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  • Author: Jiayi Zhou, Lisa Marie Dellmuth, Kevin M. Adams, Tina-Simone Neset, Nina von Uexkull
  • Publication Date: 11-2020
  • Content Type: Working Paper
  • Institution: Stockholm International Peace Research Institute
  • Abstract: Assessing the prospects for Zero Hunger—Sustainable Development Goal 2—requires an understanding of food security that goes beyond developmental or humanitarian issues, to include linkages with geopolitics. Geopolitical challenges cut across areas such as natural resources, trade, armed conflict and climate change where unilateralism and zero-sum approaches to security directly hamper efforts to eradicate hunger and undermine the frameworks that govern those efforts. The report provides an overview of how geopolitics interacts with these areas. Competition for agricultural resources can be both a cause and a consequence of geopolitical rivalry. International trade, while essential for food security, also creates vulnerabilities through supply disruptions—sometimes politically motivated. Armed conflict is a driver of food insecurity, which can itself feed into social unrest and violence. Climate change interacts with all three phenomena, reshaping both the physical landscape and political calculus. These overlapping linkages require further integrated policy engagement and analysis.
  • Topic: Climate Change, Development, International Trade and Finance, Governance, Food Security, Geopolitics, Peace
  • Political Geography: Global Focus
  • Author: Samuel Nursamsu, Dionisius Narjoko, Titik Anas
  • Publication Date: 02-2020
  • Content Type: Working Paper
  • Institution: Economic Research Institute for ASEAN and East Asia (ERIA)
  • Abstract: Can firms reallocate their imported inputs to domestic sources when faced with import tariffs? To answer this question, we analyse the input allocation behaviour of Indonesian medium and large-sized manufacturing firms in responding to the movement of import tariffs from 2000 to 2013 by utilising plant-level input data of Indonesian manufacturing. We find that an increase in tariffs only creates a weak substitution effect. Our findings indicate that firms reallocate their inputs towards domestic sources, although this is accompanied by a decrease in the firms’ value added. This implies that domestic inputs are worse substitutes for imported inputs and that firms’ capacity to switch over to domestic products is limited, suggesting that firms will immediately switch back to importing when the tariff is removed. We find no evidence that firms make any adjustment towards more domestic-oriented input composition over time; and heterogeneity exists within the result, as industries with a strong basis in the domestic market are more capable of adjusting.
  • Topic: Industrial Policy, International Trade and Finance, Tariffs, Manufacturing
  • Political Geography: Indonesia, Asia
  • Author: Chin Hee Hahn, Yong-Seok Choi
  • Publication Date: 02-2020
  • Content Type: Working Paper
  • Institution: Economic Research Institute for ASEAN and East Asia (ERIA)
  • Abstract: This paper aims to investigate whether empirical evidence supports the learning-to-export hypothesis, which has received little attention in the previous literature. By taking full advantage of plant–product level data from the Republic of Korea during 1990–1998, we find some evidence for the learning-to-export effect, especially for innovated product varieties with delayed exporters: their productivity, together with research and development and investment activity, was superior to their matched sample. On the other hand, this learning-to-export effect was not significantly pronounced for the industries protected by import tariffs. Thus, our empirical findings suggest that it would be desirable to implement some policy tools to promote the learning-to-export effect, while tariff protection cannot be justifiable for that purpose.
  • Topic: Industrial Policy, International Trade and Finance, Tariffs, Manufacturing, Productivity
  • Political Geography: Asia, South Korea
  • Author: Lurong Chen
  • Publication Date: 03-2020
  • Content Type: Working Paper
  • Institution: Economic Research Institute for ASEAN and East Asia (ERIA)
  • Abstract: Global cross-border e-commerce has become increasingly important in the international economy. The next Asian miracle of growth could be born out of the region's digital transformation. Digital connectivity is the cornerstone that will make change feasible and smoothen the transformation. Digital connectivity consists of not only physical connectivity that facilitates the movement of raw materials, intermediate goods, and goods, but also cyber connectivity to support free flows of data, information, and services. This paper proposes a policy framework of promoting digital connectivity to support the development of e-commerce. Policy efforts to improve data connectivity, logistics, and online payment can help the Association of Southeast Asian Nations narrow the development gaps in information and communications technology infrastructure, both cross-border and within countries. Improving institutional connectivity and service development play a significant role. Digital connectivity is essential for the digital-friendly ecosystem that will facilitate digital transformation, which will affect not only e-commerce but also countries’ overall economic performance.
  • Topic: International Trade and Finance, Science and Technology, Digital Economy, Connectivity
  • Political Geography: ASEAN
  • Author: Kazunobu Hayakawa, Tadashi Ito, Shujiro Urata
  • Publication Date: 04-2020
  • Content Type: Working Paper
  • Institution: Economic Research Institute for ASEAN and East Asia (ERIA)
  • Abstract: The impacts of imports on the domestic labour market have been hotly debated recently. The purpose of this paper is to empirically examine the effects of not only imports from China but also those under regional trade agreements (RTAs) on employment in Japan. As in previous studies in the literature, we found that the rise in import penetration from China significantly decreases employment in Japan. However, import penetration under RTA regimes is found to have insignificant effects on employment. The finding suggests that the increase in imports under RTA regimes might not be harmful to the domestic labour market. In addition, we did not find significant effects of import penetration via input–output linkages. This insignificant result may be because imports by Japanese manufacturing firms are mostly conducted in the form of intra-firm trade, enabling them to avoid negative impacts on employment.
  • Topic: International Trade and Finance, Regional Cooperation, Labor Issues, Employment, Manufacturing
  • Political Geography: Japan, China, Asia
  • Author: Đoàn Thi Thanh Ha, Hông Quỳnh Nguyen
  • Publication Date: 04-2020
  • Content Type: Working Paper
  • Institution: Economic Research Institute for ASEAN and East Asia (ERIA)
  • Abstract: It is well-documented that agglomeration contributes to productivity growth. However, concentrations of workers could also lead to increasing regional income disparities. Therefore, understanding the evolution of agglomeration is relevant for the formulation of industrial policy and inclusive growth. This study documents the extent, pattern, and determinants of agglomeration in Vietnamese manufacturing during 2002–2016, a period when substantial economic reform took place. Our major findings are three-fold. First, agglomeration, as measured by the Ellison–Glaeser index, has declined since the mid-2000s. Second, there exists significant sectoral heterogeneity in the level and trend of agglomeration. Third, we do not find a significant impact of trade and foreign direct investment on agglomeration per se. However, foreign direct investment in port districts does contribute to disagglomeration.
  • Topic: International Trade and Finance, Reform, Manufacturing, Productivity
  • Political Geography: Asia, Vietnam
  • Author: Kiki Verico, Mari Pangestu
  • Publication Date: 08-2020
  • Content Type: Working Paper
  • Institution: Economic Research Institute for ASEAN and East Asia (ERIA)
  • Abstract: This paper analyses the economic impact of globalisation in Indonesia from the end of the 1960s to date. The analysis found that globalisation generated a positive impact on Indonesia’s economic growth through the trade and investment channel; reduced wage inequality and child labour participation; and increased labour absorption, including women's participation in the labour market. Through the trade channel, globalisation also contributed to Indonesia’s productivity and structural economic transformation, benefited small and medium-sized enterprises (SMEs), contributed to poverty alleviation and reduced inequality, and increased trade in services such as tourism. Through the investment channel, there is evidence of the spillover effect of technology transfer, technology progress, improvement of the role of SMEs, and contribution to poverty alleviation. The waves of open and more restrictive trade and investment policies, which Indonesia has gone through in the last few decades, reflect the political economy reality – that is, the impact of globalisation is dynamic and only felt in the medium term, whereas the cost and potential negative impact is often felt more immediately throughout trade creation. The trade creation increases imports from countries with which free trade agreements have been negotiated, decreasing the domestic producer surplus. Since globalisation will create net benefits in the long run, Indonesia should continue its process of globalisation and integration with the world economy to ensure the net benefits and to move forward in its structural transformation, while managing the costs of globalisation and its transition process.
  • Topic: Globalization, International Cooperation, International Trade and Finance, Economic Growth
  • Political Geography: Indonesia, Asia, Indo-Pacific
  • Author: Rajiv Bhatia, Sifra Lentin, Ambika Khanna
  • Publication Date: 11-2020
  • Content Type: Working Paper
  • Institution: Gateway House: Indian Council on Global Relations
  • Abstract: The 20th meeting of the Council of the Shanghai Cooperation Organization (SCO) Heads of States was held virtually on 10th November, 2020. The meeting precedes the SCO Summit to be hosted by India at the end of this month, and for which preparations have been on through the year. In this compendium of three essays, Gateway House assesses the potential for deepening economic cooperation between India & SCO, asks whether the SCO Charter needs dynamism and revision, and traces the roots of the regions's Buddhist presence, back to India.
  • Topic: Foreign Policy, International Trade and Finance, Investment, Economic Cooperation
  • Political Geography: South Asia, India
  • Author: Sruthi V.S.
  • Publication Date: 08-2020
  • Content Type: Working Paper
  • Institution: Council on International Policy (CIP)
  • Abstract: The ambitious $400 billion deal between China and Iran has garnered worldwide attention. The 18-page draft proposal says that China will facilitate the infusion of about $280 billion to Iran. This major economic and security partnership between China and Iran has raised India’s concerns against the backdrop of its ongoing border conflict with China. According to the New York Times report, the proposed China-Iran deal talks about expanding China’s presence in Iran’s “banking, telecommunications, ports, railways and dozens of other projects”, and in return China will receive a steady supply of oil from Iran for the next 25 years at a discounted price. There are more than 100 projects listed in the draft that will see Chinese investments; these include building Free Trade Zones and several very significant ports. The Chinese will also help Iran build infrastructure for 5G networks and come up with an internet filter like the Great Firewall in China. The stronghold of China in Iran could also result in undermining US policy in the Middle East.
  • Topic: International Relations, Diplomacy, International Trade and Finance, Conflict
  • Political Geography: China, Iran, Middle East, India, Asia
  • Author: Judit Fabian
  • Publication Date: 03-2020
  • Content Type: Working Paper
  • Institution: Canadian Global Affairs Institute (CGAI)
  • Abstract: International trade is often framed in starkly divergent terms: either countries choose multilateral trade agreements (MTAs) and advance the cause of global economic liberalization, or they choose preferred trade agreements (PTAs) and put the entire system at risk. Canada has a long track record of pursuing PTAs and with the Trump administration’s opposition to multilateralism, and longstanding opposition in elements of the Republican and Democratic parties, this trend will likely continue. The question is whether progress will come at the expense of the global trade system. Some economists believe PTAs to be trade-diverting, reducing trade with more efficient producers outside the agreement. Others insist that PTAs can create trade by shifting production to lower-cost producers in one of the participating countries. One prominent contrary argument holds that PTAs lead to discontinuities in tariff regimes between countries and regions, increasing transaction costs, disrupting supply chains, creating opportunities for corruption and harming global welfare, especially in developing nations. While debate continues about the effects of PTAs, a closer examination suggests that worries are overblown about their negative impacts on global trade flows. Evidence indicates that they support rather than harm the international trading system. Countries shut out of PTAs are more motivated to seek out agreements in new markets, increasing liberalization overall. They may also seek a reduction in most-favoured nation (MFN) tariffs, which would deprive PTAs of their major tariff benefits. Studies have found complementarity between preferential and MFN tariffs, revealing that PTAs promote external trade liberalization. Even if a PTA reduces a given country’s incentive to push for multilateral liberalization, it raises the odds of that country liberalizing its trade to avoid getting left behind. PTAs are a response to the difficulties of securing sweeping multilateral agreements. The World Trade Organization (WTO) Agreements authorize them under GATT Article XXIV, GATS Article V, and the enabling clause, and the WTO facilitates a degree of governance over PTAs through its dispute settlement process. Over the past 25 years, countries have adopted these deals at a rapid pace. Between 1994 and 2005, the number of PTAs increased from 50 to 200. By April 2018, 336 were in effect. At the same time, global trade has increased significantly. Between 1994 and 2010, the volume of world merchandise exports more than doubled. The proliferation of PTAs has resulted in a rise in international trade governance, because the countries involved shape their relationships in line with the WTO agreements. This juridification makes PTAs subordinate to the international system rather than giving them room to dissolve it. Canada should therefore have no fear of pursuing PTAs within the larger framework of the effort to achieve multilateral trade liberalization.
  • Topic: International Trade and Finance, Multilateralism, Trade, Donald Trump
  • Political Geography: Canada, North America, United States of America