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Begin New Search Topic International Trade and Finance Content Type Working Paper Publication Year within 3 Years

61. Ambivalence About International Trade in Open- and Closed-ended Survey Responses

Author:
Arturo Chang, Thomas Ferguson, Jacob Rothschild, and Ben Page
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Spontaneous, open-ended survey responses can sometimes better reveal what is actually on people’s minds than small sets of forced-choice, closed questions. Our analysis of closed questions and trade-related open-ended responses to 2016 ANES “likes” and “dislikes” prompts indicate that Americans held considerably more complex, more ambivalent, and – in many cases – more negative views of international trade than has been apparent in studies that focus only on closed-ended responses. This paper suggests that contrast between open- and closed-question data may help explain why the effectiveness of Donald Trump’s appeals to trade resentments surprised many observers.
Topic:
International Trade and Finance, Survey, Models, and Polls
Political Geography:
North America and United States of America

62. Mexico’s Automotive Industry: A Success Story?

Author:
Jorge Carreto Sanginés, Margherita Russo, and Annamaria Simonazzi
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In less than three decades Mexico’s automotive industry has gone from a minor role to the 7th largest world producer of automotive vehicles. The Mexican experience is part of the more general case of the “integrated peripheries.” The development of these cannot be accounted for separately from the developments occurring in its core country. Unlike the core-periphery literature, however, our analysis emphasizes that the various clusters of cores and integrated peripheries are not alike. In the case under study, the core has been systematically lagging behind the main transformations pioneered by its competitors. The paper traces the evolution of the Mexican automotive industry, emphasizing the difficulties faced by a late-comer country in developing an independent industry, and the importance of policy choices as well as the macroeconomic context in affecting its development. NAFTA represents the culmination of an integration process that has profoundly transformed the structure of the Mexican automotive industry, deepening its dependence on the US market. While there is no doubt that it has contributed to the spectacular growth of the Mexican auto industry, whether it also increased its resilience or, rather, its dependence is still an open question. This issue is particularly relevant in view of the transformations that are taking place in the automotive sector and in the geopolitical scenario. These include the end of NAFTA and the advent of USMCA, the entry of powerful competitors into the global market, and the transition to electric and autonomous vehicles, which all entail risks and opportunities. The lens of the centre-periphery relationship can help to understand the present integration of North America and its future direction.
Topic:
International Trade and Finance, NAFTA, Regionalism, Industry, and Motor Vehicles
Political Geography:
North America and Mexico

63. Post-Covid-19 EU-Southern Neighbourhood Trade Relations

Author:
Katarzyna Sidlo, Esmat Mostafa Kamel, Hussein Suleiman, and Guillaume Van der Loo
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
IEMed/EuroMeSCo
Abstract:
The European Union (EU) is a key trade partner, both in terms of goods and services, for the countries in its Southern Neighbourhood (SN): Morocco, Algeria, Tunisia, Egypt, Israel, Palestine,[1] Jordan and Lebanon.[2] The economic (and otherwise) relationship between the two partners is governed by the Euro-Mediterranean Association Agreements (EMAAs), which came into force from the early to mid-2000s. The ongoing COVID-19 pandemic has, however, affected the trade exchange between the two, just as it has an adverse impact on trade globally. As pointed out in the second chapter of this policy study, one of the sectors of great importance to both the EU and the SN is agri-foods. Despite a general drop in merchandise trade, the agri-food exports from the EU actually increased globally by 0.5% during the first 10 months of the pandemic compared to the same period the year before, up to €151.8 billion. In the case of the SN, exports of agri-foods during the first three quarters of 2020 (year-on-year) grew particularly strongly in the case of Morocco (27.2%) and Algeria (20.3%) and decreased most visibly in the case of Lebanon (-37.9%). As for exports from the EU to the SN, during the same period a particularly impressive growth was witnessed in the case of Tunisia (40.3%) but the value of agri-food imports of Morocco also went up (8.4%). Trade in services, as analysed in chapter three, was hit more severely than trade in goods and declined significantly in all countries in the region during the first months of the pandemic. For Morocco, for instance, during the first three quarters of 2020 it plummeted by almost 60% (year-on-year). Because of lockdowns and travel bans, the tourism sector was among the hardest hit, even though the countries in the SN are mostly visited by travellers from nearby markets: the SN region or Europe – in 2019 the latter constituted between 29.4% (Tunisia) and 68.2% (Morocco) of all arrivals (after excluding nationals of SN countries who live abroad). As a result, tourism revenues plummeted (in Palestine, for instance, by an estimated 68%) and a significant number of people were made redundant; before the pandemic, between just under 6% (Algeria and Israel) and nearly 20% (Lebanon) of all (formally employed) workers were employed in the travel and tourism sector. The disturbances outlined above have adversely impacted food security in the region, as initial data presented in chapter four suggests. While isolating the impact of the COVID-19 pandemic on food security is difficult, as many other factors – such as bad harvest due to weather conditions in Morocco – were in play in 2020, the pandemic clearly affected both supply of and demand for foodstuffs. Some countries were more affected than others, as has already been mentioned above in the case of agri-food trade with the EU. At the same time, the impact on food security within the countries was also far from homogenous, with refugees (e.g., due to loss of work in informal sector) and poorer households – spending a bigger share of domestic budget on increasingly more expensive food products – more often forced to adopt emergency livelihood coping strategies, such as limitation of daily calory intake. Looking towards the post-COVID-19 trade relations, as outlined in chapter one of this study, the EU’s post-pandemic recovery plans and trade strategy review offer a new momentum for the SN countries to strengthen and modernise their framework for trade relations with the EU, to capitalise on potential re-shoring and near-shoring trends in EU and global value chains, and to promote (intra-) regional economic integration. However, the envisaged Deep and Comprehensive Free Trade Areas (DCFTAs) currently under negotiation with Tunisia and Morocco may not be the most realistic option at this stage. A more gradual approach based on sectoral agreements could be adopted in the short- to medium-term instead, leading to a DCFTA-like model of trade integration. Moreover, in order to strengthen the (intra-)regional economic and value chain integration, modernisation of the Pan-Euro-Mediterranean Convention should remain a priority. Finally, the modernisation of EU-SN trade relations should be linked and integrated into the broader (and longer-term) plans for EU-Africa trade relations, with an eye on the “continent-to-continent Free Trade Area” in the long run. Internally, governments in the SN should prioritise development of high productivity service sectors and work towards curbing their reliance on tourism and transportation. In order to achieve that goal, improving the quality of their institutions is as important as upgrading telecommunications infrastructure or adopting incentives such as tax breaks. More broadly, speeding up digital transformation would both facilitate servicification and reduce costs associated with merchandise trade.
Topic:
International Trade and Finance, Regional Cooperation, European Union, Pandemic, and COVID-19
Political Geography:
Europe and Mediterranean

64. Better Two Eyes than One: A Synthesis Classification of Exchange Rate Regimes

Author:
Cécile Couharde and Carl Grekou
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
This paper proposes a new de facto classification of exchange rate regimes, the synthesis classification. The proposed framework has several advantages over existing de facto classifications. First, it offers a unified framework based on the most divergent classifications, the RR and LYS classifications, leading not only to a broader coverage but also to encompass a broad spectrum of exchange systems. Second, it fits better with the known history of exchange rate regimes developments in the post-Bretton Woods era. Among others, it brings an interesting nuance to the so-called hollowing-out hypothesis by showing that the evolution of de facto regimes —especially in emerging economies since the late 1990s— has essentially involved movement toward more tightly “managed” intermediate regimes and not a shift away from such regimes. As an illustration of the insightfulness of our classification, we empirically revisit the nexus between currency crises and exchange rate regimes. In addition to associate a higher probability of currency crisis to both intermediate and floating regimes, our classification, also displays better statistical performances than other classifications in predicting currency crises.
Topic:
Economics, International Cooperation, International Trade and Finance, Exchange Rate Policy, and Currency
Political Geography:
Global Focus

65. Love of Variety and Gains from Trade

Author:
Christophe Gouel and Sébastien Jean
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
This paper shows how gains from trade are conditioned by love of variety, defined as the extent to which an additional product variety generates benefits in either final or intermediate consumption. We develop a multi-country, multisector gravity trade model where love of variety is parameterized separately from product substitutability using a generalized CES demand function, and show analytically how gains from trade depend on love of variety through different channels that we identify and interpret. In this context, except for very specific parameterizations, gains from trade differ between a heterogeneous- and a homogeneous-firm model. Counterfactual simulations based on a calibrated version of this model show that, all other things being equal, the assessed gains from trade commonly vary by a proportion of one to three depending on the value of the love-of-variety elasticity, in a way that differs significantly across countries. Trade war simulations also point to the strong sensitivity of the assessed impacts. We conclude that love of variety is a key determinant of the gains from trade, an aspect that has so far been overlooked for the sake of convenience in the modeling framework and due to lack of empirical estimates.
Topic:
International Cooperation, International Trade and Finance, Trade Wars, and Models
Political Geography:
Global Focus

66. Free Trade Agreements and the Movement of Business People

Author:
Thierry Mayer, Hillel Rapoport, and Camilo Umana Dajud
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Many of the measures to contain Covid-19 severely reduced business travel. Using provisions to ease the movement of business visitors in trade agreements, we show that removing barriers to the movement of business people promotes trade. To do this, we first document the increasing complexity of Free Trade Agreements. We then develop an algorithm that combines machine learning and text analysis techniques to examine the content of FTAs. We use the algorithm to determine which FTAs include provisions to facilitate the movement of business people and whether those provisions are included in dispute settlement mechanisms. Using these data and accounting for the overall depth of FTAs, we show that provisions facilitating business travel indeed facilitate business travel (but not permanent migration) and, eventually, increase bilateral trade flows.
Topic:
International Cooperation, International Trade and Finance, Migration, Business, Free Trade, Pandemic, and COVID-19
Political Geography:
Global Focus

67. Long-Term Macroeconomic Projections of the World Economy

Author:
Lionel Fontagné, Erica Perego, and Gianluca Santoni
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
What will the global economy look like in a generation? The answer depends on the multiple forces driving long-term growth (demography, education, diffusion of technical progress, energy costs, investment and saving behaviour, international capital mobility) and requires a comprehensive framework to conceptualise them. We re-estimate the three-factor (capital, energy, labour) MAcro-econometric model of the Global Economy (MaGE), initially developed by Fouré et al. (2013), with a database covering 170 countries using state-of-the-art methods. We thus establish the long-term structural relationships that drive the dynamics of the World economy. The model projections to 2050 illustrate the expected changes in the World economy and their driving forces. In light of the projected volume of energy consumption, making these projections compatible with climate imperatives calls for increased technology sharing at the international level in order to decouple economic growth from energy use.
Topic:
Economics, Energy Policy, International Trade and Finance, and Macroeconomics
Political Geography:
Global Focus

68. Gains Associated with Linking the EU and Chinese ETS under Different Assumptions on Restrictions, Allowance Endowments, and international Trade

Author:
Malte Winkler, Sonja Peterson, and Sneha Thube
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Linking the EU and Chinese Emission Trading Systems (ETS) increases the cost-efficiency of reaching greenhouse gas mitigation targets, but both partners will benefit – if at all – to different degrees. Using the global computable-general equilibrium (CGE) model DART Kiel, we evaluate the effects of linking ETS in combination with 1) restricted allowances trading, 2) adjusted allowance endowments to compensate China, and 3) altered Armington elasticities when Nationally Determined Contribution (NDC) targets are met. We find that generally, both partners benefit from linking their respective trading systems. Yet, while the EU prefers full linking, China favors restricted allowance trading. Transfer payments through adjusted allowance endowments cannot sufficiently compensate China so as to make full linking as attractive as restricted trading. Gains associated with linking increase with higher Armington elasticities for China, but decrease for the EU. Overall, the EU and China favor differing options of linking ETS. Moreover, heterogeneous impacts across EU countries could cause dissent among EU regions, potentially increasing the difficulty of finding a linking solution favorable for all trading partners.
Topic:
Climate Change, Environment, International Trade and Finance, Regional Cooperation, and European Union
Political Geography:
China, Europe, and Asia

69. Ambivalence About International Trade in Open- and Closed-ended Survey Responses

Author:
Arturo Chang, Thomas Ferguson, Jacob Rothschild, and Benjamin I. Page
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Spontaneous, open-ended survey responses can sometimes better reveal what is actually on people’s minds than small sets of forced-choice, closed questions. Our analysis of closed questions and trade-related open-ended responses to 2016 ANES “likes” and “dislikes” prompts indicate that Americans held considerably more complex, more ambivalent, and – in many cases – more negative views of international trade than has been apparent in studies that focus only on closed-ended responses. This paper suggests that contrast between open- and closed-question data may help explain why the effectiveness of Donald Trump’s appeals to trade resentments surprised many observers.
Topic:
International Trade and Finance, Public Opinion, Free Trade, Donald Trump, and Data
Political Geography:
Global Focus and United States of America

70. China and Geoeconomic Dynamics in Central Asia: Balancing Global Strategies, Local Interests and Multiple Partners

Author:
Aliya Tskhay
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs
Abstract:
Central Asia is at the core of China’s ambitious Belt and Road Initiative (BRI), which promises to bring connectivity, trade, and improved infrastructure, as well as overall economic development to the states of the region. Yet beyond the official rhetoric, China is promoting its power through geoeconomic means. This paper looks at areas of cooperation (energy, infrastructure, trade, and finance) and identifies the ways in which China is involved with the region. Through a combination of loans, investments, and infrastructure projects, the research shows how China ‘binds’ the region closer to itself and ‘wedges’ out alternative partners. It also shows how Central Asian states utilise the funding within the BRI framework for national development programmes, whilst navigating avenues for mitigating the establishment of a dependent relationship with China. The paper concludes with some policy implications for China, Central Asia, and the wider region.
Topic:
Development, International Trade and Finance, Infrastructure, Hegemony, Belt and Road Initiative (BRI), and Strategic Interests
Political Geography:
China and Asia

71. The EU-US Trade and technology Council: Mapping the Challenges and Opportunities for Transatlantic Cooperation on Trade, Climate, and Digital

Author:
Guillaume Van der Loo, Thijs Vandenbussche, and Andreas Aktoudianakis
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
EGMONT - The Royal Institute for International Relations
Abstract:
The EU-US Summit on 15 June 2021 marked the beginning of a renewed transatlantic partner- ship and set an ambitious joint agenda for EU-US cooperation post-COVID-19. The new Biden administration offers the EU the opportunity to re-establish transatlantic relations, which reached their lowest point since World War II under the turbulent Trump administration, and to address the bilateral disputes and tensions that have emerged, partly as a result of Trump’s ‘America First’ policies. One of the key deliverables of the Summit was the establishment of the EU-US Trade and Technology Council (TTC). The TTC aims to deepen EU-US relations on trade and investment and to avoid new technical barriers to trade by cooperating on key poli- cies such as technology, digital policy issues and supply chains. Despite the optimism in Brussels and Washington about renewing and strengthening transat- lantic cooperation, there are several challenges for EU-US cooperation. In the areas of trade, digital and climate in particular several differing views or outstanding disputes (most of them inherited by the Trump administration) will need to be addressed by the new TTC (the first meeting is scheduled on 29-30 September 2021) or other joint bodies. Only then will the EU and the US be able to deliver on the new ambitious transatlantic agenda. This paper will there- fore discuss the key challenges and opportunities for EU-US cooperation in the three inter- related areas of trade, digital and climate. For each of these areas, the outcome of the June 2021 EU-US Summit will be discussed and the challenges and opportunities for delivering on the renewed transatlantic agenda will be analysed. Moreover, this paper will present several policy recommendations, for the TTC or on EU-US cooperation in general, on how to advance the transatlantic partnership.
Topic:
Climate Change, Diplomacy, International Cooperation, International Trade and Finance, Science and Technology, European Union, Digitalization, and Summit
Political Geography:
Europe, North America, and United States of America

72. Free Trade as an Anchor for Sustainable Development

Author:
Sundjo Fabien and Sunjo Tata
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
Does trade enhance or jeopardize sustainable development? This brief answers this question by debunking the myth that protectionism is a driver of sustainable development. It then outlines the ways in which free trade can lead to sustainable development. This brief finds that free trade is a boon for GDP growth, value chains, and better productivity. It will equally lead countries to specialize and become more competitive. This brief pithily finds that free trade will anchor sustainable development if countries synchronize trade facilitation measures and lower non-tariff barriers such as indiscriminate checks at land borders.
Topic:
Development, International Trade and Finance, Sustainable Development Goals, Free Trade, and Sustainability
Political Geography:
Africa

73. Free Trade as a Catalyst to the Fourth Industrial Revolution Technologies in Cameroon’s Manufacturing Sector

Author:
Henri Kouam
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
The Fourth Industrial Revolution is rapidly changing the nature of work in recent times. Policymakers are grappling with integrating 4IR technologies into their economies, but for Cameroon and Nigeria, free trade is a useful tool in supporting manufacturing and innovation. Free trade will increase competition in the Cameroonian market as lower trade barriers will increase the flows of goods and services into Cameroon. Admittedly, local manufacturers will innovate their processes in order to protect their market share and reduce the impact of foreign competition. Medium and high-tech manufacturing exports in Cameroon will drive by increased demand from other African countries and price-driven competition in local markets.
Topic:
Economics, International Trade and Finance, Free Trade, Manufacturing, and Industrialization
Political Geography:
Africa and Cameroon

74. UK Green Growth Index

Author:
Oxford Economics
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
Our UK Green Growth Index, produced on behalf of Lloyds Banking Group, assesses the degree to which each UK nation and region may be impacted by the challenges of the net zero transition, and how well placed they are to capitalise on green growth. The transition to net zero will require substantial investment and adaptation across the UK economy. This will create unique opportunities for British businesses to innovate, produce, and supply the goods and services needed to enable the transition, not only in the UK but globally. At the same time, for many parts of the economy the transition will create challenges due to the need to adapt products, processes, and skills. Our UK Green Growth Index, produced on behalf of Lloyds Banking Group, assesses the degree to which each UK nation and region may be impacted by these challenges, and how well placed they are to capitalise on green growth. Our research suggests that green growth opportunities are especially strong in Scotland, given its existing base of green economy activity and its access to a workforce with relevant skills. Similarly, Wales appears well placed to capitalise on green growth opportunities, although it may face greater disruption in the nearer term due to its reliance on high emitting industries. Northern Ireland is also relatively exposed to disruption and may need to accelerate efforts to put in place the factors needed to fully exploit green economy opportunities. Amongst English regions, the South East and South West appear to be best placed to capitalise on the green economy and are less exposed to disruption from the transition than many other parts of the UK. In contrast, Yorkshire and the Humber may face greater disruption and has further to go to develop some of the factors needed to capitalise on green growth. London is somewhat of an outlier: its status as a city-region with a service-orientated economy means it is much less exposed to the challenges than areas which rely more on industrial activity, but it also has less scope to capitalise on green economy opportunities in fields such as manufacturing and energy (although it is well positioned to develop as a centre for green finance and other professional services).
Topic:
Environment, International Trade and Finance, Economic Growth, and Green Technology
Political Geography:
United Kingdom and Europe

75. Economic impact of the global ferry industry

Author:
Oxford Economics
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
The global ferry industry comprises companies that own or operate vessels that transport passengers, goods and vehicles over short sea and inland routes. Ferries provide vital connections which enable all types of journey, whether that be local trips to work, study, visit others, or access amenities, or longer trips for business or tourism. Ferries also facilitate trade within and across national borders. Ferries therefore play a pivotal role as an economic and social enabler. As they do so, they sustain significant economic activity in their own right, both directly through the income and employment they support, and through wider supply chain and worker spending effects which benefit other parts of the economy. In this study, commissioned by Interferry, we assess the economic footprint of the global ferry industry. Our modelling suggests the global ferry industry could have supported $60 billion in GDP and 1.1 million jobs globally in 2019.
Topic:
International Trade and Finance, Maritime Commerce, Labor Issues, Maritime, and Travel
Political Geography:
Global Focus

76. Interactions Between Global Value Chains and Foreign Direct Investment: A Network Approach

Author:
Amat Adarov
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
The world economy is increasingly shaped by cross-border production and investment activity. The paper uses complex network analysis along with panel data econometric techniques to study the structure and interactions between the networks of global value chains (GVC) and foreign direct investment (FDI). The analysis reveals that both FDI and GVC networks have a distinct core-periphery structure dominated by a relatively small number of countries with the USA constituting the global hub interlinked with regional European and Asian clusters, which, in turn, are centered around regional hub countries like China and Germany. Simultaneous equation model regressions using three-stage least squares suggest that FDI centrality facilitates GVC centrality of countries. However, FDI centrality is driven to a large extent by the FDI statutory restrictions and tax offshore regulations, rather than GVC connectivity.
Topic:
International Trade and Finance, Foreign Direct Investment, Borders, Networks, Macroeconomics, and Global Value Chains
Political Geography:
Global Focus

77. Labour Taxes and International Trade: The Role of Domestic Labour Value Added

Author:
Amat Adarov, Mario Holzner, Branimir Jovanovic, and Goran Vukšić
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper revisits the relationship between labour taxation and international trade, focusing on the role of domestic labour value added. Using sectoral data from 41 EU and OECD economies over the period 2005-2014, we assess how labour taxes affect exports and imports and how domestic labour value added shapes this relationship. We find that higher labour taxes reduce exports but that the effect depends to a large extent on the share of domestic labour value added, which differs by industries, countries and time periods. Imports do not seem to be affected. This implies that changes in labour taxes will not affect all sectors and countries in the same way and that policy makers should be aware of this when deciding on labour taxes. We also calculate the contribution of labour tax changes to the export dynamics in the analysed period and sample of countries, finding that in general the contribution is small.
Topic:
International Trade and Finance, Labor Issues, Tax Systems, Exports, and Imports
Political Geography:
Global Focus

78. Impact of Technical Barriers to Trade on the Trade in Goods in the Information and Communications Technology Sector: Differentiating by Aim of the Regulatory Measure

Author:
Mahdi Ghodsi
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
In this modern digital world, goods from the information and communications technology (ICT) sector are the engine of the global economy. While tariffs levied on ICT goods have been eliminated or significantly reduced since the conclusion in December 1996 of the Information Technology Agreement of the World Trade Organization (WTO), non-tariff measure (NTMs) have come to be used more frequently with regard to imports of these goods. Technical barriers to trade (TBTs), as the most important trade policy measure imposed on imports of ICT goods, form the focus of this study. This paper analyses how different types of TBTs imposed on imports of ICT goods globally affected the values and volumes of imported goods at the six-digit level of the Harmonised System (HS) during the period 1996-2018. Keywords cited in the TBTs notified to the WTO give an indication of the aims behind the imposition of TBTs. Therefore, this study digs deeper into the impact of 30 types of TBT, using the keywords cited. The methodology used in this paper controls for zero trade flows using the Pseudo Poisson Maximum Likelihood (PPML) technique; and it controls for endogeneity bias using the exogenous instrumental variable approach. Furthermore, the paper provides more detailed analysis of the impact of TBTs across five ICT product categories that are defined by the United Nations Conference on Trade and Development (UNCTAD). The results indicate that TBTs have a generally strong positive impact on the value of imports of ICT goods. While many keywords cited in TBTs notified to the WTO affect the values and volumes of imports in a positive way, certain other TBTs function as trade barriers that reduce their values and volumes.
Topic:
International Trade and Finance, Communications, World Trade Organization, Tariffs, and Information Technology
Political Geography:
Global Focus

79. Source – Assembly – Sink: Value Added Flows in the Global Economy

Author:
Robert Stehrer
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
In this paper we provide a method to characterise global value chains and a related decomposition of bilateral gross exports by distinguishing three different stages of the value-added flows: (i) the source of value added, (ii) the final assembly stage of a product, and (iii) the final absorption (sink) of this product. Methodologically this is embedded in a simple framework using matrix algebra allowing for intuitive interpretations of the individual decomposition terms and results. The approach leads to a novel decomposition of bilateral gross export flows and related value-added trade indicators. It is shown how these correspond to existing measures using the property of inverse matrices. Specifically, the paper sheds light on the nature of the double-counting terms discussed in the literature. Finally, the approach outlined is extended by incorporating insights from the hypothetical extraction method. We argue that this is a complementary approach which however can be used to flexibly define the value chains of interest and characterise the respective flows that are considered part of this defined value chain, again carefully differentiating the source, assembly, and sink dimensions.
Topic:
International Trade and Finance, Economy, Exports, Global Value Chains, and Decomposition
Political Geography:
Global Focus

80. Heterogeneous Effects of Non-tariff Measures on Cross-border Investments: Bilateral Firm-level Analysis

Author:
Amat Adarov and Mahdi Ghodsi
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
We analyse the heterogeneous effects of technical regulations and safety standards embodied in non-tariff measures on foreign direct investment using global firm-level panel data of bilateral cross-border ownership relationships over the period 2008-2018. To this end, we develop a novel measure of time-varying bilateral ad valorem equivalents of sectoral non-tariff measures, which reveals that technical barriers to trade (TBTs) played a much greater role as a trade-inhibiting factor in comparison with import tariffs and sanitary and phytosanitary (SPS) measures over the period 1996-2018, with their relative importance increasing in the post-Great Recession period. Estimations using the Poisson pseudo-maximum likelihood framework reveal the importance of non-tariff measures as a driver of foreign direct investment, with heterogeneous effects observed for the measures imposed by the host and the home country, as well as across sectors and types of non-tariff measures. Among other results, we find that an increase in the stringency of technical barriers to trade imposed by the host country is associated with higher investment in the foreign subsidiaries operating in this country, pointing to the regulatory barrier-jumping motive of foreign direct investment. The effect is much stronger for the multinational corporations operating in the information and communications technology sector.
Topic:
International Trade and Finance, Foreign Direct Investment, Economy, and Business
Political Geography:
Global Focus