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on International Trade |
| By: | Silva Neira, Ignacio; Rodríguez González, Carlos; Pédussel Wu, Jennifer |
| Abstract: | Globalization has significantly influenced economic policy in Latin America. After the debt crisis of the 1980s, capital controls were removed leading to a substantial increase in Foreign Direct Investment (FDI) to the region. Chile, in particular, has extensively promoted free international integration, with the import of technology through FDI playing a major role in its economic development. During the 1990s, Chile experienced a period of rapid GDP growth, increased exports, and higher productivity. However, its productive dynamism has since stalled, trapping the country in an income plateau. Insights from evolutionary economics provide a framework for understanding this phenomenon, where neoclassical theory falls short. This study seeks to provide empirical evidence on whether FDI has promoted or hindered the innovative performance of domestic firms in Chile. Using firm-level data, the research employs the well-known CDM model to address selection bias in innovation efforts. The econometric analysis measures the impact of foreign competition on local innovation, specifically examining how foreign ownership and competition within economic sectors influence innovation outputs in local firms. The findings indicate that firms facing higher levels of foreign competition are less likely to implement new processes or products. These results offer valuable policy implications, highlighting the nuanced effects of FDI on host economies. The impact of FDI varies depending on the type of investment, the economic sector, and the technology introduced. Consequently, strategies aimed at leveraging FDI for economic catch-up must account for these variances and focus on fostering local innovation and technological advancement. |
| Keywords: | Foreign Direct Investment, CDM Model, Innovation, Technology transfer |
| JEL: | F21 O33 L25 O54 D22 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ipewps:313642 |
| By: | Magbondé, Kadoukpè Gildas |
| Abstract: | Despite the expansion of global value chains (GVCs) over the last three decades, African countries trail the other developing regions in terms of GVC integration. Yet, the drivers of African countries' GVC participation are not well understood compared to developed countries. The current paper fills this knowledge gap by providing empirical evidence of the institutional drivers of GVC participation in Africa. It uses the instrumental variable approach based on a panel dataset of 37 African countries spanning the period 2002-2018 to examine the impacts institutions have on total, backward, forward GVCs as well as GVC position. Though no significant effect is recorded with respect to total GVC participation, the instrumental-variable estimates suggest that upgraded institutions encourage backward GVCs and reduce both forward GVCs and upstreamness. For a successful transition from upstream stages of GVCs, African countries must consider strengthening their political and economic institutions. |
| Keywords: | Institutions, global value chains, African countries and instrumental variable approach |
| JEL: | F13 F23 P48 E02 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:sgscdp:314433 |
| By: | Arjona, Román (European Commission, Directorate-General for Internal Market, Industry, Entrepreneurship and SME; Avenue d'Auderghem 45, 1040 Brussels, Belgium); Connell, William (European Commission, Directorate-General for Internal Market, Industry, Entrepreneurship and SME; Avenue d'Auderghem 45, 1040 Brussels, Belgium); Herghelegiu, Cristina (European Commission, Directorate-General for Internal Market, Industry, Entrepreneurship and SME; Avenue d'Auderghem 45, 1040 Brussels, Belgium) |
| Abstract: | This paper investigates how the import relations of the European Union (EU) have recently shifted in an increasingly fragmented global trade environment. Using trade data at a highly disaggregated product level, we analyse the reallocation of EU import flows, examining its implications in terms of changes in import diversification levels and price dynamics |
| Keywords: | European Union, trade fragmentation, supply chain reorganisation, resilience, dependencies, raw materials, semiconductors, net-zero technologies |
| JEL: | L52 L60 F14 F15 F61 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:bda:wpsmep:wp2024/28 |
| By: | Hoda Mohamed (Friedrich Schiller University Jena) |
| Abstract: | How the use of industrial robots affects value capture in fragmented global production networks, represented by global value chains (GVCs), remains an open question. I focus on the automotive industry - the largest consumer of industrial robots and one of the most traded manufacturing industries - to examine how robot adoption affects value capture through backward and forward GVC participation. In addition, I assess how automation shapes an industry’s position within the value chain, using upstreamness as a proxy. Using data from OECD TiVa, OECD ICIO, and IFR for 56 countries and 14 manufacturing industries from 1997 to 2017, I apply OLS, OLS-IV, and Poisson pseudo maximum likelihood fixed effects models to analyze the impact of automation on GVC integration. My findings reveal that robot adoption significantly increases forward GVC participation, particularly among factory economies, while also driving higher upstreamness. These results indicate that robots enable industries to capture more value in GVCs while maintaining their upstream positions in GVCs, which are symbolized by forward linkages and trade in intermediate goods. |
| Keywords: | robots, global value chains, automotive, trade in value-added |
| JEL: | F14 O14 L62 |
| Date: | 2025–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:jrp:jrpwrp:2025-0005 |
| By: | Paola Conconi; Fabrizio Leone; Glenn Magerman; Catherine Thomas |
| Abstract: | This paper provides a new explanation for the dominance of multinational corporations (MNCs) in international trade: after being acquired by an MNC, firms face lower entry frictions in countries in which their global parent already has a presence. We provide a model of firms’ export and import choices that delivers firm-level gravity regressions to isolate these “MNC network effects” from other channels through which multinational ownership can affect firms’ trade participation. We estimate the model combining rich administrative data for Belgium with data on MNCs’ global affiliate networks. Event study results reveal that acquired firms are more likely to start exporting to and importing from countries that belong—or that are exogenously added—to their parental network. The effects are stronger when new affiliates are geographically and culturally close to their direct parent, which can facilitate transfer of information about the global parent’s network. Combining the structure of our model with the empirical estimates, we find that MNC network effects have a large impact on firm growth. The effects of MNC ownership extend beyond the boundaries of the multinational: new affiliates are also more likely to start trading with countries that are geographically and culturally close to the MNC network, even if their parent has no affiliates there. |
| Date: | 2025–03–06 |
| URL: | https://d.repec.org/n?u=RePEc:oxf:wpaper:1071 |
| By: | Ezzat, Asmaa; Zaki, Chahir |
| Abstract: | Efficient institutions matter in promoting Global Value Chains (GVCs) participation since they help reduce transaction costs for firms that engage in trade. Competition policy is considered an important dimension of these institutions. This paper investigates whether competition policy matters for participation of emerging countries in GVCs, with a special focus on African countries. To do so, we use the EORA dataset on backward and forward linkages and merge it with different indicators pertaining to the de jure (competition law) and the de facto (market dominance, antimonopoly, etc.) measures of competition policy. We find that both the de jure and the de facto dimensions of competition policy matter for backward and forward GVC participation. In addition, our findings indicate that this relationship is non-linear as the market can become saturated. Two important transmissions channels can explain this effect: market diversification and trade liberalization. These results remain robust after we control for the endogeneity between GVC and competition. In the case of African countries, we find that more diversified economies benefit from competitive markets, whereas other results remain unchanged, especially for the de jure measures. |
| Keywords: | competition policy, GVC, Africa |
| JEL: | D40 F12 F14 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:sgscdp:314432 |
| By: | Alessandro Borin (Bank of Italy); Peonare Caka (Bank of Slovenia); Gianmarco Cariola (Bank of Italy); Dennis Essers (National Bank of Belgium); Elena Gentili (Bank of Italy); Laura Lebastard (Bank of Italy); Andrea Linarello (Bank of Italy); Michele Mancini (Bank of Italy); Tullia Padellini (Bank of Italy); Ludovic Panon (Bank of Italy); Francisco Requena (University of Valencia); Jacopo Timini (Bank of Spain) |
| Abstract: | We study how disruptions to the supply of foreign critical inputs (FCIs) —defined as vulnerable inputs and key inputs for the digital and green transition —may affect value-added at different levels of aggregation. Using firmlevel customs and balance sheet data for Belgium, France, Italy, Slovenia and Spain, our framework allows us to assess how geoeconomic fragmentation may affect European economies differently. Our baseline calibration suggests that a 50% reduction in imports of FCIs from China and other countries with a similar geopolitical orientation would result in sizable losses with significant heterogeneity across firms, sectors, regions, and countries, driven by the heterogeneous exposure of firms. Our findings highlight that the short-term costs of supply disruptions of FCIs can be substantial, especially when firms cannot easily substitute away from these products. |
| Keywords: | Geoeconomic fragmentation, global value chains, global sourcing, international trade, imported inputs. |
| JEL: | F10 F14 F50 F60 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:eec:wpaper:2506 |
| By: | Lisandra Flach; Lisa Scheckenhofer |
| Abstract: | Key MessagesThe average tariff gap for traded products between the US and the EU is around 0.5 percentage points, which is relatively low compared to other US trade partners.US tariff changes aimed at closing the tariff gap between the US and the EU could affect 53% of German exports to the US and 6% of German global exports. While a wide range of products would be affected, the tariff increase would remain relatively small for three quarters of traded products, as their tariff gaps are below 2.3%.Our simulations show that higher US “reciprocal” tariffs reduce German exports to the US between 2.4% and 3.0% and decrease value added by 0.02%. These small effects for Germany, compared to scenarios with a flat 20% increase in US tariffs, are mostly due to the relatively low tariff gap between the US and the EU.However, the opposite scenario arises if the EU negotiates “full reciprocal tariffs” with the US – implying that the US also lowers tariffs when its own are higher. In this case, German value added and welfare increase. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:econpb:_71 |
| By: | Mumin, Yazeed Abdul; Ali, Williams |
| Abstract: | Recent technological advances and policy initiatives present Africa with enormous growth potential from participating in global value chains (GVCs). However, the widening income inequality is raising questions as to whether participation in GVCs plays any role in this observed phenomenon. Despite the increased attention on regional and global value chains, and on income inequality in Africa, little attention has been given to investigating the potential nexus between both. This study investigates the impacts of GVC participation on income inequality and the underlying mechanisms in Africa. We applied the instrumental variable (IV) approach to address potential endogeneity between GVC participation and income inequality. We find that participation in GVCs substantially reduces income inequality in Africa, which is largely through increased relative prices of exports, access to improved technologies and economic upgrading. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:sgscdp:314434 |
| By: | Eduardo Polloni-Silva (Universidade Federal de Mato Grosso do Sul); Herick Fernando Moralles (Universidade Federal de São Carlos); Rosina Moreno (AQR-IREA, University of Barcelona) |
| Abstract: | Research shows that Foreign Direct Investment (FDI) can be beneficial/harmful to the host’s environment. However, the mechanisms that explain these contrasting effects are still unclear. By employing a regional dataset on FDI in the State of Sao Paulo, Brazil, this study verifies how the technological content of the FDI may impact the host region. Additionally, applying the promises from the institution-based view, the origins of FDI and the institutional quality of these home countries were included. The results reject the commonly employed ‘one size fits all’ approach towards FDI, since both high-technology and low-technology FDI can be beneficial for the host’s sustainable development. Yet, the origins of these investments matter, and receiving FDI from countries with weaker institutions can be harmful, regardless of the sector. These findings have important implications for policymakers and future research focused on emerging economies, and the promised expectations of FDI should be revisited |
| Keywords: | CO2 Emissions Intensity; Sustainability; Foreign Direct Investment; São Paulo; Brazil. JEL classification: F18; O13; Q56; R11 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:aqr:wpaper:202410 |
| By: | Federico Carril-Caccia (University of Granada); Jordi Paniagua (University of Valencia. Kellogg Institute, University of Notre Dame.); Marta Suarez-Varela (Bank of Spain) |
| Abstract: | This paper analyses the effects of food crises on forced international migration (FIM) flows using a structural gravity model, testing the influence of liquidity constraints in the context of heterogeneous migration costs and economic resources of potential migrants. We construct a dataset that captures the severity, persistence, and causes of food crises. Our results suggest that food crises increase FIM. While mild food crises skew international migrants towards developed and non-neighbouring countries, more severe events divert them to closer destinations. The results indicate that food crises tighten liquidity constraints on migration, and this worsens as they intensify. Under more severe food crises, migrants may be unable to afford the higher costs of migrating internationally, particularly to a developed nation, thus choosing a closer destination or migrating internally. |
| Keywords: | Forced migration; Food crisis; Food insecurity; liquidity constraints; heterogeneous migration costs; Gravity equation |
| JEL: | F22 O15 Q18 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:eec:wpaper:2505 |
| By: | Pablo A. Cuba-Borda; Albert Queraltó; Ricardo M. Reyes-Heroles; Mikaël Scaramucci |
| Abstract: | We explore how shocks to trade costs affect inflation dynamics in the global economy. We exploit bilateral trade flows of final and intermediate goods together with the structure of static trade models that deliver gravity equations to identify exogenous changes in trade costs between countries. We then use a local projections approach to assess the effects of trade cost shocks on consumer price (CPI) inflation. Higher trade costs of final goods lead to large but short-lived increases in inflation, while increases in trade costs of intermediate goods generate small but persistent increases in inflation. We develop a multi-country New Keynesian model featuring trade in final and intermediate goods and show that it can replicate the inflation responses we identify in the data. We estimate the model using historical data and use it to explore the drivers of U.S. inflation in the aftermath of the COVID-19 pandemic. We find that trade costs account for one percentage point of additional inflation in 2022 and the bulk of inflationary pressures in 2023. |
| Keywords: | inflation; international trade; trade costs; New Keynesian model; post-pandemic inflation; monetary policy; gravity equations |
| JEL: | E10 E30 F10 F40 F60 |
| Date: | 2025–03–04 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:99656 |
| By: | Alessia Matano (AQR-IREA, University of Barcelona and Università di Roma “La Sapienza”); Paolo Naticchioni (Roma Tre University and IZA) |
| Abstract: | This paper investigates the relationship between China’s import competition and the innovation strategies of domestic firms. Using firm level data from Italy spanning 2005-2010 and employing IV fixed effects estimation techniques, we find that the impact of China’s import competition on innovation varies depending on the type of goods imported (intermediate vs. final). Specifically, imports of final goods boost both product and process innovation, while imports of intermediate goods reduce both. Additionally, we extend the analysis to consider the role of unions in moderating these responses. We find that, in unionized firms, imports' impact on innovation is mitigated, specifically to protect workers' employment prospects |
| Keywords: | China’s Import Competition, Final and Intermediate Goods, Product and Process Innovation, Unions, IV Fixed effects estimations. JEL classification: C33, L25, F14, F60, O30, J50 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:aqr:wpaper:202501 |
| By: | Saad Ahmad (U.S. International Trade Commission); Jeffrey Bergstrand (University of Notre Dame. Kellogg Institute, University of Notre Dame); Jordi Paniagua (Kellogg Institute, University of Notre Dame. University of Valencia); Heather Wickramarachi (U.S. International Trade Commission) |
| Abstract: | We introduce the Multinational Revenue, Employment, and Investment Database (MREID). Utilizing firm-level data from Orbis, MREID offers comprehensive and consistent information on international and domestic revenue, employment, and investment of multinational enterprises (MNEs) for 185 countries, 25 industries, and (initially) a 12-year annual time series. The database covers a range of industries, including agriculture, mining, energy, manufacturing, and services, enabling a full account of MNE activities across sectors and countries. |
| JEL: | F15 F21 F23 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:eec:wpaper:2504 |
| By: | Rivera, John Paolo R.; Gutierrez, Eylla Laire M.; Bautista, Marie Jel D. |
| Abstract: | Amid various trade agreements that define trade rules and commitments for economies globally, the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) have emerged as the largest and most forward-looking agreements. The combined impact of these agreements is expected to promote deeper integration of member economies, resulting in sustained economic growth. However, these agreements also present threats, such as increased inequality and stiffer competition for local industries. Given these opportunities and threats to member economies, it is crucial to examine the readiness of enterprises for liberalization, especially in less developed economies like the Philippines. This study focuses on the Philippine tourism industry, given its economic significance. It underscores the continuously expanding economic role of tourism, identifies opportunities and threats, and assesses the readiness of tourism enterprises for trade liberalization. To address the research question of how tourism enterprises can prepare for the impacts of trade liberalization brought about by RCEP and CPTPP, a qualitative triangulation approach involving document reviews, key informant interviews, and focus group discussions was employed. The findings indicate that both trade agreements offer limited opportunities for tourism enterprises to participate in liberalization, as they are constrained by issues of mutual recognition and standardization of skills. These findings aim to evaluate the current status of tourism within the context of ongoing developments in the international economic environment. |
| Keywords: | CPTPP;enterprises;RCEP;trade liberalization;travel and tourism;Regional Comprehensive Economic Partnership;Comprehensive and Progressive Agreement for Trans-Pacific Partnership |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:phd:rpseri:rps_2025-02 |
| By: | Ziruo Chen; Bifei Tian; W. Robert Reed (University of Canterbury); Zhengxin Wang |
| Abstract: | This paper empirically investigates the effects of bilateral investment treaties (BITs) on entrepreneurship through the lens of social network analysis (SNA), focusing on two key network characteristics: centrality and brokerage. We begin by developing a set of hypotheses regarding how a country’s position within the BIT network influences entrepreneurial activity. These hypotheses are tested using a panel dataset of 102 countries spanning 2006–2018. We also examine how these relationships are moderated by economic development and trade integration, and whether they vary across different types of entrepreneurship—including formal vs. informal, male vs. female, and domestic vs. international entrepreneurship. Our findings indicate that centrality has a positive effect on entrepreneurship, while brokerage exerts a negative influence. Moreover, both economic development and trade integration are found to weaken these effects. We also observe differential impacts of BIT network structure across the various entrepreneurship subgroups. |
| Keywords: | BITs network; Entrepreneurship; Centrality; Brokerage; Economic development; Trade integration |
| JEL: | F21 L26 F63 F15 |
| Date: | 2025–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:cbt:econwp:25/06 |
| By: | César Ducruet; Dimitris Tsiotas; Bruno Marnot; Barbara Polo Martin; Hidekazu Itoh; Elyass Sayd |
| Abstract: | Port infrastructure and related freight flows that support international trade are not distributed evenly across the globe, but are instead heavily concentrated in a few hubs and gateways. Remoteness from such key nodes is a major barrier to overall development, while overconcentration leads to the congestion and vulnerability of transport and supply chains. Advancing the maritime accessibility of smaller ports in favor of a more balanced development has so far been unsuccessful. Due to its closeness with trade and socio-economic welfare making it highly strategic, maritime connectivity has attracted international efforts to accurately measure it through a wide array of studies in the past two decades . Here we develop a novel analysis of the global maritime network, over the last 140 years (1880-2020), based on untapped vessel movement data published by the insurer Lloyd’s List. Our results demonstrate that while the network has become more optimal to connect the global market, its topological and spatial structure became increasingly sparse and vulnerable to crises and shocks. We also show that contrary to what is commonly claimed, containerization prolonged rather than initiated the contemporary transformation of the maritime network. |
| Keywords: | complex networks; connectivity; international trade; maritime transport; ports |
| JEL: | N90 O18 F14 L90 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:drm:wpaper:2025-14 |
| By: | Marlies Piek; Dieter von Fintel |
| Abstract: | The effects of minimum wages on workers and firms depend on enforcement and compliance. While most research examines local determinants, this paper explores whether international market enforcement influences minimum wage impacts. In South Africa farmers exporting to the EU must comply with private standards mandating minimum wage adherence. Using difference-in-differences and administrative tax data, we analyse how a large agricultural minimum wage increase affected export stance, employment, and wages under varying private standards. |
| Keywords: | Minimum wage, Trade, Employment, Wages, Administrative data, Tax data, South Africa |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-10 |
| By: | Alloysius Joko PURWANTO (Economic Research Institute for ASEAN and East Asia (ERIA)); Ridwan Dewayanto RUSLI (Cologne University of Applied Sciences and University of Luxembourg); Hafis Pratama Rendra GRAHA (Bandung Institute of Technology); Sirichai KOONAPHAPDEELERT (Chiang Mai University); Reza Miftahul ULUM (University of Indonesia); Citra Endah Nur SETYAWATI (Economic Research Institute for ASEAN and East Asia (ERIA)); Nadiya PRANINDITA (Economic Research Institute for ASEAN and East Asia (ERIA)); Ryan Wiratama BHASKARA (Economic Research Institute for ASEAN and East Asia (ERIA)) |
| Abstract: | This study analyses the impact of the COVID-19 pandemic on a firm's total factor productivity (TFP) using Korean firm-level data from 2016 to 2021. The study reveals that the pandemic had a heterogeneous impact on firm TFP depending on the firm's operational characteristics, specifically whether the firm is a multinational enterprise (MNE) or a pure exporter (non-MNE). Whilst the pandemic had a more significant negative impact on the TFP of pure exporters than other firms, MNEs were less affected by the pandemic shock than pure exporters. This implies that whilst both firms were exposed to negative demand shocks on a global scale, MNEs were better equipped to handle supply-side uncertainties through international diversification. The study identifies certain characteristics of MNEs that helped buffer the pandemic shock, such as shedding labour, high R&D intensity, and more diversification via foreign subsidiaries. These characteristics enabled MNEs to mitigate the pandemic shock and even increase their TFP during the pandemic. |
| Keywords: | Global Pandemic; COVID-19; firm productivity; resource allocation; labour shedding; R&D; MNEs; international diversification; pure exporting firms |
| JEL: | D24 F23 F40 H12 I18 |
| Date: | 2025–03–04 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-38 |
| By: | Zainab Iftikhar (University of Bonn & CEPR); Anna Zaharieva (Bielefeld University) |
| Abstract: | In this study we evaluate the effects of low-skilled immigration on small businesses, wages and employment in Germany. We develop a search and matching model with heterogeneous workers, cross-skill matching, and endogenous entry into entrepreneurship. The model is calibrated using German Socio-Economic Panel (SOEP) data. Quantitative analysis shows that low-skilled immigration benefits high-skilled workers while negatively affecting the welfare of low-skilled workers. It leads to the endogenous expansion of immigrant entrepreneurial activities, generating positive spillovers for all demographic groups except native entrepreneurs. Overall, there is a marginal loss to the economy in terms of per worker welfare. This loss is mitigated with increased skilled migration from India. Policies restricting immigrant entrepreneurship relax competition for native small businesses but reduce welfare for all other worker groups. Ethnic segregation of small businesses benefits low-skill native entrepreneurs. |
| Keywords: | Entrepreneurship, small business, self-employment, search frictions, immigration |
| JEL: | J23 J31 J61 J64 L26 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:358 |
| By: | Maria Bas (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Lionel Fontagné (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Irene Iodice (University of Bielefeld, CESifo - CESifo, Universität Bielefeld = Bielefeld University); Gianluca Orefice (Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, CESifo - CESifo, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper investigates the role played by firms' managerial skills in the heterogeneous reaction of exporters to common exogenous changes in their international competitiveness (here captured by changes in the real exchange rate). Relying on a simple theoretical framework, we show that firms with better managerial skills have higher profits, market power, and are able to adapt their markup more when faced with a competitiveness shock. We test this prediction relying on detailed firm-product-destination level export data from France for the period 1995-2007 matched with specific information on the firms' share of managers. Our findings show that managerial intensive firms have larger exporter price elasticity to real exchange rate variations. The effect is not trivial: in the wake of a depreciation, exporters whose management intensity is one standard deviation higher than the average, increase their prices by 51% to 73% more than the average exporter. This finding is robust to controlling for the alternative explanations suggested by the previous literature to explain the heterogeneous pass-through of firms. |
| Keywords: | Exchange rate pass-through, heterogeneous pricing-to-market, managerial skills |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:hal:cesptp:halshs-05000273 |
| By: | Michitaka NAKATOMI |
| Abstract: | Due to the expansion and diversification of the WTO membership, the complexity and conflict of economic interests, and the rise of economic security demands, consensus-based rulemaking in the WTO has become both stagnant and chaotic, and concerns about unilateral measures and protectionism are increasing. In this environment, since 2018, the WTO has been drawing attention to the importance of plurilateral agreements under the JSI (Joint Statement Initiative), which has produced certain results. It is also no exaggeration to say that all trade agreements since the inception of the WTO have been based on plurilateral agreements. This paper focuses on the importance of plurilateral agreements, discussing the background to the attention paid to plurilateral agreements, their definitions and extensions, the conditions and factors for their realization, their contribution to WTO rules and the path to multilateralization, and their potential and limitations, based on analyses of actual cases. The current status and future issues facing JSI and WTO decision-making will also be touched upon. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:eti:rpdpjp:25007 |
| By: | Dünhaupt, Petra; Gräf, Helena; Jiménez, Valeria; Jungmann, Benjamin |
| Abstract: | Adequate policy space is essential for resource-rich countries to move up the value chain and seize the opportunities presented by global decarbonization and the demand for low-carbon technologies. However, WTO rules, investment and free trade agreements (FTAs) deprive nonhegemonic powers of the industrial policy tools used by successful developmental states in the past, thus reducing policy space and arguably 'kicking away the ladder'. The present article addresses these issues in the context of Chile's lithium industrial policy and the modernised EU-Chile FTA. With the objective of moving up the lithium value chain, Chile employs preferential pricing: offering lithium at a preferential price to companies that establish production sites for higher-value processes. However, the modernized FTA includes restrictions on the use of preferential pricing, as outlined in its Energy and Raw Materials Chapter (ERM) -a novel element in the EU FTAs aimed at safeguarding access to critical raw materials for the EU's Green Deal objectives. By means of document analysis and 21 expert interviews, we find that the modernised FTA and its ERM are compatible with Chile's current lithium industrial policy. Nonetheless, they further restrict Chile's policy space, potentially limiting future policy adaptations. These restrictions, alongside further national factors, may hinder the fulfilment of Chile's industrial policy goals. The article offers explanations for the negotiation outcomes and identifies factors beyond policy space that constrain the effectiveness of Chile's lithium industrial policy. |
| Keywords: | Chile, Lithium, Policy Space, Industrial Policy, Free Trade Agreement |
| JEL: | F63 O24 O25 O54 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ipewps:313641 |
| By: | Magerman, Glenn (ECARES at ULB, CEPR and CESIfo); Palazzolo, Alberto (ECARES at ULB and NBB) |
| Abstract: | This paper analyzes a policy toolbox encompassing trade, industrial, and public policies and their effects on the EU and its geographical regions. We develop a multi-sector, multi-region general equilibrium framework with imperfect competition, input-output linkages, and external economies of scale. Regional and supranational governments set policies and raise taxes and provide subsidies to fund these |
| Keywords: | Deglobalization, Regional Inequalities, Trade policy, Industrial Policy, Public Policy, Supply Chains, General Equilibrium |
| JEL: | F10 R12 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:bda:wpsmep:wp2024/29 |
| By: | Prest, Brian C. (Resources for the Future) |
| Abstract: | Surging exports of US liquefied natural gas (LNG) over the past decade have raised concerns about their potential to increase domestic gas prices and spur environmental impacts, both local and global, especially because methane, a potent greenhouse gas, commonly leaks from US oil and gas infrastructure. Yet methane leak rates vary widely—up to an order of magnitude—across sources of US oil and gas supply, creating uncertainty in the carbon footprint of US LNG. This paper models the impacts of increased US oil and gas export demand on domestic oil and gas prices, marginal oil and gas supply by US basin, and the implied methane intensity of that marginal supply. Each 1 billion cubic feet per day (Bcf/d) increase in gas export demand is estimated to increase domestic natural gas prices by approximately 2.5% while reducing crude oil prices by 0.5% due to the induced supply of coproduced oil. The US supply response to gas export demand comes disproportionately from basins with low estimated methane leak rates, led by Appalachia, yielding an effective methane intensity of the gas supply anticipated to meet export demand (1.7% leak rate) that is lower than the average US gas supply (3.1%). The supply response to an increase in oil demand shows the reverse pattern, with high-leak Permian supply crowding out low-leak basins like Appalachia, yielding a very high effective methane leak rate (9.1%). These widely varying effective methane leak rates suggest that the 2015 repeal of the US crude oil export ban may have been a bigger driver of US methane emissions than expanded LNG exports would be. In particular, model results suggest that US crude oil exports over 2015–23 drove methane emissions twice as large as those driven by US LNG exports over the same period, with the former’s induced emissions equivalent to those expected to be caused by more than 20 Bcf/d of gas exports. |
| Date: | 2025–03–10 |
| URL: | https://d.repec.org/n?u=RePEc:rff:dpaper:dp-25-05 |
| By: | Sanja Samirana Pattnayak |
| Abstract: | This study contributes to the literature on digitalisation in developing countries by examining its role in export intensity and firm productivity in Indian manufacturing from 2000 to 2021. Using fixed effects and the system generalised method of moments (GMM) model, the analysis draws on firm-level data from the Prowess database, encompassing approximately 11, 000 manufacturing firms. The findings reveal that digitalisation amongst India’s manufacturing firms is positively associated with both export intensity and productivity, after accounting for firm characteristics and heterogeneity. Specifically, a 1% increase in digital intensity corresponds to a 0.16% increase in exports. This effect is further enhanced when expenditure on internet services and software development is included, raising the export impact to 0.21% per 1% increase in digital intensity. Additionally, the results indicate that a 1% increase in digitalisation intensity leads to a 0.8% growth in total factor productivity. These findings have significant policy implications, particularly as digitalisation increasingly shapes the global and Indian economies. They underscore the need for strategies to promote digital adoption in manufacturing to enhance competitiveness and productivity. |
| Keywords: | digitalisation; productivity; exports; servicification; manufacturing; India |
| JEL: | C33 D24 F14 J24 L60 O33 |
| Date: | 2025–03–19 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-39 |
| By: | Rafael Llorca (Departamento de Economía Aplicada II (Estructura Económica), Facultad de Economía, Avda. de los Naranjos, s/n, 46022 Valencia); Alejandra Martínez – Martínez (University of Valencia and INTECO) |
| Abstract: | This paper examines the impact of key climate factors and extreme meteorological events on international tourism flows relative to domestic tourism flows. To achieve this, we estimate a structural gravity equation on a sample of 50 countries over the period 2008–2021. On average, temperatures do not exhibit a significant effect on the aforementioned relationship. However, this finding is critically influenced by the heterogeneity observed across countries, particularly the negative effects estimated for Canada and the United States. The number of hot days and heavy precipitations reduces the relative volume of international tourism, although this effect also varies depending on the country. Notably, the United States once again plays a pivotal role in driving the estimated average negative impact of extreme events on international tourism flows. At the global level, storms, landslides, wildfires, extreme temperatures and epidemics adversely affect international tourism. |
| Keywords: | Climate change, Domestic tourism, International Tourism, Gravity Equation, United States |
| JEL: | F64 L83 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:eec:wpaper:2503 |
| By: | Corpus, John Paul; Cassimon, Danny |
| Abstract: | We examine the effect of net capital inflows on industrialization in the ASEAN-4 countries of Indonesia, Malaysia, Philippines, and Thailand. Using panel data covering 1980–2018, we estimate the influence of both aggregate and disaggregated net capital inflows on the manufacturing sector’s share in employment and real output. We find that aggregate net capital inflows have a negative influence on the manufacturing share of employment. Disaggregating capital inflows reveals that the negative effects emanate from non-FDI inflows, particularly portfolio investment and portfolio debt inflows. Meanwhile, FDI inflows have a positive effect on the manufacturing share of output. Our findings are consistent with existing evidence on the effects of aggregate capital inflows and non-FDI inflows on the manufacturing sector. We make a novel contribution for the ASEAN-4 by tracing the negative effects of non-FDI inflows to portfolio investment and portfolio debt, and uncovering the positive ffect of FDI on manufacturing’s output share. Our findings imply that policymakers in developing countries must pay attention to the influence that capital inflows exert on structural change and their industrialization efforts. |
| Keywords: | capital inflows, structural change, premature deindustrialization, ASEAN-4 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:iob:wpaper:2025.05 |
| By: | Tang, Suphanvasa Chotikajan; Thiratayakinant, Kraijakr |
| Abstract: | This Perspective discusses the latest developments in UNCITRAL of the Advisory Centre on International Investment Dispute Resolution and argues that the Advisory Centre should be established with an initial set-up of headquarters and regional offices in order to effectively deliver its services given the unique nature of ISDS cases. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:colfdi:314445 |
| By: | Gern, Klaus-Jürgen; Kooths, Stefan; Liu, Wan-hsin; Reents, Jan; Sonnenberg, Nils |
| Abstract: | The global economy is facing increased economic policy uncertainty in a phase of already moderate momentum. The announcements made by the incoming US administration are the main reason for this. However, it is unclear what measures will actually be taken. This forecast is based on the assumption that additional tariffs will be imposed on imports into the United States, but that these will not be as extensive as has been suggested during the election campaign. While we assume that the decline in US policy interest rates will be slowed, we still expect that global economic activity will gradually receive tailwinds from more favorable financing conditions. Under these assumptions, the US economy is likely to continue to expand significantly, while economic momentum in Europe will gradually pick but remain low. At the same time, a sustained economic recovery in China is still not in sight despite the announced stimulus measures given the gloomy outlook for exports. While global trade has showed signs of life in the year to date, it is likely to be slowed noticeably over the forecast horizon by the expected restrictive trade policy measures. All in all, we keep our forecast for global output growth in 2024 - measured on a purchasing power parity basis - to at 3.2 percent this year. For next year, we expect an expansion of 3.1 percent, also unchanged from our September forecast. The outlook for 2026 has deteriorated and we have reduced our forecast by 0.2 percentage points to 3.1 percent. The decline in inflation has slowed down of late, and the lack of a year-on-year fall in energy prices and the expected further decline in inflation towards the target of 2 percent is likely to be sluggish mainly due to the persistent rise in services prices. There is a risk that monetary policy will remain restrictive for longer than currently expected. In addition, there are still major risks for the global economy from a possible escalation of geopolitical conflicts. Trade conflicts could also escalate further, but they could also turn out to be less severe than assumed. |
| Keywords: | China, USA, Business Cycle World, Growth, Europe, International Finance |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkeo:313570 |
| By: | Stephen Broadberry; Mark Harrison |
| Abstract: | We draw lessons from three centuries of economic warfare and sanctions. Establishing cause and effect is difficult because much else was typically changing during periods of conflict. Unintended consequences were everywhere. Impact was followed (and sometimes preceded) by adaptation so that countermeasures blunted the effectiveness of economic warfare measures and sanctions. This does not mean that the original measures were unimportant, because countermeasures were costly to the target country. Civilian lives and interests were collateral damage. Economic warfare and sanctions worked most effectively when complemented by fighting power either engaged in conventional warfare or credibly threatening war as a deterrent, and they were ineffective in its absence. |
| Date: | 2025–02–25 |
| URL: | https://d.repec.org/n?u=RePEc:oxf:esohwp:_215 |