP. |
| JEL: | E3 F4 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33101 |
| By: | Abdelmonim AMACHRAA |
| Abstract: | Nothing better illustrates the positive contribution of the integration of national economies into global value chains than the fact that in the 1990s, the automotive sector barely existed in Morocco. Now, it is the leading export sector, with a production and assembly capacity of 700, 000 vehicles, making it an attractive and competitive hub linking Africa and Europe in the automotive value chain. However, the automotive industry is on the cusp of change, with advances in electric and autonomous vehicles, and transformations in mobility, lowering the barriers to entry in car assembly, and increasing the need for labor- intensive products such as wiring harnesses. We have identified two trends. First, vehicle manufacturers are engaging in the supply of raw materials. Second, the reorientation of investment flows and the organization of the location of production units will allow Western countries to reduce their dependence on foreign suppliers, particularly China. Upstream integration, semiconductors, clean energy, and batteries are at the center of decoupling negotiations. In an uncertain context, this research is intended to conceptualize an adaptive integration strategy for middle-income countries in global automotive value chains. |
| Date: | 2023–05 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:pp_09-23 |
| By: | Biehler, Nadine; Kipp, David; Koch, Anne |
| Abstract: | Migration cooperation with third countries is thriving. Bilateral agreements with countries of origin, host countries and transit countries are increasingly seen as important instruments for overcoming the challenges associated with immigration. With the Special Commissioner for Migration Agreements, the German government has created a focal point to bring together the political objectives in the areas of return and labour recruitment into one comprehensive approach. Initial agreements were quickly reached in the hope of sending a clear signal to the electorate. Beyond their symbolic effect, the agreements have the potential not only to be the starting point for long-term, sustainable migration policy cooperation, but also to contribute towards the development of the countries of origin. In order to realise this potential, a better reconciliation of interests between the respective partner countries and Germany, capacity building in the area of recruitment and more consistency in external migration policy are required. |
| Keywords: | migration cooperation with third countries, countries of origin, host countries, transit countries, labour recruitment, Special Commissioner for Migration Agreements |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:swpcom:305236 |
| By: | Zuzana Zavarská (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | This policy note explores key issues in the Danube Region, focusing on labour market dynamics, including the development of digital skills, foreign direct investment (FDI) with a particular emphasis on FDI in the IT sector, and the robotisation and automation of the region’s industries. Covering 14 countries—Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czechia, Germany, Hungary, Moldova, Montenegro, Romania, Serbia, Slovakia, Slovenia, and Ukraine—it outlines policy recommendations aimed at enhancing workforce readiness, attracting high-tech foreign investments, and ensuring the region's competitiveness in an increasingly digitalised and automated global economy. |
| Keywords: | Danube Region, Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czechia, Germany, Hungary, Moldova, Montenegro, Romania, Serbia, Slovakia, Slovenia, Ukraine, Economic Policy, FDI, Digitalisation, Automation, Labour Market Dynamics, Regional Development |
| JEL: | O52 R58 F21 J24 O33 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:wii:pnotes:pn:84 |
| By: | Fabrizio Leone |
| Abstract: | Using a panel of Spanish manufacturing firms covering the 1990-2017 period, I document new evidence about affiliates of multinational enterprises (MNEs): after being acquired, they exhibit a higher propensity to use robots, which leads to a reduction in their labor share. These effects are identified using a matched event-study design, which accounts for selection into multinational ownership and robot adoption. The findings are consistent with a model of robot adoption choices by heterogeneous firms and hold even after considering other explanations for the labor share decline. The estimates imply that without MNEs, the reduction in the manufacturing labor share over the sample period would have been 8% smaller. Multinational-induced robot adoption explains about one-third of the overall impact of multinational activity on the labor share. |
| Keywords: | multinational enterprises, globalization, robots, labor share |
| JEL: | F23 F66 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11396 |
| By: | Ketan REDDY (Indian Institute of Management Raipur, India); Subash SASIDHARAN (Indian Institute of Technology, Madras, Chennai, India.); Shandre Mugan THANGAVELU (Sunway University, The University of Adelaide) |
| Abstract: | In this study, we examine the implications of economic policy uncertainty on global value chain (GVC) participation and the integration of Indian manufacturing firms using firm-level data. Using panel data from 2004 to 2021, we find that economic policy uncertainty (EPU) impedes GVC participation and firm integration. Further, we find that the impact of EPU on GVC participation operates through the financial constraint channel with highly leveraged and low-liquidity firms. Using survival analysis, we also highlight that higher EPU results in higher exit from GVCs and reduces entry into GVCs. |
| Keywords: | Economic policy uncertainty; GVC participation; Manufacturing firms |
| Date: | 2024–09–26 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-23 |
| By: | Zahniser, Steven; Cardell, Lila; Zereyesus, Yacob Abrehe; Valdes, Constanza |
| Abstract: | Cuba’s economy, which has been struggling since 2016 and fared poorly during the Coronavirus (COVID-19) pandemic, has been unable to achieve a strong, sustained recovery and continues to face lower tourism revenues, decreased agricultural output, energy shortages, and double-digit inflation. This continuing economic downturn has limited Cuba’s ability to import agricultural products and weakened the country’s ability to produce its own food, thereby worsening food security in Cuba. To assess the extent of this problem, researchers at the U.S. Department of Agriculture (USDA), Economic Research Service (ERS) used the International Food Security Assessment (IFSA) model. Results indicated that an estimated 12.8 percent (1.4 million people) in Cuba did not meet the daily threshold of 2, 100 calories per capita in 2023. Due to uncertainties regarding the measurement of Cuba’s Gross Domestic Product (GDP), the researchers considered a scenario with adjusted GDP per capita (based on the average GDP per capita for the Caribbean subregion) and estimated that 37.8 percent of the population (4.2 million people) was food insecure. Although Cuba’s declining agricultural production has increased the need for agricultural imports, the country’s ongoing challenges in earning foreign exchange through tourism, remittances, and exports limit its ability to do so. Under these circumstances, U.S. agricultural exports to Cuba increased in 2021, 2022, and 2023 but were concentrated in a single commodity, chicken meat. |
| Keywords: | Agricultural and Food Policy, Consumer/Household Economics, Crop Production/Industries, Demand and Price Analysis, Food Security and Poverty, Health Economics and Policy, International Relations/Trade, Livestock Production/Industries, Political Economy, Productivity Analysis |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:ags:uersrr:348092 |
| By: | Alexander Klein; Christopher M. Meissner |
| Abstract: | We study the relationship between tariffs and labor productivity in US manufacturing between 1870 and 1909. Using highly dis-aggregated tariff data, state-industry data for the manufacturing sector, and an instrumental variable strategy, results show that tariffs reduced labor productivity. Tariffs also generally reduced the average size of establishments within an industry but raised output prices, value-added, gross output, employment, and the number of establishments. We also find evidence of heterogeneity in the association between tariffs and value added, gross output, employment, and establishments across groups of industries. We conclude that tariffs may have reduced labor productivity in manufacturing by weakening import competition and by inducing entry of smaller, less productive domestic firms. Our research also reveals that lobbying by powerful and productive industries may have been at play. The era’s high tariffs are unlikely to have helped the US become a globally competitive manufacturer. |
| JEL: | F13 F15 N11 O14 O47 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33100 |
| By: | M. Scott Taylor |
| Abstract: | This paper generalizes the original Brander and Taylor model of open-access renewable resource use and trade to address three common critiques. First, I introduce heterogeneity across agents in harvesting productivity to smooth out the model's extreme specialization patterns while maintaining its Ricardian structure and tractability. Second, I move beyond the original assumption of open access by constructing a policy stringency function allowing for partial, first-best, and endogenous resource policy. Third, by exploiting the smooth substitution possibilities generated by agent heterogeneity and the insight that policy stringency functions are likely to vary across countries, I show how the model's core predictions can be evaluated using empirical methods related to those in growth econometrics. |
| JEL: | F11 F18 F64 Q20 Q27 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33113 |
| By: | Asad, Asad L. (Cornell University); Gonzalez-Rodriguez, Sofia; Ro, E Ju; Medina, Daniel Tovar; Mousa, Nora |
| Abstract: | This report describes how immigration advocates—people engaging in political or legal campaigns for, and/or offering direct services and support to, immigrants—understand their efforts to reduce or prevent the harms of the U.S. immigration system on immigrants and their families. We draw on interviews with 67 immigration advocates representing 76 immigrant-serving nonprofits across the United States between November 2021 and February 2023. The interviews affirm advocates and their organizations’ important frontline roles in reducing systemic harm by addressing immigrants’ immediate material, social, and/or legal needs. Yet, when it comes to preventing harm by reforming or transforming the immigration system, many advocates believe their efforts do little but maintain the system’s structure. Advocates attribute this dynamic to several sources, including the ever-evolving harms of the current system; the demands of the public and private funders their organizations rely on; intraorganizational challenges common to immigrant-serving organizations; and the perceived immovability of the national, state, and local political contexts they work in. We conclude with several immediate and long-range suggestions for immigration advocates to consider as they continue their work. |
| Date: | 2024–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:u78ks |
| By: | Jerg Gutmann; Pascal Langer; Matthias Neuenkirch |
| Abstract: | Political leaders matter, but statistical evidence for their relevance in international politics is scarce. We estimate panel probit models with data for the period 1970 to 2004 and sender-year and dyad fixed effects to evaluate whether more similar leaders are less likely to sanction each other. We find that higher leader similarity significantly reduces the likelihood of sanction imposition. The effect is especially pronounced when UN and EU sanctions are excluded, that is, when focusing on sanctions imposed through unilateral political decisions. In this case, going from no correlation to perfect correlation in the characteristics of the leader pair lowers the likelihood of sanctions by 5.7 pp. Moreover, leader similarity seems to matter especially for sanctions aimed at democratic change or human rights improvements, where political leaders are expected to enjoy more discretion. |
| Keywords: | International sanctions, Leader similarity, Political leaders |
| JEL: | D70 F51 K33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:trr:wpaper:202411 |
| By: | Ilya Hajiaghayi; MohammadTaghi Hajiaghayi; Gary Peng; Suho Shin |
| Abstract: | We study bilateral trade with a broker, where a buyer and seller interact exclusively through the broker. The broker strategically maximizes her payoff through arbitrage by trading with the buyer and seller at different prices. We study whether the presence of the broker interferes with the mechanism's gains-from-trade (GFT) achieving a constant-factor approximation to the first-best gains-from-trade (FB). We first show that the GFT achieves a $1 / 36$-approximation to the FB even if the broker runs an optimal posted-pricing mechanism under symmetric agents with monotone-hazard-rate distributions. Beyond posted-pricing mechanisms, even if the broker uses an arbitrary incentive-compatible (IC) and individually-rational (IR) mechanism that maximizes her expected profit, we prove that it induces a $1 / 2$-approximation to the first-best GFT when the buyer and seller's distributions are uniform distributions with arbitrary support. This bound is shown to be tight. We complement such results by proving that if the broker uses an arbitrary profit-maximizing IC and IR mechanism, there exists a family of problem instances under which the approximation factor to the first-best GFT becomes arbitrarily bad. We show that this phenomenon persists even if we restrict one of the buyer's or seller's distributions to have a singleton support, or even in the symmetric setting where the buyer and seller have identical distributions. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.17444 |