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on International Trade |
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Issue of 2026–03–16
fifteen papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Ethan Kapstein (Princeton University); Malia Sayad (University of Oxford.) |
| Abstract: | The purpose of this paper is to offer an empirical reappraisal of the relationship between military alliances and international trade, using "best practices" in gravity modeling. Specifically, we address three questions. First, do military allies trade more with one another than they do with other countries? Second, is accession to an alliance associated with an increase in trade between "new" and “old†members? Third, do allies more or less with their adversaries than with other countries? Focusing on the members of the North Atlantic Treaty Organization (NATO), we find that alliance accession is indeed associated with increased levels of trade, but overall, allies do not trade more with one another than they do with other countries (including their adversaries). Our research thus provides only partial support for some of the earlier studies that assessed the Effects of military alliances on international trade patterns. |
| Keywords: | Military Alliances, International Trade, Geoeconomics, Gravity Models, NATO, Trade Accession Effects, Security Externalities |
| JEL: | F14 D74 F13 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:pri:esocpu:41 |
| By: | Cokic, Marco |
| Abstract: | There is a growing body of literature on the economic history of Eastern Europe during the Cold War, thereby mainly trying to explain the demise of the Eastern bloc by discussing a range of different aspects. Trade has been largely excluded so far, even though Socialist countries were participating in international trade. This paper aims to discuss the impact of one of the most remarkable events in this period, the accession of four Socialist countries into the General Agreement on Tariffs and Trade (GATT), which is an explicitly Capitalist trade treaty, between 1966 and 1973. The results suggest that the signing of GATT is associated with a 48–56 per cent increase in export volume, depending on the type of specification. However, the paper finds modest welfare gains for these countries, which can be explained by their comparatively closed economies and other barriers to trade beyond tariffs. Given the methodological limitations, the results should be understood as the lower boundary of the actual impact of GATT on Socialist countries, thereby suggesting that trade deals between countries with different economic and political structures can be beneficial. |
| Keywords: | GATT; trade agreements; socialist countries; Cold War; Eastern Europe |
| JEL: | F13 F14 N44 N74 O24 P33 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:wpaper:137522 |
| By: | Nathan Chevalier; Matthieu Crozet; Charlotte Emlinger; Daniel Mirza |
| Abstract: | A growing number of studies show the significant impact of major geopolitical events and alignments between countries on international trade. We propose a new dataset, based on the GDELT database, that captures the exposure of country pairs to all types of geopolitical frictions, including low- and medium-importance events. The statistical indicators, which are monthly and bilateral, provide information on the geopolitical climate surrounding the relations between each country pair over time. The database covers 201 countries over nearly 10 years. Our econometric analysis confirms that geopolitical tensions create an unfavorable climate for international trade. We estimate that An increase of one standard deviation in our tension indicator has an effect on trade equivalent to a tariff ranging from 0.06% to 8.19%, depending on the specification. We also observe that the sensitivity of international trade to geopolitical events has increased significantly since the COVID-19 crisis. |
| Keywords: | Geoeconomics;International Trade;Risk;GDELT |
| JEL: | F14 F51 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cii:cepidt:2026-02 |
| By: | Simon Azuelos (AFD - Agence française de développement); Julien Gourdon (AFD - Agence française de développement); Peter Kuria Githinji (UoN - University of Nairobi); Cecília Hornok; Alina Mulyukova (University of Göttingen); Zakaria Ouari; Sid Boubekeur |
| Abstract: | This study evaluates the role of Special Economic Zones (SEZs) in Africa using newly compiled datasets covering over 230 zones across 43 countries. It examines SEZ impacts on export diversification, technological sophistication, market penetration, and integration into global value chains, while also assessing their influence on local household welfare. Findings show that SEZs significantly improve export sophistication and market access, but their contribution to product diversification and regional value chain participation remains limited. Empirical evidence from household-level data reveals that proximity to SEZs correlates with measurable wealth gains, better access to services, and improved housing quality. These benefits are broadly distributed, suggesting that SEZs can enhance welfare without exacerbating inequality. However, job creation —particularly for women— varies by sector and zone design. The study concludes that governance structure, incentive strength, and alignment with regional and sustainability goals are key to maximizing SEZ performance. Next-generation SEZs embedded in broader economic frameworks, including ESG principles and the AfCFTA, hold promise as inclusive and transformative development tools for African economies. |
| Keywords: | Export Sophistication, Global Value Chains (GVCs), Household Welfare, Industrial Policy, Trade Policy, ESG, African Continental Free Trade Area (AfCFTA), Export Diversification, Africa, geography Special Economic Zones (SEZs) |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05521092 |
| By: | Akira Sasahara (Keio University) |
| Abstract: | This article provides an overview of the literature examining the effects of international trade on countries’ average income levels. It reviews the seminal study by Frankel and Romer (1999), which uses geography as an instrumental variable to identify the causal effects of trade on income in a cross-country setting. It also discusses studies by Felbermayr and Gröschl (2013), Feyrer (2019), and Feyrer (2021), which exploit time-varying geographic shocks–natural disasters, air transport, and a canal closure, respectively–to identify the causal effects of trade on income in panel data. Along the way, this article discusses key empirical challenges and the methodological advances developed to address them. It concludes that the widely accepted answer to the question “Does trade raise income levels?†is “Yes, †at least for the period from the 1950s to the 2000s. |
| Keywords: | International trade, income levels, empirical analysis |
| JEL: | F14 F43 O47 |
| Date: | 2025–02–20 |
| URL: | https://d.repec.org/n?u=RePEc:keo:dpaper:dp2026-003 |
| By: | Sharat Ganapati; Colin J. Hottman |
| Abstract: | Transaction-level quantity discounts are a pervasive feature of US trade, shaping both price variation and tariff incidence. Using administrative microdata, we show that these discounts reflect transaction-level scale economies rather than market power. Accounting for these micro-level economies resolves a key puzzle: while observed import prices rose one-for-one with 2018-2019 US tariffs, we show this was driven by the loss of scale economies as transaction sizes collapsed. Controlling for this scale effect, the strategic pass-through of tariffs to scale-free prices falls to 60 percent, implying foreign exporters absorbed a significant share of the burden through reduced markups. |
| JEL: | F10 F12 F14 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34901 |
| By: | Kevin Parra Ramirez (Sciences-Po, Banque de France); Vincent Vicard (CEPII) |
| Abstract: | While multinational enterprises (MNEs) shift hundreds of billions in profits to low-tax jurisdictions annually, how they do remains disputed. Using firm-level data for France in 2018, we provide the first joint quantification of the three main profit-shifting channels: transfer mispricing in goods trade, intangible assets and services traded with tax havens, and intra-firm debt. We find empirical evidence for all three instruments, but transfer mispricing dominates quantitatively (€10 billion, 0.4% of GDP), followed by services (up to €6 billion) and debt (€2 billion). Although significant, these direct estimates account for half of total missing profits in France, as estimated indirectly from the location of MNE profits. We document two key blind spots likely to close this gap: cross-border digital payments by households and understudied debt instruments (e.g., securities). |
| Keywords: | Tax avoidance, Multinational firms, Profit shifting, FDI, Trade |
| JEL: | H26 H25 H32 F14 F23 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:043 |
| By: | Francesca de Nicola; Alexandros Ragoussis; Tim Schmidt-Eisenlohr; Trang Thu Tran |
| Abstract: | Letters of credit are a key trade finance instrument that covers more than 10 percent of global trade, with a notably larger role in low-and middle-income economies. Studying detailed trade data from Viet Nam, we document how letter of credit use varies with firm characteristics. We show that the probability of using a letter of credit is systematically lower for younger, smaller, and foreign-owned trading firms. Importers that are less diversified or have less trading experience are more likely to use letters of credit. Firm characteristics have the strongest effects in markets where information is scarce and enforcement is weak. These patterns are consistent with a model in which the ability to screen trading partners and the cost of bank intermediation vary with firm characteristics, and where a firm’s screening ability and country institutions are substitutes. Any policy or intervention that aims at increasing the use of bank-intermediated trade finance will therefore need to take firm heterogeneity into account. |
| Keywords: | international trade, trade finance, letter-of-credit, firms, development |
| JEL: | F14 F34 O16 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12524 |
| By: | Esteban Jaimovich (University of Turin/Collegio Carlo Alberto); Vincenzo Merella (Prague University of Economics and Business and University of Cagliari) |
| Abstract: | We study how product quality shapes the choice between air and sea freight. In a model with non-homothetic demand and income uncertainty, exporters face a timing wedge: sea shipments must commit quantities before uncertainty resolves, whereas air shipments can be better timed but at higher cost. The model implies a sharp modal sorting for vertically differentiated products: high-quality varieties fly while lower-quality varieties sail. It also predicts that the average air–sea quality gap shrinks as sea routes lengthen relative to air routes. Using U.S. customs data at the exporter–district–product level, and proxying quality with unit values, we confirm both patterns. In addition, leveraging within origin–destination time variation in relative freight costs in a 2SLS design, we show that higher sea costs (relative to air) raise the average unit value of air shipments, consistent with quality sorting. Calibrated counterfactuals show that higher demand volatility reshapes selection in a distance-dependent way, tightening it on short routes while expanding air-based participation on long routes, whereas COVID-type air-freight disruptions and tariff-type marginal-cost shocks disproportionately hit profits for highquality, long-distance exporters, and push marginal exporters to switch from air to sea. |
| Keywords: | International trade; Transportation mode; Unit values |
| JEL: | F1 F14 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:aoz:wpaper:388 |
| By: | Carsten Eckel; Lisandra Flach; Ning Meng |
| Abstract: | Products produced by multiproduct firms can be linked through demand linkages (cannibalization), supply linkages (joint production), or both. We analyze how these within-firm linkages shape the propagation of shocks - such as tariffs - across products and markets and affect firm performance through changes in markups and marginal costs. Exploiting antidumping duties as firm-product-market specific shocks, we provide evidence of both types of linkages and quantify their relative importance. On average, two-thirds of within-firm linkages arise from demand linkages and one-third from supply linkages, with substantial heterogeneity across industries. We further estimate their effects on markups and marginal costs, showing that roughly 80% of the adjustment occurs through marginal costs and 20% through markups. Our findings indicate that disregarding either type of linkage can lead to sizable misestimations of markups and pass-through rates. |
| Keywords: | multiproduct firms, cannibalization effect, joint production, demand linkages, supply linkages, antidumping duties, markups, marginal costs |
| JEL: | D21 D22 D24 F12 F13 F14 L11 L25 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12530 |
| By: | Robin Kaiji Gong; Yao Amber Li; Stephen Teng Sun; Shang-Jin Wei |
| Abstract: | While finance theory distinguishes the roles of equity and debt in supporting firm growth, their differential impacts on international trade remain underexplored. This study provides the first empirical analysis of how access to equity financing affects firm exports. We leverage the unique institutional setting in China, where initial public offerings (IPOs) require stringent regulatory approval, ensuring that only qualified firms advance to the final review stage. Our empirical strategy compares the export performance of successful IPO applicants with that of “near misses"—applicants rejected at the final review meetings. To sharpen identification, we utilize meeting records to exclude rejections citing concerns about future revenue growth or profitability risks, as these may entail unobserved shocks to export performance. Our cohort based difference-in-differences analysis reveals that IPO approval leads to a significant annualized increase of more than 6% in firm exports over the subsequent six years. Distinct from previous findings on debt financing, IPO approval primarily affects the extensive margin, enabling firms to expand into more destination-product markets. Mechanism tests suggest that IPOs enhance exports by financing intangible investments and fostering risk-taking activities. |
| JEL: | F1 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34906 |
| By: | Brodzicki, Tomasz |
| Abstract: | This paper presents an extended framework building on the Melitz model to analyze the impact of artificial intelligence (AI) adoption on firm behavior, market structure, and international trade. We introduce a log-normal distribution of firm productivity and model heterogeneous AI adoption by incorporating fixed costs and a free-rider effect, where non-adopters benefit indirectly from technological diffusion. A key innovation lies in including AI productivity gains, either symmetric in a simplified manner or stochastic, allowing for firm-level variation in implementation success. This addition generates realistic dispersion in post-adoption outcomes and alters firm dynamics near critical survival, investment, and export activity thresholds. We compare deterministic AI adoption trajectories (sigmoid and exponential) with stochastic scenarios, highlighting how uncertainty in AI outcomes can amplify competitive asymmetries and increase market volatility. Under high fixed adoption costs and weak spillovers, the model exhibits strong endogenous concentration effects, especially when adoption follows an exponential path reinforced by feedback loops, potentially approaching scenarios of artificial superintelligence (ASI) or singularity. A sigmoid adoption trajectory implies bounded gains and a more stable equilibrium. The paper also explores the potential breakdown of monopolistic competition assumptions, suggesting oligopolistic drift in concentrated AI-intensive markets. These dynamics give rise to targeted policy implications to promote inclusive technological diffusion and reduce systemic risk. |
| Keywords: | Artificial Intelligence; AI; Market Structure; Global Trade; Productivity; Firm Heterogeneity; Technological Change |
| JEL: | D24 F12 F61 L11 O33 |
| Date: | 2024–08–31 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127767 |
| By: | Stéphane Auray; Michael B. Devereux; Aurélien Eyquem |
| Abstract: | Can protectionism revive domestic production, slow automation, and help routine workers? We address this question in a dynamic open-economy model with heterogeneous firms, endogenous entry, and task-based production in which routine tasks can be performed by workers or robots. Import tariffs reallocate demand toward domestic goods, reshape markups and entry incentives, and generate fiscal revenues rebated to households. As a result, tariffs raise GDP and consumption measured at market prices and temporarily slow automation, even though intermediate output at factor prices and trade volumes decline. The gains are unevenly distributed: routine workers benefit robustly through transfers and reduced training, non-routine workers face opposing wage and rebate effects, and firm owners gain in aggregate as higher domestic demand and entry expand total profits despite lower per-firm values. Aggregate welfare gains hinge critically on key assumptions (automation, training, endogenous entry) and on how tariff revenues are rebated. In the baseline with uniform transfers, the welfare-maximizing tariff lies below the classical monopoly formula, while alternative rebate schemes can shift it substantially. Overall, the results caution against viewing tariffs as a simple tool for reindustrialization and highlight the role of technology adoption and fiscal incidence in evaluating protectionist policies. |
| JEL: | F30 F40 F41 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34935 |
| By: | Nicola Cortinovis; Joric Donnet |
| Abstract: | This paper explores the impact of 3D printing (3DP), a technology popularly described as being able to “produce (almost) anything from anywhere†, on the spatial organization of production. Although some scholars have theorized that 3DP may affect the location of manufacturing, empirical evidence on its implications for the spatial footprint of production activities remains limited. This study investigates how 3DP adoption, together with pre- existing local capabilities, is associated with the export performance of countries in terms of 3D-printable products. Using trade data and exploiting a recent change in the Harmonized System classification, we identify 3DP adopting countries and analyze the relationship between 3DP adoption, pre-existing specializations and export outcomes. Our findings suggest that countries not previously specialized in a product but that adopted 3DP technologies tend to catch up with, and in some cases overtake, previously specialized countries, a result compatible with the idea of a shifting geography of production. We further examine the heterogeneity across product types and levels of complexity. This paper contributes to the literature by conceptually framing the spatial implications of 3DP, leveraging a novel empirical approach to capture 3DP adoption, and providing new empirical insights on the relation between 3DP and export performance. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2602 |
| By: | Ben G. Li; Penglong Zhang |
| Abstract: | Geopolitics is shaped by trade and borders. We develop a general-equilibrium model in which both are endogenously determined in a linear world. Their interaction rationalizes geopolitical outcomes that cannot be obtained when either trade or borders are treated as exogenous. This unified and tractable framework is used to study political economy, security, and ideology within and across states. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.11292 |