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

1. How Does Globalisation Affect Social Cohesion?

Author:
Kasper Vrolijk
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This paper explores the effects of globalisation on social cohesion outcomes and the underlying mechanisms. A framework for reviewing the literature is offered, in which labour earnings, household expenditures and firm productivity are identified as the main channels through which economic globalisation affects cohesion, trust and pro-social behaviour. Evidence points towards substantial losses in cohesion following negative globalisation changes, altering cohesion through absolute and relative changes in employment and expenditure (and people’s perception thereof). However, evidence is thin and inconsistent; studies are limited to effects of trade (and not foreign direct investment), cover some dimensions of cohesion but not others, and often evaluate the effect of negative trade events on cohesion (while trade and foreign direct investment may offer gains to workers, households and firms, which boosts cohesion). From the available evidence, it is determined that when setting policy, it is important to address relative losses from globalisation (between groups), incorporate economic costs of social repercussions, and take on market distortions and underlying cyclical or secular trends that may amplify the effects of globalisation on cohesion.
Topic:
Globalization, Economy, Trade, and Social Cohesion
Political Geography:
Global Focus

2. Strengthening Regional Value Chain between India and South Korea: Emerging Opportunities for Trade and Investment Cooperation

Author:
Durairaj Kumarasamy
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The changing dynamics of supply chains and their impact on shaping international relations in East Asia have become crucial issues for scholars and policymakers. Asia’s two major economies, India and South Korea, are reassessing their strategy on the changing dynamics of the supply chain. India is to redesign its developmental strategy to establish India-centric supply chains in key industries. India has stressed its endeavour to become a self-reliant economy by introducing a highly ambitious Production-Linked Incentive (PLI) scheme to attract FDI in strengthening and establishing the supply chain linkages in India, whereas South Korea has adopted a strategy to mitigate supply chain-related risk through greater emphasis on developing strong self-reliance and promoting economic diversification by enhancing its economic ties with India. In addition, the pandemic-induced supply chain disruptions further reinforced South Korea toward diversification and resilience of its supply chain. South Korea’s development experience and deep investment relations with India can explore the untapped potential of bilateral trade and investment linkages. To ensure supply chain resilience both India and South Korea focus on critical sectors such as semi-conductors, steels, secondary batteries and chemicals, along with new technology areas like AI, 6G, Digital Infrastructure and renewable energy for cooperation. In this regard, the study explores the trade and investment relationship between India and South Korea and identifies the potential sectors to engage in the sustainable value chain between them.
Topic:
Investment, Trade, Economic Cooperation, Supply Chains, and Value Chains
Political Geography:
South Asia, India, Asia, and South Korea

3. Structural transformation and international trade: Evidence from the China shock

Author:
Clément Nedoncelle and Julien Wolfersberger
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
How does international trade affect structural transformation in developing countries? We use data on sectoral allocation of labour and value-added in 46 developing economies over the period 1995–2017 and exploit for identification plausibly exogenous variation in manufacturing imports from China. We find that the so-called ‘China shock’ largely slows down the transformation of low- and middle-income economies out of agriculture. In our main specification industrialization decreases by 0.49 per cent on average for each additional per cent of manufacturing imports from China. It highlights a competition effect where exposure to Chinese imports is largely detrimental to structural transformation. These results hold across geographical regions, with a difference in Sub-Saharan Africa, where international trade causes an increase in the size of the services sector.
Topic:
Development, Economies, Trade, Industrialization, and Structural Transformation
Political Geography:
Global Focus

4. Trade sanctions and informal employment

Author:
Ali Moghaddasi Kelishomi and Robert Nisticò
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper examines how trade sanctions affect the allocation of workers across formal and informal employment. We analyse the case of the unexpected and unprecedented trade sanctions imposed on Iran in 2012. We use a difference-in-differences approach and compare the probability of working in the informal sector before and after 2012 for individuals employed in industries with pre-existing different levels of exposure to international trade. Combining employment data from the Iranian Labour Force Survey and trade data from Iran’s Customs Administration database for the years 2008–14, we find that workers employed in industries initially facing higher exposure to trade are significantly more likely to experience informal employment in the years after 2012 than workers employed in industries with lower trade exposure. This result suggests that, in the short run, the informal sector may absorb a significant fraction of workers displaced by the trade shock caused by the sanctions. We estimate that the increase in informal employment is highest for poorly educated workers, highlighting the unequal labour market consequences of trade sanctions. We exclude that industries differentially exposed to international trade were already following a different trend in the share of informal employment in the years prior to 2012, thus providing empirical support for the validity of our identification strategy. Moreover, we show that our main result holds when accounting for potential sorting issues by an instrumental variable approach. Our findings shed light on a potentially important dimension of labour reallocation whereby trade sanctions can affect the economy of the target country. They also provide important implications for policies designed to address informal employment and to assist trade-displaced workers.
Topic:
Labor Issues, Sanctions, Employment, Trade, and Informal Economy
Political Geography:
Iran and Middle East

5. Global trends in countries‘ perceptions of the Belt and Road Initiative

Author:
Alicia Garcia-Herrero and Robin Schindowski
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Drawing on global media reports, we conduct a sentiment analysis of the image of China’s Belt and Road Initiative (BRI) and the evolution of its image over time. Our main finding is that perceptions of the initiative deteriorated significantly in many geographies from 2017 to 2022. The notable exception is in sub-Saharan Africa where the BRI’s image remains positive, even if slightly less so than in the past. This is notwithstanding increases in debt levels with China, much of which now face potential restructuring. Furthermore, we find significant inter- and intra-regional differences in the average sentiment towards China’s landmark project, as well as a much worse image of the initiative in countries which, until today, are not part of the BRI. Finally, we focus on the European Union, Africa and China’s immediate neighbourhood to better understand the complexities behind the perceived benefits and challenges associated with China’s Belt and Road Initiative.
Topic:
Bilateral Relations, European Union, Geopolitics, Economy, and Trade
Political Geography:
China, Europe, and Asia

6. Trade Shocks and Social Mobility: The Intergenerational Effect of Import Competition in Brazil

Author:
Andrés César, Matias Ciaschi, Guillermo Falcone, and Guido Neidhöfer
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
This paper investigates whether the impact of trade shocks on employment and wages persists across generations. Using an instrumental variable strategy on survey data with retrospective information on parental employment, we study the consequences of increased Chinese import competition in Brazilian industries on individuals with differently exposed fathers. Results show that several years after the shock, children of more exposed fathers have lower education and earnings, lower chances of formal jobs, and are more likely to rely on social assistance. These effects are substantial for children from disadvantaged background, indicating that the shock had a negative impact on intergenerational mobility.
Topic:
Trade, Imports, Economic Competition, and Social Mobility
Political Geography:
Brazil and South America

7. The Transition From an Intensity to an Absolute Emissions Cap in China’s National Emissions Trading System

Author:
Duan Maosheng
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
The unique characteristics of China's economic development and electricity marketization have resulted in the implementation of a bottom-up intensity-based emissions cap in China’s national emissions trading system (ETS) in its early stages. However, the efficacy of the bottom-up cap-setting approach remains controversial, particularly with regard to achieving emission reduction goals and cost-effectiveness. In response to China's "dual carbon" targets and updated Nationally Determined Contributions (NDC), China’s national ETS shall gradually shift towards a real cap-and-trade system, with a transition period when a hybrid system, which has an absolute control cap beside the intensity cap, is implemented. The Transition from an Intensity to an Absolute Emissions Cap in China’s National Emissions Trading System examines the cap-setting approaches used in ETSs in China, the underlying reasons for choosing intensity caps in China, and major issues related to the transition from an intensity cap to an absolute cap in China’s national ETS.
Topic:
Climate Change, Economy, Trade, and Carbon Emissions
Political Geography:
China and Asia

8. Economic and Environmental Impacts of China’s New Nationwide CO2 Emissions Trading System

Author:
Lawrence Goulder, Xianling Long, Chenfei Qu, and Da Zhang
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
China’s National Emissions Trading System (ETS) has already become the world’s largest ETS and is expected to contribute substantially toward meeting China’s pledge to peak its carbon emissions before 2030 and achieve carbon neutrality before 2060. The new system is based on a tradable performance standard (TPS), a rate-based system under which each covered facility receives from the government in each compliance period a certain number of emissions allowances based on its output and the government’s assigned “benchmark” ratio of emissions per unit of output. Economic and Environmental Impacts of China’s New Nationwide CO2 Emissions Trading System describes the results from a multi-sector multi-period general equilibrium model designed to assess the potential economic, energy mix, and emissions impacts of different future policy options under China’s National ETS over the period 2020–2035, by sector and province and in the aggregate
Topic:
Environment, Economy, Trade, and Carbon Emissions
Political Geography:
China and Asia

9. Carbon Capture and Storage - Publics in five countries around the North Sea prefer to do it on their own territory

Author:
Christine Merk, Gisle Andersen, Åsta Dyrnes Nordø, and Torben Helfrich
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Carbon Capture and Storage (CCS) has been identified as an essential part of the lowest-cost path toward reaching the goals of the Paris Agreement. In Europe, an accelerated pace of CCS development indicates that a CO2 transport and storage system could be established by 2030. However, we know little about how the public views the market for transport and storage of CO2 currently under development in Europe. In early 2023, we conducted an experimental comparative survey to study public opinions on cross-border CO2 trade for storage in Denmark, Germany, the Netherlands, Norway and the UK. The share of respondents that perceive CCS as somewhat positive or very positive varies considerably between the countries; we find the highest share in Denmark (69%), followed by the UK (68%), Norway (67%), the Netherlands (57%) and the lowest share in Germany (49%). Especially concerns about environmental risks and costs lead to more negative views, while perceptions of job creation and economic opportunities lead to more positive evaluations. The experimental results show that importing CO2 for storage is among the least preferred options in all countries, while the storage of CO2 that has been captured in the own country is the most preferred option; the gap in the share of positive evaluations is substantial and amounts to up to 20 percentage points in the UK. Respondents who feel that countries are responsible for reducing national greenhouse gas emissions and storing their own captured CO2 drive the pattern of a more positive evaluation of a domestic CCS value chain and a more negative evaluation of importing CO2.
Topic:
Climate Change, Trade, Carbon Emissions, and Perception
Political Geography:
Europe and North Sea

10. The US-EU Trade and Technology Council: Assessing the record on data and technology issues

Author:
Juan Carlos Fernández-Rodríguez and Frances G. Burwell
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
European Policy Centre (EPC)
Abstract:
Since its creation, the Trade and Technology Council (TTC) has endorsed a Declaration for the Future of the Internet (DFI), designed a Joint Roadmap for transatlantic cooperation on artificial intelligence (AI) and identified quantum technology as a high priority. While these achievements can be considered success stories, this Discussion Paper argues that the TTC is now facing a dilemma. Different approaches to technology and digital governance and the lack of regulatory autonomy make the TTC best suited to address emerging issues that do not require changes in legislation. Yet, this is precisely what stakeholders want it to address. So, how can the TTC ensure its continuity without regulatory authority? The Paper offers five key recommendations: Make AI a test case and build from the lessons of the Joint AI Roadmap; Engage in issues where there is an initial strong value alignment and no regulation; Work on moonshot ideas such as the “metaverse” or low-earth orbit governance; Take oversight over the special task forces it has created to tackle critical issues such as the US Inflation Reduction Act (IRA); Think more actively about how to push its efforts into multilateral forums with like-minded partners.
Topic:
Science and Technology, European Union, Trade, and Data
Political Geography:
Europe, North America, and United States of America

11. EU-Ukraine wartime trade: Overcoming difficulties, forging a European path

Author:
Svitlana Taran
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
European Policy Centre (EPC)
Abstract:
During the first year of Russia’s war in Ukraine, EU trade-liberalisation measures and EU-Ukraine Solidarity Lanes provided Ukraine with alternative export routes and allowed the country to reorient part of its exports to the EU market. However, the insufficient logistics capacity and lack of adequate coordination and cooperation during the operation of Solidarity Lanes led to tensions between Ukraine and its Eastern European neighbours. While a compromise between the European Commission and the Eastern European countries allowed the extension of temporary trade-liberalisation measures for a further year, resolving the immediate crisis, more is needed to ensure their smooth operation. This Discussion Paper provides recommendations on how the EU can further intensify efforts to facilitate Ukraine’s trade flows and prevent sudden trade disruptions and restrictions. These include: Enhance the strategic alignment and connectivity between Ukraine and the EU; Ensure security guarantees and increase the capacity of seaport corridors; Enhance coordination and unity between the Commission, EU member states and Ukraine; Avoid sudden and unjustified Solidarity Lanes' disruptions; Protect critical port and export infrastructure from Russia’s attacks; Facilitate EU-Ukraine trade liberalisation and Ukraine’s integration into the EU Single Market.
Topic:
Security, European Union, Trade Liberalization, Trade, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine

12. RCEP and Indonesia: Economic Reform and Prospects for Implementation

Author:
Yose Rizal Damuri and Deni Friawan
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The conclusion of the Regional Comprehensive Economic Partnership (RCEP) is very important for Indonesia as it may bring many benefits to the country. This paper is an attempt to see the role of domestic political-economy dynamics in facilitating and constraining Indonesia’s decision to join, ratify, and implement a free trade agreement (FTA). It also seeks some understanding on whether an FTA can bring significant market liberalisation. This paper focuses on two areas of observation. First, it discusses the current progress of the legislative process and public acceptance of the RCEP agreement in Indonesia and how the process is influenced by the political-economy dynamics of the country. Second, the paper also looks at the potential impacts of the agreement on Indonesia’s current reform agenda, especially the recently passed Jobs Creation Law (Law No. 11/2020). For these observations, we conduct a content analysis on RCEP-related news published in two newspapers in Indonesia, namely Kompas and the Jakarta Post. In addition to content analysis, we also conducted interviews with stakeholders, including parliament members and government officials from the Ministry of Trade who have been actively involved in RCEP negotiations and the ratification process. The paper provides some remarks and recommendations for the future agenda of RCEP ratification and implementation in Indonesia.
Topic:
Economics, Reform, Policy Implementation, Free Trade, and Trade
Political Geography:
Indonesia and Southeast Asia

13. Divergence in Non-Tariff Measures and the Quality of Traded Products

Author:
Doan Thi Thanh Ha, Kunhyui Kim, and Mahdi Ghodsi
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Non-tariff measures (NTMs) constitute a grey area where trade policy meets public policy goals. NTMs comprise a diverse set of regulatory policy measures, including testing and certification, rather than traditional international trade policy measures such as tariffs or tariff-rate quotas. Regulatory NTMs protect plants, animals, humans, and consumers from imported harmful products containing diseases; regulate the use of hazardous substances in production; ensure conformity with common standards; and protect the environment. Trade literature has focused on the impact of NTMs on trade flows, whereas few studies address the potential welfare-improving effects of these measures. This paper fills this gap by examining the relationship between NTM applications and the quality of traded products. Two questions are addressed. First, do more or additional burdens of NTMs in the foreign market incur a higher quality of exported products? Second, is the quality impact of NTMs in different sectors different between food and other manufacturing goods? We adopt a recently developed indicator to capture the additional requirements for exporters stemming from importers’ imposition of NTMs, and a quality estimator that controls for price. Our empirical results indicate that, overall, divergence in sanitary and phytosanitary (SPS) measures between the two trading partners reduces the quality of traded goods. Furthermore, while the divergence in SPS measures reduces the quality of traded goods in the manufacturing sector, the divergence in technical barriers to trade shows no statistically significant impact on the quality of traded goods between the two trading partners. The results imply that additional costs from technical barriers to trade are negligible compared with those from SPS measures in the manufacturing sector.
Topic:
Regulation, Tariffs, Public Policy, and Trade
Political Geography:
Global Focus

14. Investment Facilitation and Promotion in Cambodia: Impact of Provincial-level Characteristics on Multinational Activities

Author:
Shandre Mugan Thangavelu, Leng Soklong, Vutha Hing, and Ratha Kong
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper examines the foreign direct investment policy of Cambodia in terms of investment promotion and facilitation. The study examines the key factors affecting the location of foreign firms (with more than 10% ownership) in Cambodia accounting for key provincial-level (18 provinces) characteristics, such as infrastructure (roads), population density (young population), special economic zones (SEZs), the number of establishments, poverty rate, rainfall, water supply, electricity supply, sharing of an international border, sharing a coastal area, and consumption per capita. The paper uses administrative data from the Council for Development of Cambodia, which manages foreign direct investment and the special economic zones in Cambodia. The study consists of nearly 500 foreign firms that have been approved to invest in Cambodia from 2017 to 2020. The results indicate a positive impact of road infrastructure (national and provincial roads) on foreign investment activities as it improves the movement of people and goods, reduces transaction costs, increases market access, and increases the service linkages within the domestic economy. At the provincial level, we observe that electricity supply, rainfall (water supply), land area, and a young working population have a positive impact on the investment decisions of foreign investors in the provinces of Cambodia. We also observe a negative impact of SEZs on foreign investment in Cambodia. The results indicate an urgent need for structural transformation of the Cambodian economy in terms of investment in soft and hard infrastructure and the development of the critical skills and human capital of the labour force. It is important to improve and upgrade the SEZs with key technologies and innovation to be more competitive in attracting foreign investment activities, which will be critical for increasing the competitiveness of Cambodian industries in global value chain activities.
Topic:
Multinational Corporations, Investment, Trade, and Global Value Chains
Political Geography:
Cambodia and Southeast Asia

15. The COVID-19 Pandemic and World Machinery Trade Network

Author:
Kozo Kiyota
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
In light of the importance of the machinery trade in global trade, this study examines whether the patterns of machinery exports changed significantly after the COVID-19 pandemic. Frameworks of network analysis and structural break analysis are applied to monthly level bilateral export data from January 2016 to March 2022. The main findings are threefold. First, positive structural change is found in exports in major machinery-exporting countries. Second, negative structural change in centrality is found in Japan and some ASEAN Member States (AMS), which implies a decline in the relative importance of these countries in the global machinery network. Third, the decline in Japanese centrality was not caused by the decline in export values or number of destination countries. Rather, it is attributable to the decline in the centrality of Japan’s export destination countries such as AMS. Noting that Japan has a relatively strong trade relationship with AMS, these results together suggest that the negative shock of the pandemic spread throughout the supply chain, which led to the decline in the relative importance of some countries – such as Japan – in the global machinery trade network.
Topic:
Exports, Trade, ASEAN, and COVID-19
Political Geography:
Japan, Asia, and Southeast Asia

16. The Effects of the United States-China Trade War During the COVID-19 Pandemic on Global Supply Chains: Evidence from Viet Nam

Author:
Duc Anh Dang and Ngoc Anh Tran
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The trade war between the United States (US) and China has affected their bilateral trade as well as that with other countries. This study investigates how Vietnamese firms performed during the COVID-19 pandemic under the shadow of this trade war. The change in the log of Vietnamese exports to the US from 2017 to 2020 is used to measure the impact of the trade war, and the change in the log of Chinese exports to the US is then used as an instrument for the Vietnamese export change during the same period. It is found that firms that faced more trade war exposure increased their investment, profit, and value added, which may be due to the market exit of unproductive firms. Moreover, the trade war impact is more pronounced for large firms. Foreign-invested firms gained less from trade war exposure. The pandemic weakened the trade war effect on firm performances; however, it exacerbated the trade tension effect on foreign-trade firms.
Topic:
Bilateral Relations, Investment, Trade, and COVID-19
Political Geography:
China, Asia, North America, and United States of America

17. Global Value Chain Disruptions and Firm Survival During COVID-19: An Empirical Investigation

Author:
Sasidaran Gopalan and Ketan Reddy
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Despite the rapid acceleration of countries participating in global value chains (GVCs) over the last three decades, global GVC participation rates have plateaued since the global financial crisis (GFC) and worsened with the onset of the coronavirus disease (COVID-19) pandemic. The massive supply chain disruptions induced by the pandemic not only appeared to expose the vulnerabilities of GVCs, largely because of concentration risks, but also contributed to a dramatic decline in trade flows globally. As countries around the world emerge from the shadows of the pandemic, there is growing academic and policy interest in deciphering how countries should build effective strategies that facilitate firm survival, especially viewed from the lens of resilience and robustness. Considering this background, in this paper, we propose to make a twofold contribution to this literature. First, we undertake a comprehensive firm-level investigation (in a cross-country setting) to ascertain whether firms engaged in GVCs relative to non-GVC firms exhibited better survival instincts during the COVID-19 pandemic. Second, we uncover the heterogeneity of the shock across sectors and industries, considering the varied sectoral/industrial exposure to the COVID-19 pandemic. We document that GVC firms showcased greater robustness and resilience during the pandemic phase compared with other firms. Our results also show that the degree of resilience and robustness varies significantly by industry.
Topic:
Financial Crisis, Trade, Global Value Chains, and COVID-19
Political Geography:
Global Focus

18. ASEAN Digital Community 2045

Author:
Lili Yan Ing, Yessi Vadila, Ivana Markus, and Livia Feliciani Nazara
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Over the last decade, the Association of Southeast Asian Nations (ASEAN) has undergone significant development in digitalisation. The rapid digital transformation in ASEAN, however, has brought forth risks and challenges encompassing data security, cybersecurity, competition, and the digital divide. To effectively address these challenges and leverage the potential of the digital realm, ASEAN developed nine frameworks during 2016–2023. Yet, the focus is primarily on digital trade. We suggest that ASEAN embrace digital transformation by establishing the ASEAN Digital Community (ADC) 2045. This vision could provide guidance to Member States, enabling them to overcome regional challenges and unlock their digital potential. It is crucial for ASEAN to nurture digital development across the three key pillars: political-security, economic, and socio-cultural dimensions. The three pillars should be built on four fundamental elements: data governance, value-added enhancement, improved digital connectivity, and digital inclusivity. Through the establishment of ADC 2045, ASEAN could position itself as a significant player in the global digital economy while ensuring that digital transformation aligns with its sustainable and inclusive development agenda.
Topic:
Science and Technology, Investment, Innovation, Trade, ASEAN, Connectivity, and Competition
Political Geography:
East Asia, Asia, and Southeast Asia

19. Catastrophe: The Global Cost of the Ukraine War

Author:
Carl Conetta
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Project on Defense Alternatives
Abstract:
The war has been a disaster for Ukraine, but also a calamity for the world. This brief article provides a concise overview of the war’s profound global effects, beginning with the combatants’ cost in lives and treasure. Beyond this it assesses the war’s impact on global trade and economy; energy and food price inflation and their effects on poverty, hunger, and mortality; the redirection of humanitarian and official development assistance; the total sum of aid to the Ukrainian war effort, and the estimated cost of postwar reconstruction and recovery. Also examined is the war’s effect on global defense spending. The article also provides copious citations to support further inquiry.
Topic:
Economy, Trade, and Russia-Ukraine War
Political Geography:
Europe and Ukraine

20. Capital Flight from Natural Resource-Dependent African Countries: Updated Estimates and Analysis for the Cases of Cameroon, Ghana, and Zambia, 1970-2021

Author:
Léonce Ndikumana
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This paper is part of a project that investigates domestic and global drivers and enablers of capital flight from Cameroon, Ghana, and Zambia, three countries that are significantly endowed in natural resources. It presents estimates of capital flight from these three countries and discusses the key drivers of the phenomenon. The results show that as of 2021, estimated total capital flight stood at $71.1 billion for Cameroon, $50 billion for Ghana, and $71.5 billion for Zambia. External borrowing and, in the cases of Zambia and Cameroon, trade misinvoicing, are key correlates of capital flight. While external borrowing directly and indirectly drives capital flight, trade misinvoicing constitutes an important mechanism of unrecorded cross-border capital flows. This study contributes to the efforts to uncover the mechanisms and enablers of capital flight from Africa, with the aim of shedding light on possible strategies to curb further capital outflows in the context of efforts to scale up and diversify development financing to support recovery from global crises, the transition to green growth, and sustainable development in Africa.
Topic:
Development, Political Economy, Natural Resources, Capital Flight, and Trade
Political Geography:
Africa, Zambia, Ghana, and Cameroon

21. Not So Clear: Revisiting the Impacts of Cap-and-Trade on Environmental Justice

Author:
Michael Ash and Manuel Pastor
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
A recent article by Danae Hernandez-Cortes and Kyle Meng (HCM) suggests that the cap-and-trade program in California was accompanied by improvements in the degree of environmental inequity in the state. We note that that the model used to estimate this improvement is not well-designed to capture the variation in facility adjustment to the cap-and-trade program that is at the heart of the environmental justice debate about potential shifts in co-pollutant exposure. We also show that even if that were a proper approach, the estimates offered by HCM may be problematic due to data issues, including proper identification of facilities subject to the cap, shifting results when we require that facilities have observations both before and after the cap, and robustness when we apply their method estimates beyond their selected subsample to the broader range of facilities. As such, the environmental justice implications of California’s carbon market remain an unsettled empirical question.
Topic:
Inequality, Trade, Pollution, and Environmental Justice
Political Geography:
North America and United States of America

22. EU-Georgia Relations at a Critical Juncture: A Case for European Strategic Autonomy

Author:
Ioannis N. Grigoriadis and Mariam Gugulashvili
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
Despite the substantial progress that Georgia has made in implementing the EU Association Agreement and related reforms, it has been experiencing democratic backsliding since 2018. The divergence of Georgia’s ruling party from a pro-European trajectory, as well as the political polarization that has been dominant in recent years, have contributed to the deterioration of ties between Georgia and the EU. Unlike Ukraine and Moldova, Georgia, which was once seen as a “reform pioneer,” was not given candidate status in June 2022. Georgian public opinion has always supported membership of Euro-Atlantic institutions, with more than 80% of Georgians today being Euro-enthusiasts and overwhelmingly in favour of joining the EU. The EU is Georgia’s largest donor and trading partner. Georgia’s key strategic option boils down to Russia vs. the West. Georgia should foster closer relations with certain EU member states that could provide key support for its EU membership aspirations.
Topic:
Bilateral Relations, European Union, Trade, and Strategic Autonomy
Political Geography:
Europe and Georgia

23. Post-Brexit imports, supply chains, and the effect on consumer prices

Author:
Jan David Bakker, Nikhil Datta, Josh de Lyon, Luisa Opitz, and Dilan Yang
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
UK in a Changing Europe, King's College London
Abstract:
This report documents the decrease in imports and shows how the patterns of imports vary across sectors following the UK’s departure from the Single Market and Customs Unit at the end of 2020. The authors, Jan David Bakker, Nikhil Datta, Josh De Lyon, Luisa Opitz, and Dilan Yang, focus on comparisons between imports from the EU and imports from non-EU countries. Some products, such as fats, oils, and waxes, experienced a sizeable decrease in trade volumes with EU countries compared to those of non-EU countries in January 2021. Other products, such as minerals, experienced minimal deviation in imports from the EU versus non-EU. We also document that the timing of import changes varies across products: in some cases, the deviation occurs pre-TCA, and there is some evidence of stockpiling; in other cases, the changes only occur post-TCA, and can be either short term or persistent. The fall in imports from the EU will affect the UK economy through its impact on supply chains. Two-thirds of international trade is in products used as inputs to production. We show that imports from the EU fell for products that are used as inputs to production in many industries in the UK. For some sectors such as agriculture, fishing, and car manufacturing, there is evidence that imported inputs began to be sourced from non-EU countries pre-TCA. For others, including vegetable oil, animal fats, prepared animal feeds, and pharmaceuticals, the adjustments occurred post-TCA. Evidence suggests that increased access to intermediate inputs can boost productivity, so a reversal is likely to cause a fall in productivity. Imports also provide cheaper goods to consumers, as well as a wider variety of choice. Focussing on food products, we show that the drop in imports after Brexit caused an increase in prices. Products that were more heavily reliant on imports from the EU increased in price following the election of Boris Johnson in 2019, pre-TCA and then increased further post-TCA. This report therefore shows that changes in imports of goods from the EU have affected UK firms’ supply chains. Part of this change is driven by the adjustment costs incurred as part of the new trading relationship and is likely to be short term, but another part is likely to reflect a long-term increase in the cost of inputs from the EU, which make up a sizable contribution of total imports. This could have a knock-on effect for consumers who will face higher prices, and for workers whose jobs will be affected by adjustments in the supply chain.
Topic:
European Union, Brexit, Trade, Imports, and Supply Chains
Political Geography:
United Kingdom and Europe

24. What Determines Interfirm Trade Credit? Empirical Evidence from the ASEAN

Author:
Sasidaran Gopalan and Ketan Reddy
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper empirically examines the link between the heterogeneity of firms and their probability of obtaining interfirm trade credit in Asia, with a specific focus on the Association of Southeast Asian Nations (ASEAN) bloc of economies. In doing so, the paper investigates the following three issues: to what extent firm size plays a role in obtaining trade credit, to what degree a firm’s integration into global value chains affects its probability of obtaining trade credit, and the impact of agglomeration on firms’ likelihood of obtaining trade credit.
Topic:
International Trade and Finance, Trade, Global Value Chains, and Credit
Political Geography:
Asia and ASEAN

25. Embedding Human Rights in European and US China Policy

Author:
Malin Oud
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
German Marshall Fund of the United States (GMFUS)
Abstract:
Europe and the United States share an interest in promoting human rights in China but often struggle to affect change in this regard. Because of ineffective approaches and low political commitment, human rights are a marginalized issue in transatlantic China policy and an afterthought to commercial interests. European and US policymakers have attempted to compartmentalize their approach to China, keeping human rights separate from commercial and other interests. This does little to advance human rights, and it only seems to encourage more assertive and coercive behavior by China. During the last few years, the Western assumption that trade and foreign capital would transform China into a more open and democratic society has been replaced by a disillusioned realization that its rise as a superpower is reshaping the international order. Under President Xi Jinping, China has evolved from its previous position as rule-taker and status quo-keeper at the UN to become an assertive rule-maker and international norm entrepreneur. Its vulnerability to external pressure has declined while its power to exert pressure and economic coercion on others has increased. China no longer presents its political and economic model merely as different from but as superior to that of the liberal democracies in the West. For several years now, European and US policymakers have declared an “end of naivety” in relation to China. After years of debating how to make the EU more resilient and robust, Russia’s invasion of Ukraine has “given birth to geopolitical Europe,” in the words of its chief diplomat, Josep Borrell. It remains to be seen whether this moment of clarity will translate into a more principled defense of human rights and investment in democratic resilience. For this to happen, there needs to be a broader reckoning with how Western countries for decades mishandled the authoritarian challenge to the international order, often because they were pursuing stronger economic ties with the same governments they now see as systemic rivals.
Topic:
Foreign Policy, Economics, Human Rights, Business, and Trade
Political Geography:
China, Asia, North America, and United States of America

26. How Its War on Ukraine Killed Russia’s Hydrogen Ambitions

Author:
Aliaksei Patonia
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
German Marshall Fund of the United States (GMFUS)
Abstract:
Hydrogen looks like the fuel that can facilitate global decarbonization because it can be used in diverse applications—such as heat and power generation, transport, and manufacturing—without any carbon emissions. But, while many countries (including in Europe) view renewables-based, zero-carbon hydrogen as the ultimate goal in transitioning to a hydrogen economy, today most hydrogen is produced from natural gas. Thus, it is unlikely that the hydrogen transition will happen without relying on this fossil fuel. Russia is the country with the world’s largest natural gas deposits, and it has been exploring ways to adjust its energy sector to the needs of the emerging global hydrogen one. In 2021, it announced the goal of capturing up to 20 percent of the world’s hydrogen market by 2030. This came after all the major importers of Russia’s energy products had developed their hydrogen strategies, and its key energy companies started to explore new opportunities. Having signed memoranda of understanding with some of the world’s major energy companies to jointly develop Russia’s hydrogen export potential, they focused on Europe as the key destination. Some of Asia’s hydrogen pioneers and most promising future importers, such as Japan and South Korea, were also included among Russia’s potential partners. These steps could have resulted in long-lasting and fruitful collaborations generating large profits for Russia, but its ambitions have been jeopardized by its invasion of Ukraine in February 2022. This has led to Russia losing key political and economic partners in Europe and also in Asia, which—in combination with being the target the toughest sanctions in its history—is likely to cripple its nascent hydrogen sector. Having planned to convert its natural-gas pipelines to transport hydrogen to future buyers in Europe, Russia is unlikely to be able to use this infrastructure for this purpose anymore. The EU will be an unlikely buyer of Russian hydrogen for the foreseeable future. Turning to Japan and South Korea would not be a success either, since they have joined the sanctions regime against Russia and, like the EU, have been officially labeled as unfriendly by Moscow. This will make the transfer of the technologies critical for the production of low- and zero-carbon hydrogen from the world leaders to a technologically backward Russia very problematic. Europe will also feel long-lasting repercussions of Russia’s war in Ukraine in the energy and hydrogen sectors. With no steady supplies of cheap Russian gas or hydrogen, Europe’s decarbonization efforts and building up its hydrogen industry will be inhibited and require a lot more effort and money. Russia will have to seek alternative markets for its energy commodities and it will seek deals with China, the only country whose energy consumption can rival that of Europe. But, as one of the world’s largest producers of electrolysers and of conventionally manufactured hydrogen, China probably will not need to import Russia’s hydrogen to build up its own hydrogen sector. Possessing critical technologies of its own, it will instead increase imports of Russian primary energy sources (such as natural gas) that it can use for producing hydrogen. The influx of huge volumes of cheap Russian feedstock will speed up China’s transformation from a country with a nascent hydrogen sector into a dominant player on the global hydrogen market. If the EU or the United States—the only two actors comparable to China in economic, technological, and geopolitical strength—do not develop similarly strong hydrogen sectors, Beijing could end up dominating the global energy landscape. To avoid the geopolitical consequences of this and for global balance to be maintained, further cooperation between the EU and the United States will be needed to speed up the creation of strong hydrogen sectors for both.
Topic:
Foreign Policy, Economics, Business, Trade, Hydrogen, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine

27. Leaning-against-the-wind intervention and the “carry-trade” view of the cost of reserves

Author:
Eduardo Levy-Yeyati and Juan Francisco Gómez
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
For a sample of emerging economies, we estimate the quasi-fiscal costs of sterilized foreign exchange interventions as the P&L of an inverse carry trade. We show that these costs can be substantial when intervention has a neo-mercantilist motive (preserving an undervalued currency) or a stabilization motive (appreciating the exchange rate as a nominal anchor) but are rather small when interventions follow a countercyclical, leaning-against-the-wind (LAW) pattern to contain exchange rate volatility. We document that under LAW, central banks outperform a constant size carry trade, as they additionally benefit from buying against cyclical deviations, and that the cost of reserves under the carry-trade view is generally lower than the one obtained from the credit-risk view (which equals the marginal cost to the country´s sovereign spread).
Topic:
Foreign Exchange, Economy, International Reserves, Trade, and Exchange Rates
Political Geography:
Global Focus

28. On the Design of Effective Sanctions: The Case of Bans on Exports to Russia

Author:
Ricardo Hausmann, Ulrich Schetter, and Muhammad A. Yildirim
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We analyze the effects of bans on exports at the level of 5’000 products and show how our results can inform economic sanctions against Russia after its invasion of Ukraine. We begin with characterizing export restrictions imposed by the EU and the US until mid May 2022. We then propose a theoretically-grounded criterion for targeting export bans at the 6-digit HS level. Our results show that the cost to Russia are highly convex in the market share of the sanctioning parties, i.e., there are large benefits from coordinating export bans among a broad coalition of countries. Applying our results to Russia, we find that sanctions imposed by the EU and the US are not systematically related to our arguments once we condition on Russia’s total imports of a product from participating countries. Quantitative evaluations of the export bans show (i) that they are very effective with the welfare loss typically ∼100 times larger for Russia than for the sanctioners. (ii) Improved coordination of the sanctions and targeting sanctions based on our criterion allows to increase the costs to Russia by about 60% with little to no extra cost to the sanctioners. (iii) There is scope for increasing the cost to Russia further by expanding the set of sanctioned products.
Topic:
Sanctions, European Union, Exports, Trade, and Russia-Ukraine War
Political Geography:
Russia, Europe, Ukraine, and Eastern Europe

29. Trump ended WTO dispute settlement. Trade remedies are needed to fix it.

Author:
Chad P. Bown
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Unhappy with the rulings of the WTO dispute settlement system, which disproportionately targeted US use of trade remedies, the United States ended the entire system in 2019. There are multiple hurdles to agreeing to new terms of trade remedy use and thus potentially restoring some form of binding dispute settlement. First, a change would affect access to policy flexibility by the now large number of users of trade remedies. Second, although China’s exports are the overwhelming target of trade remedies, exporters in other countries increasingly find themselves caught up in trade remedy actions linked to China. Third, critical differences posed by China’s economic model may call for new rules for trade remedies, but no consensus on those rules has emerged. Even some of the most promising reforms have practical limitations, create additional challenges, or may be politically unviable.
Topic:
Economics, Trade, Donald Trump, and WTO
Political Geography:
China and United States of America

30. WTO 2025: Restoring binding dispute settlement

Author:
Alan Wm. Wolff
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Binding dispute settlement—the ability to obtain a final judgment of whether a member of the World Trade Organization (WTO) has acted inconsistently with its obligations—was the defining attribute of the WTO as created in 1995. Global commerce thrived on having the certainty provided by its taking place within this system. For well over a decade, the United States had complained that the dispute settlement system was undermining the trade remedies—antidumping, countervailing duties against subsidies, and safeguard actions against injurious imports—that were allowed under the WTO’s rules. When a populist US administration assumed office in 2017, it blocked appointments to the WTO’s Appellate Body. Today, the WTO dispute settlement system has become balkanized. The European Union and a number of other countries have banded together to put into place an alternative mechanism. Outside this system are the other two-thirds of the WTO members, including the United States. For most WTO members, no definitive result can be reached as to whether WTO obligations have been violated, as there is no assurance that WTO dispute settlement will be binding for them. This paper addresses how to reconstruct a system that the United States could join that would be broadly acceptable to others. It sets out a wide range of elements for negotiators to consider to rebuild the WTO dispute settlement system and make WTO agreements enforceable again.
Topic:
Economics, Trade, WTO, and Disputes
Political Geography:
Global Focus

31. WTO 2025: Enhancing global trade intelligence

Author:
Alan Wm. Wolff
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
International trade flows based on information. Is the foreign market open? What are the conditions for entry? Are there customs duties to be paid and other regulations that need to be satisfied? Businesses thrive on getting as much certainty as they can find, and this requires reliable information. Is the competition subsidized? Are the competitors favored state-owned companies? During the pandemic, governments needed to know if food and medical supplies were going to be available from foreign sources and, most importantly, how available vaccines would be as most of the world’s countries could not produce any. Effective public policy cannot be made in the dark. The World Trade Organization, and the General Agreement on Tariffs and Trade before it, were founded with the idea of providing transparency. But more is needed to understand why trade is taking place, and even more important, when it is not, why not?
Topic:
Economics, Markets, Trade, and WTO
Political Geography:
Global Focus

32. Public responses to foreign protectionism: Evidence from the US-China trade war

Author:
David Steinberg and Yeling Tan
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
America's recent turn toward protectionism has raised concerns about the future viability of the liberal international trading system. This study examines how and why public attitudes toward international trade change when one's country is targeted by protectionist measures from abroad. To address this question, the authors fielded three original survey experiments in the country most affected by US protectionism: China. First, they find consistent evidence that US protectionism reduces Chinese citizens' support for trade. This finding is replicated in parallel experiments on technology cooperation, and further validated outside of the China context with a survey experiment in Argentina. Second, they show that responses to US protectionism reflect both a "direct reciprocity" logic—citizens want to retaliate against the United States specifically—and a "generalized reciprocity" logic that reduces support for trade on a broader, systemic basis.
Topic:
Economics, Political Economy, Public Opinion, Trade, and Protectionism
Political Geography:
China, Asia, North America, and United States of America

33. What drove the profitability of colonial firms? Labour coercion and trade preferences on the Sena Sugar Estates (1920–74)

Author:
Sam Jones and Peter Gibbon
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The magnitude of returns to colonial-era investments in Africa has been addressed in an extensive literature, as have the nature and legacies of extractive colonial institutions. However, the link between these institutions and the profitability of firms remains unclear. We reconstruct the annual financial records of Sena Sugar Estates in Portuguese East Africa (today’s Mozambique) over the period 1920–74 to probe the contributions of forced labour and preferential trade arrangements to the performance of the firm. We show that Sena Sugar Estates achieved stable and solid returns to capital, comparable in size to a range of domestic UK firms. Counterfactual simulations suggest that the firm’s profitability was highly dependent on sustained access to cheap labour, but generally was not so dependent on trade preferences. At the same time, a production function analysis suggests that higher reliance on rents from forced labour was associated with lower total factor productivity at the Estates. This helps explain why extractive institutions did not translate into ‘super-profits’.
Topic:
History, Colonialism, Trade, Sugar, and Forced Labor
Political Geography:
Africa and Mozambique

34. The New Wave of Defensive Trade Policy Measures in the European Union: Design, Structure, and Trade Effects

Author:
Fredrik Erixon, Oscar Guinea, Philipp Lamprecht, Vanika Sharma, and Renata Zilli
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This study undertakes a comprehensive review of proposed and adopted defensive trade policy instruments in the EU, with the purpose of better understanding their design, functioning, and implications. The study covers eight policy instruments at different stages of development. These are: Anti-Coercion Instrument (ACI), International Procurement Instrument (IPI), Carbon Border Adjustment Mechanism (CBAM), Foreign Subsidy Instrument (FSI), Corporate Sustainability Due Diligence (DD), Level Playing Field Provisions in the EU-UK Trade and Cooperation Agreement (LPF), Enforcement Regulation (ER), and the Deforestation Initiative (DI). It is understandable that the EU seeks both redressive and retaliatory measures in its trade policy. However, these measures would have the total effect of Europe producing more for itself and being less dependent on imports. This is a significant policy shift, because in their totality the defensive trade policies make the EU more inward-looking. This can lead to major negative consequences. An extensive distortion of trade and markets would reduce the gains from trade and prompt a reallocation of European resources. Notably, the EU is a larger supplier of goods and services than it is a buyer, and an inward-looking policy that leads to retaliation from EU’s trading partners can harm its exports and trade surplus. There are also potential strategic consequences that could follow, and their importance has increased considerable as a result of the Russian war against Ukraine. Under these measures, the EU could introduce new trade frictions with friends and allies, and with countries that the EU seeks closer cooperation with to provide for a safer geopolitical environment. For each of these defensive measures, the study takes an extensive look at the objectives of the instruments, their legality, proportionality, and subsidiarity, the working of the instruments and the division of labour between institutions, as well as their enforceability in conjunction with existing multilateral and bilateral rules affecting the EU. It also attempts to capture the impact and potential for retaliation for the EU and its partners as a result of the implementation of the instruments. The study highlights the areas where the instruments lack clarity, particularly in the implementation of the instrument, the division of labour between the EU and EU member states, and the compliance of the instruments with WTO rules and bilateral FTA provisions. The instruments share some general characteristics. Many of the instruments have been created as retaliatory measures against coercion and unfair trade practices by partner countries. Very often, the partner countries most affected by the instruments are also the same. The United States, China, Russia, the UK, and Turkey are likely to be on the receiving end of the instruments due to the significant volumes of trade and economic interdependence with the EU, but also because they either do not follow the same trade rules as the EU, or the EU wants to maintain with them the current level of competitiveness. Most instruments also use restrictions to the EU market as the main policy lever. The objective is not just about creating an equal playing field but also ensuring that the rest of the world follows EU rules. Particularly, the EU aims at regulating non-EU companies directly and unilaterally through EU policies, which increases the risk of retaliation against the EU. At the same time, there are also important areas of departure in the specifics of each instrument, as illustrated by the varying objectives, measures, compatibility with international obligation, affected sectors, and whether the measures apply automatically or at the discretion of the EU.
Topic:
Defense Policy, Political Economy, European Union, and Trade
Political Geography:
Europe

35. What Will It Take for Jordan to Grow?

Author:
Tim O'Brien, Thảo-Nguyên Bùi, Ermal Frasheri, Fernando Garcia, Eric Protzer, Ricardo Villasmil, and Ricardo Hausmann
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This report aims to answer the critical but difficult question: "What will it take for Jordan to grow?" Though Jordan has numerous active growth and reform strategies in place, they do not clearly answer this fundamental question. The Jordanian economy has experienced more than a decade of slow growth. Per capita income today is lower than it was prior to the Global Financial Crisis as Jordan has experienced a refugee-driven population increase. Jordan’s comparative advantages have narrowed over time as external shocks and responses to these shocks have changed the productive structure of Jordan’s economy. This was a problem well before the country faced the COVID-19 pandemic. The Jordanian economy has lost productivity, market access, and, critically, the ability to afford high levels of imports as a share of GDP. Significant efforts toward fiscal consolidation have further constrained aggregate demand, which has slowed non-tradable activity and the ability of the economy to create jobs. Labor market outcomes have worsened over time and are especially bad for women and youth. Looking ahead, this report identifies clear and significant opportunities for Jordan to strengthen new engines of export growth that would enable better overall job creation and resilience, even amidst the continued unpredictability of the pandemic. This report argues that there is need for a paradigm shift in Jordan’s growth strategy to focus more direct attention and resources on activating “agents of change” to accelerate the emergence of key growth opportunities, and that there are novel roles that donor countries can play in support of this.
Topic:
Foreign Direct Investment, Economy, Economic Growth, Trade, COVID-19, Labor Market, Inclusion, and Green Jobs
Political Geography:
Middle East and Jordan

36. Stolen decades: the unfulfilled expectations of the Belarusian economic miracle

Author:
Aleś Alachnovič and Julia Korosteleva
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
The case of the Belarusian economy has puzzled many academic scholars for years. Belarus has often been referred to as a transition outlier, given its relatively fast recovery in 1996 and spectacular growth prior to the global financial crisis without much transformation of its economy. Three decades after gaining its independence, the state control of the economy still remains considerably high. Subsidized financing of state-owned enterprises allowed to preserve production capabilities over the first decade, to achieve some productivity gains in the late 1990s–early 2000s, and to avoid social destabilization. However, with a delay in structural reforms, this economic model, also heavily dependent on the Russian subsidies and foreign debt, has become fatigue, driving the economy into stagnation in the 2010s. The Covid-19 pandemic, the 2020 post-presidential political crisis and Russia’s war in Ukraine in 2022 put further strains on the economy, calling for change. This working paper gives an overview of the Belarusian economic developments before the presidential elections to have a better understanding of how various rigidities of the Belarusian economic model have amplified the detrimental effect of the political unrest for the economy and the Belarusian society overall, and discusses the anticrisis and mid-term economic reforms Belarus will have to undergo.
Topic:
Demographics, Labor Issues, Economy, Social Policy, and Trade
Political Geography:
Eastern Europe and Belarus

37. Trade Liberalization and Economic Development: Lessons for Africa

Author:
Henri Kouam and Fabien Sundjo
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
What happens when countries lower their tariff & import duties and open up their economy to other countries? This policy brief looks at the impact of trade liberalization on economic development, drawing from broad-based international literature. It shows how free trade can positively impact economic development, boost incomes, and improve standards of living. The African Continental Free Trade Area will stimulate intra-regional trade and help countries like Cameroon address acute development challenges. However, the expected positive results will depend on its successful implementation.
Topic:
Development, Economics, Regional Cooperation, Trade Liberalization, Trade, Economic Development, and Liberalism
Political Geography:
Africa

38. The Geopolitics of Clean Hydrogen – Opportunities and Challenges for Italy

Author:
Marco Giuli
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
The emergence of clean hydrogen as an energy carrier promises to shape the future geography of the energy trade. Under growing contestation of interdependence, such a geography should be read through political lenses alongside commercial and technological ones. Generally, hydrogen is likely to reduce the geopolitical sensitivity of energy trade with respect to a fossil-fuel-based energy order by increasing the share of energy produced domestically, shifting geostrategic competition from a focus on grabbing resources to a focus on mastering technology and setting standards, and offering petrostates opportunities for economic diversification. Italy can exploit the opportunities offered by a hydrogen economy for enhancing its energy security and positioning in the regional energy trade. However, it should be careful with monitoring how geopolitical barriers such as regional instability may affect its hydrogen ambitions.
Topic:
Geopolitics, Trade, Hydrogen, Pipeline, and Energy
Political Geography:
Europe and Italy

39. The US–Italy Economic Relations in a Divided World

Author:
Adriana Castagnoli
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
In 2021, bilateral trade returned to the sustained pace it had prior to the Covid pandemic. Direct investment also grew – crucially, not just Italian investment in the United States but the other way round too. While Italy’s economic ties with Russia and China remain potential hotspots, Rome has never questioned its Atlantic orientation. Nevertheless, possible austerity policies following sanctions against Russia could spread social discontent that populist parties can exploit for consensus purposes in the 2023 general election, rekindling anti-Americanism rooted in different segments of Italian society.
Topic:
Foreign Policy, Foreign Direct Investment, Economic Policy, Trade, and Energy
Political Geography:
Russia, China, Italy, and United States of America

40. Who Gains from Agricultural “Reform”?: Understanding the 2020 Farm Laws and Protests

Author:
C. P. Chandrasekhar
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Over 2020-21, farmer protests in India turned into a movement that took large numbers of farmers to the borders of India’s capital. The movement was provoked by the passage of three farm laws designed to dismantle regulation of agricultural trade, provide a legal framework for contract farming arrangements, and facilitate corporate entry into agricultural production and trade. Despite intense farmer opposition the government held out for almost a year after the movement began before withdrawing the laws. The paper attempts to understand the factors underlying this stand-off by tracing the post-Independence evolution of agricultural and food policy and examining the political economy context of the positions adopted by the farmers and the government. A lesson that the farmers have derived from experience, I argue, is that agricultural prices, the terms of exchange between agriculture and industry, and the viability of crop production are not determined by benign and free markets, but by structures of power reflected in state policy. Till the economic crises of the mid-1960s those power relations were skewed against agriculture, but the crisis forced a shift in state policy aimed at raising agricultural production by intensifying farming activity, especially food grain production. A new framework of intervention involving procurement at a cost-plus price and distribution to consumers at subsidised prices, helped either tilt the terms of trade in favour of agriculture or prevent an adverse shift in the terms facing agriculture. Farmers saw the farm laws and the failure to guarantee procurement at an adequately remunerative price as an effort to dismantle that protective framework and favour corporate interests. The protests have resulted in the. repeal of the laws. But the stand-off over the level and price of procurement is still unresolved.
Topic:
Agriculture, Political Economy, Reform, Protests, and Trade
Political Geography:
South Asia and India

41. Costs and Benefits of Trade Shocks: Evidence from Chilean Local Labor Markets

Author:
Andres Cesar, Guillermo Falcone, and Leonardo Gasparini
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
We study Chile’s labor market responses to trade shocks during 1996-2006, exploiting spatial and time variations in trade exposure arising from initial differences in industry specialization across local labor markets and the evolution of shocks across industries. We take advantage of China’s supply and demand’s worldwide shocks to instrument for Chinese import competition and demand for Chilean exports. Our main finding is that increasing manufacturing import competition implied a significant rise in labor informality in more exposed local markets, especially among young and unskilled workers. These groups also suffered significant relative wage losses. Meanwhile, locations that benefited most from the increased demand for primary products experienced a relative increase in employment, particularly among young individuals, and reallocation from self-employment towards salaried jobs in the formal sector, along with relative wage gains among old-age workers. Interestingly, these areas experienced a smaller increase in tertiary education enrollment rates than less exposed areas.
Topic:
Employment, Trade, Labor Market, and Informal Economy
Political Geography:
South America and Chile

42. Comparative Advantages in the Digital Era – A Heckscher-Ohlin-Vanek Approach

Author:
Dario Guarascio and Roman Stöllinger
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper revisits the Heckscher-Ohlin-Vanek (HOV) theorem and investigates its fit for digital tasks and ICT capital, which both represent endowment factors that are expected to shape the digital transformation. We use a theory-consistent methodology for calculating the measured net factor content of trade (Trefler and Zhu, 2010) and apply it to a unique dataset on digital and non-digital tasks performed in detailed occupations, as well as recent data on ICT capital stocks. Equipped with these data we provide new evidence on the factor-based trade patterns for 25 EU countries and use it to test the HOV theorem. Overall, the performance of the sign test and the rank test is good if not impressive. In 83% of the cases countries are net exporters of those factors with which they are abundantly endowed, with a higher score achieved for digital tasks than for ICT capital. We conclude that the fit of the HOV theorem for highly relevant endowments of the digital era is as good as that of traditional endowment factors.
Topic:
European Union, Business, Trade, and Digital Transition
Political Geography:
Europe

43. The Economic Consequences of Russia-Ukraine War for Azerbaijan

Author:
Emin Mammadov
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Center for Economic and Social Development (CESD)
Abstract:
The past three decades of independence demonstrate that Russia remains a strategically economic and political partner, and multidirectional relations between two parties historically were of crucial importance. In the year 2021, total trade turnover between Russia and Azerbaijan accounted for 2.295 bln USD with a 12% upsurge recovering to pre-pandemic levels. Russia ranked as the 3hd largest trade partner of Azerbaijan in 2021 following Italy and Turkey and the share of trade with Russia alone made up 8.83% of the total in this period.
Topic:
Politics, Economy, Trade, and Russia-Ukraine War
Political Geography:
Russia, Ukraine, and Azerbaijan

44. The Digital Silk Road and China’s Influence on Standard Setting

Author:
Alex He
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
China is striving to become a leader in international standard setting, and the Digital Silk Road, part of China’s Belt and Road Initiative to expand its global infrastructure and markets, is key to realizing this goal. Both roads depend on standard connectivity, fuelled by Chinese private companies that are the driving force behind China’s growing role as a leader in technology development and shaping standards in both domestic and global markets. However, China faces strong competition to gain more influence in international standard-setting bodies, which are dominated by the European Union and the United States.
Topic:
Infrastructure, Digital Economy, Trade, Digital Culture, Silk Road, and Digitalization
Political Geography:
China, Europe, Asia, North America, and United States of America

45. Mexico’s “Catch-22”: The Implications of Being a Trade and Climate Partner of the United States and the European Union

Author:
Simone Lucatello
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Under the current global environmental governance and trade regimes, several initiatives, such as the new United States–Mexico–Canada Agreement, the European Union’s European Green Deal, and regional free trade agreements the European Union has implemented with strategic partners like Mexico, are prompting a vibrant discussion on how trade agreements can be used as a potential mechanism to create enforceable cross-border commitments to tackle climate change. However, to cut greenhouse gas emissions within a few decades, a decisive departure from current trends in emission and trade policies is required by all countries, both developed and developing. As a result, politicians, scholars and experts around the world have looked to trade agreements as a possible tool for reaching global climate commitments, either related to or independent from the Paris Agreement. But how well do these agreements suit this purpose? Carbon-intensive products worldwide increased when tariff reductions were implemented, resulting in destructive practices for many countries, particularly those in the Global South. For countries such as Mexico, the nexus between trade and climate change is not easy to address: the country is trapped between its ambitions to play a role in global trade platforms as an industrial manufacturer and agricultural exporter and its desire to be recognized as a global actor in climate change policy and actions within the global community. Despite recent changes in climate and environmental politics under the administration of President Andrés Manuel López Obrador (2018–2024), Mexico is a middle-income country with a long-standing tradition as climate champion and environmental leader in the Global South and needs to make clear where it stands under the new global environmental and ecological transition scenario imposed by the climate crisis and trade-related issues. The “entanglement” of global trade treaties and commitments under the current climate crisis, represents a major shift for Mexico. Caught between the new US–Mexico-Canada Agreement, the EU–Mexico Trade Agreement and the possible impacts of the European Green Deal, Mexico needs to define its role in trade and environmental terms alongside giant partners such as the United States and the European Union, while defending its role as a regional power. If the European Green Deal takes off as an international driver for deepening climate and sustainable development goals with European Union strategic partners, it remains to be seen how Mexico will respond to the challenge. In this paper we address the possible implications for Mexico under each of these instruments. We look at the interplay between them, explore the linkages and possible conflictual pathways, and “disentangle” the schemes in which trade and climate change are interconnected. Mexico may be trapped in a “catch-22” situation. Environmental provisions embedded in trade treaties provide critical benefits to the country, but this often comes at the expense of “unacceptable” environmental enforcement measures that can put at risk national development plans, especially at a time when the environment and climate change issues are not at the top of the current administration’s political agenda.
Topic:
Climate Change, Governance, European Union, Partnerships, Trade, and Green Deal
Political Geography:
North America, Mexico, and United States of America

46. After the CHIPS Act: The Limits of Reshoring and Next Steps for U.S. Semiconductor Policy

Author:
Vishnu Kannan and Jacob Feldgoise
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The U.S. Congress’s recent success in passing the CHIPS and Science Act (informally the CHIPS Act) shows that legislators are united on one point: the United States needs to manufacture more semiconductors at home. This idea gained traction during the worst days of the coronavirus pandemic, when global shortages of semiconductors halted the manufacturing of automobiles, traditional consumer electronics, and other products that use semiconductors, such as household appliances.1 As demand for these products soared during the pandemic, the world experienced painful price inflation, which amplified the acute geopolitical tensions between the United States and China.2 U.S. policymakers, already worried that dependence on Taiwan for the most sophisticated semiconductors could imperil national security and economic security, saw an urgent need to act.3 And together, rising prices and geopolitical competition underscored the need to invest in domestic economic revitalization. The CHIPS Act’s $52.7 billion investment in domestic semiconductor manufacturing (see table 1) aims to fulfill three main objectives: 1) reduce the likelihood that shocks abroad might disrupt the supply of chips, 2) boost American international economic competitiveness and create domestic jobs, and 3) protect semiconductors from being sabotaged in the manufacturing process. This paper argues that the CHIPS Act, by itself, will not fully accomplish any of these goals. The act is a major step forward, but it leaves multiple gaps that require additional government action.
Topic:
Industrial Policy, Legislation, Trade, and Semiconductors
Political Geography:
North America and United States of America

47. The World Bank, the IMF, and the GATT/WTO: Which institution most supported trade reform in developing economies?

Author:
Douglas A. Irwin
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The 1980s and 1990s saw a policy revolution in developing countries in which many highly protected (if not closed) economies were opened to world trade. These reforms were largely undertaken unilaterally, but international economic institutions such as the World Bank, the International Monetary Fund, and the General Agreement on Tariffs and Trade/World Trade Organization supported these efforts. This paper examines the ways in which these institutions promoted, or failed to promote, trade policy reform during this pivotal period.
Topic:
Development, World Bank, Reform, Trade, IMF, and WTO
Political Geography:
Global Focus

48. The state and the ‘legalization’ of illicit financial flows: Trading gold in Bolivia

Author:
Fritz Brugger, Joschka Proksik, and Felitas Fischer
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Most research on illicit financial flows (IFFs) has focused on illicit outflows from developing countries and the role of non-state actors in generating IFFs. Less attention has been paid to processes and interfaces through which IFFs enter formal value chains—in effect being ‘legalized’ before leaving the country—or the crucial role of state institutions as gatekeepers. We develop a novel explanatory approach to account for the enabling role of state institutions in the ‘legalization’ of IFFs. Building on political settlement theory, we explain the performance of institutions in the regulation of IFFs as a function of political settlements. Taking the case of the Bolivian gold-trading sector, we examine how the process of ‘legalizing’ illicit value flows works in practice and analyse the motives and underlying conditions that lead state institutions to permit the formal export of gold shipments that have been illicitly sourced or transferred. Evidence from Bolivia indicates that the ‘legalization’ of illicit flows cannot be sufficiently explained by reference to corruption, illicit rent-seeking, or a general lack of administrative capacity. Rather, the process accommodates the interests of the cooperatives dominating the gold-mining sector, which are critical to maintaining the political settlement on which the incumbent government’s power is based. By maintaining a status quo of non-enforcement, legal ambiguity, and pervasive informality, gold-mining cooperatives are permitted to reap higher benefits from resource extraction at the expense of domestic revenue mobilization.
Topic:
Institutions, Mining, Trade, Value Chains, Illicit Financial Flows, and Gold
Political Geography:
Global Focus

49. The impact of COVID-19 on urban informal workers in Maputo

Author:
Nilifer Anaç, Eva-Maria Egger, Sam Jones, Ricardo Santos, and Alex Warren-Rodriguez
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Informal self-employed traders in developing countries are vulnerable to shocks as they often lack access to social insurance or formal finance. This study investigates the impact of the COVID-19 pandemic on these urban traders in the capital of Mozambique, Maputo. Drawing on longitudinal phone survey data over six months, we find they experienced significant negative shocks to earnings, leading to a reduction in savings as well as worsening food security and assets. Individuals simultaneously affected by a municipal policy to remove informal traders from a central market were hit particularly hard as they lost their clients and market stalls. We simulate that a cash transfer equivalent to the government’s proposed COVID-19 response would have significantly buffered these shocks. The findings point to the need for a more shock-responsive social protection system, easy access to liquidity and provision of market infrastructure for informal traders.
Topic:
Urban, Trade, COVID-19, and Informal Economy
Political Geography:
Africa and Mozambique

50. Current Capabilities and Future Potential of African Textile & Apparel Value Chains: Focus on West Africa

Author:
Lindsay Whitfield
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Centre for Business and Development Studies (CBDS), Copenhagen Business School
Abstract:
African countries export very little of what is traded within apparel global supply chains and across the African continent, except in the case of cotton, but import a large amount of what the rest of the world produces. Africa’s fabric and apparel production is biased towards cotton, especially in yarn and fabric production, with little participation in production and export of man-made fibre, yarn and fabric. Most apparel exports from the continent come from North Africa, followed far behind by East and Southern Africa. Apparel exports from the African continent go largely to Europe and then North America. Currently, only 8% of Africa’s textile and apparel imports are supplied by other African suppliers. Southern Africa and especially South Africa is the largest supplier of intra-African imports of apparel. Inputs and intermediate textile products account for a significant share of intra-African textile and apparel imports in Southern, East and North Africa. Notably, under the free trade area in the Southern African Development Community, trade in clothes and home textiles increased, but trade in fibre, yarn and fabric did not significantly change. Overall, intra-African sources still account for a small share of these countries’ overall supplies of imported inputs, which indicates a substantial untapped potential. West Africa produces about 60% of Africa’s cotton but accounts for the bulk of its exports outside the continent, accounting for about 5% of the world cotton production and about 15% of world exportation. However, West African countries have little modern production capabilities in spinning, weaving, knitting or dyeing. A significant portion of the population in West Africa buys wax print cloth and has their clothes tailor made. The majority of the greige fabric used by the wax printing companies in Cote d’Ivoire and Ghana, which supply the rest of the sub-region, is imported from Asia. Only Ghana has industrial or mass apparel production for export, and it is small, comprised largely of two firms that started exporting in the late 2010s with foreign investment. Ghana and Cote d’Ivoire have some small-scale local firms producing for the domestic market, but most of these firms do not have the capabilities to grow into large firms that could produce using industrial methods. The governments of Togo, Cote d’Ivoire and Ghana are adopting new strategies to develop apparel exports in their countries. However, only the Togolese government has started implementing its strategy, which centres on an eco-industrial park and vertically integrated knit factories established through a public-private partnership with Arise Integrated Industrial Platform. Given the disruptions to globalized apparel supply chains during the Covid-19 pandemic and the resulting increased cost of shipping, buyers in the US and Europe are looking for shorter supply chains that are more resilient in the face of global shocks. Localization and regionalization of apparel production closer to end-markets are attractive to global apparel brands and retailers. However, global apparel buyers are no longer concerned just with cost, quality and speed to market when making sourcing decisions. They now must balance those criteria with sustainability goals. CBDS Working Paper 2022/3 5 Given the global trends outlined in this report that will reshape textile and apparel global supply chains over the next five to ten years, the textile and apparel industry should be reconceived as a sunrise and not a sunset industry. New fibre and recycling technologies are in a phase of fast innovation to produce more sustainable and circular man-made fibres. The raw material for clothing production will become manufactured fibres that rely on advancements in chemical technologies and biofabrication. Virgin cotton will be of less importance, as it is replaced by natural fibres that are less resource intensive and by manmade cellulosic fibres that feel like cotton. In the transition stage, cotton will move to organic and regenerative as well as become blended with other natural and man-made cellulosic fibres. Future fibres will have a high technology content and require licensing technology, both man-made cellulosic fibres and the new wave of synthetics that seek to replace polymers. African countries have the opportunity to build sustainable textile and apparel industries from the start, which can give them a competitive advantage as apparel-supplying countries in South and Southeast Asia do not (yet) have ‘green’ industries. The cost of renewable energy technology is falling and renewable energy technologies to power industries are evolving. New fibre and recycling technologies also offer a window of opportunity to leapfrog into the next generation of technologies. Taking advantage of this window of opportunity requires that the African government look forward and not backward, that they think in terms of building new and not rebuilding the existing textile industries. African textile and apparel domestic and regional value chains should be based on mastering the next generation of fibre production and recycling technologies. Such a strategy involves taking risks to invest in building the knowledge and skills required for this new technology, but not taking risks will mean that African countries miss the opportunity to move to the technological frontier. Furthermore, African countries can go beyond becoming competitive in the new textile and apparel global supply chains but also use them to drive broader green industrialization processes. Such a strategy also involves building diversified regional textile bases as well as regional value chains, which can harness the efforts of more economies and larger market demand as well as create a stronger platform of capabilities with which to engage in global export markets. AfCFTA negotiations on the rules of origin for the textile and apparel sector are on-going, and the AfCFA Council of Ministers responsible for trade is still working on reaching a consensus. The evidence assembled in this report shows that the textile production capabilities in the major apparel producing and exporting countries in Sub-Saharan Africa are not significant enough to support trade under a double transformation rule. Therefore, major investments in spinning, knitting, weaving, dyeing, and finishing are required before countries could take advantage of the preferential market access for textile and apparel in the AfCFTA with a double transformation rule. The quantitative and qualitative evidence presented in this report on the impact of the double transformation rule under SADC indicates that it did not encourage new investments in textile production, and thus regional integration was limited by existing textile production capabilities. CBDS Working Paper 2022/3 6 Trade rules are not strong enough incentives to encourage investments in textile production. In general, trade policy is a rather blunt instrument for addressing a task that requires a range of more sophisticated industrial policy tools. Instead of relying solely on trade policy tools, governments should design and develop industrial policies that actively support the learning processes of local firms. Part of the industrial policy tool kit to support local firm learning is attracting the ‘right kind of foreign direct investment’ and assisting local firms in leveraging technology from these foreign firms. Governments also need to make public investments in creating the industry-specific knowledge and skills for textile and apparel, which includes building the foundation for moving into new fiber and recycling technologies through investment in basic chemistry education and supporting partnerships in research between local and foreign firms and researchers.
Topic:
Markets, Business, Trade, Supply Chains, Value Chains, and Textile Industry
Political Geography:
Africa and West Africa