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The incorporation of increasing returns and imperfect competition into applied general-equilibrium (AGE) models, beginning with Harris (1984), led to much larger welfare effects from changes such as trade liberalization. But the imperfect competition side of these IO developments has often failed to incorporate meaningful strategic behavior, largely ruling out firm-level productivity and scale effects. I show here that the incorporation of theory-based endogenous markups into AGE models is not difficult in spite of the added simultaneity of the system. I first derive the optimal markup equations for Nash Cournot and Nash Bertrand competition in a CES environment with free entry and exit. Then I code a simple numerical model using non-linear complementarity. Three alternatives are considered: large-group monopolistic competition (LGMC), small-group Cournot (SGC) and small-group Bertrand (SGB). Growth in the economy is the experiment used to compare these specifications. While the overall effects of growth on welfare are qualitatively similar, the gains to initially small economies are much larger under either small-group assumption relative to LGMC, but diminish relative to LGMC as economies grow large. Secondly I show how the contributions of variety (entry), firm scale (productivity), and markups (distortions) to welfare changes differ substantially among the three alternatives.

This paper introduces endogenous workplace quality choice into an international trade model with a monopsonistically competitive labour market, in which firms compete for potential employees by offering them a combination of monetary and non-monetary benefits. To attract the workers required to produce for the foreign market in addition to the domestic market, exporting firms have to offer more attractive compensation to their employees than comparable non-exporting firms, which is why they are not only paying higher wages but also offering better workplace amenities. The gains from trade, therefore, not only materialise in terms of a higher purchasing power but also in terms of a higher average workplace quality. Welfare metrics, which exclusively focus on real income gains, might underestimate the gains from globalisation. Dieser Beitrag endogenisiert die Wahl der Arbeitsplatzqualität in einem Außenhandelsmodell mit monopsonistischem Arbeitsmarkt. Unternehmen konkurrieren um potenzielle Mitarbeiter, indem sie ihnen eine Kombination aus monetären und nicht-monetären Vorteilen anbieten. Exportierende Unternehmen müssten eine attraktivere Entlohnung anbieten als vergleichbare nicht-exportierende Unternehmen, um Arbeitnehmer anzuziehen, die nötig sind, um zusätzlich zu dem inländischen Markt für den ausländischen zu produzieren. Deshalb zahlen sie nicht nur höhere Löhne, sondern bieten weitere nicht-monetären Zusatzleistungen an. Die Gewinne aus dem Handel kommen also nicht nur in Form einer höheren Kaufkraft zum Tragen, sondern auch in Form einer höheren durchschnittlichen Arbeitsplatzqualität. Wohlfahrtsindikatoren, die sich ausschließlich auf reale Einkommenszuwächse konzentrieren, könnten die Vorteile der Globalisierung unterschätzen.

Large cities (central places) excessively export to smaller cities in their surrounding hinterland. Using Japanese inter-city trade data, we identify a substantial centrality bias: Shipments from central places to their hinterland are 50%-125% larger than predicted by gravity forces. This upward bias stems from aggregating across industries, which are hierarchically distributed across large and small cities, and therefore does not arise in sectoral gravity estimations. When decomposing the centrality bias along the margins of our data, we find that the by far largest part of this aggregation bias can be attributed to the extensive industry margin.

Do economic sanctions affect internal support of sanctioned countries' governments? To answer this question, we focus on the sanctions imposed on Russia in 2014 and identify their effect on voting behavior in both presidential and parliamentary elections. On the economic side, the sanctions significantly hurt Russia's foreign trade - with regional-level variation. We use trade losses caused by the sanctions as measure for regional sanction exposure. For identification, we rely on a structural gravity model that allows us to compare observed trade flows to counterfactual flows in the absence of sanctions. Difference-in-differences estimations reveal that regime support significantly increases in response to the sanctions, at the expense of voting support of Communist parties. For the average Russian district, sanction exposure increases the vote share gained by president Putin and his party by 13 percent. Event studies and placebo estimations confirm the validity of our results.

We develop a dynamic general equilibrium framework with firm heterogeneity and monopsonistic labour markets, for quantification of the impact of trade and FDI liberalisation episodes. Firms make standard extensive margin investment choices into exporting and multinational statuses. The labour market features upward-sloping supply curves and love of variety in employment. These features interact with the variable-fixed cost tradeoff of outward activity. We calibrate the model to U.S. data and study the effect of reductions in tariffs and outward FDI taxes in both bilateral and unilateral contexts, examining steady state and transitional effects. We compare the predictions of this model with a more standard version with perfectly competitive labour markets. Our headline finding is that the model with labour market power gives substantially different quantitative estimates to the perfectly competitive version. For instance, a bilateral trade liberalisation gives welfare gains that are over 10 times larger in the presence of monopsony power. Significant quantitative differences persist with a variety of robustness exercises.

In October 2023, the EU Carbon Border Adjustment Mechanism (CBAM), a part of the reform of the European Emissions Trading System (EU ETS), will come into effect. Currently, energy-intensive industries do not need to purchase all of the necessary EU ETS allowances on the market to remain globally competitive, as the remaining allowances are freely allocated to them. The CBAM plans to gradually replace free allowances with a price on the carbon emissions embedded in imports. Following a transitional—primarily monitoring— phase, this price on embedded emissions will be gradually introduced from 2026 on the imports of certain products. While the CBAM can mitigate carbon leakage, production declines in greenhouse-gas intensive industries as a result of limiting free allowances, and rising carbon prices, it cannot compensate for them completely. In particular, the CBAM does not provide sufficient protection for exporters to non-EU countries. It is crucial that the CBAM does not lead to trade conflicts that would make multilateral cooperation more difficult. International cooperation is indispensable, as it is the only way to reduce global emissions., DIW Weekly Report

We develop a dynamic model of inventory investment and trade to examine how firms adjust to changes in international trade costs when facing a risk of stockouts due to demand uncertainty and order lead times for imports. We study two strategies firms may use to avoid stockouts, namely holding inventories of imports, and engaging in dual sourcing. Both strategies are shown to magnify the protective effects of trade costs. Using transaction-level data for a U.S. steel wholesaler experiencing an episode of Section-201 tariffs, we find strong evidence consistent with this magnification effect. Higher tariffs are shown to significantly reduce both the inventory-sales and the import-sales ratios, as the firm adjusts its stockout avoidance strategies.

This paper develops an empirical model of consumer taste in twenty-nine Belgium food industries for the period from 1998-2005 to generate a "taste distance" measure of over 1,800 firm-product exports to 53 country destinations. We estimate consumer taste using a control function approach and perform a decomposition of export revenues of firm-products to establish the importance of representative consumer taste relative to quality and marginal cost in export success. We find substantial taste heterogeneity in food exports across destination countries. Overall, in the large majority of food exports, consumer taste is an important and separate demand determinant to explain export revenues. Depending on the product, taste for a product explains between 4-30% of export revenues. Thus, any taste shock due to events such as pandemics or climate change, may induce substantial changes in export profitability of firms.

This paper analyzes the impact of financial development on export concentration. I incorporate credit constraints into a trade model with heterogeneous exporters and endogenous quality choice. The model predicts that financial development increases innovation activity and export shares of larger firms. In contrast, a model variant in which exporters have to finance production costs instead of investments suggests a negative impact of financial development on export concentration as smaller firms benefit more from relaxing credit constraints. These opposing predictions are tested using export data for 70 countries over the period 1997-2014 and exploiting variation in external finance dependence across sectors. I find strong support for the predictions of the investment model that higher financial development increases export concentration among top firms, especially in sectors with high external finance dependence and large scope for quality differentiation. This effect is also present within firms: financial development induces exporters to skew their sales towards the top performing products. I finally show in a counterfactual analysis that financial frictions are quantitatively important to explain the variation in the skewness of exports across countries and sectors.

COVID-19 highlighted the weaknesses in the supply chain. Many have argued that a more resilient or robust supply chain is needed. But what does a robust supply chain mean? And how do firms’ decisions change when taken that approach? This paper studies a very stylized model of a supply chain, where we study how the decision of a multinational corporation changes in the presence of uncertainty. The two standard theories of supply chain are just-in-time and just-in-case. Just-in-time argues in favor of pursuing efficiency, while just-in-case studies how such decision changes when the firm faces idiosyncratic risk. We find that a robust supply chain is very different specially in the presence of systemic shocks. In this case, firms need to concentrate on the worst-case. This strategy implies a supply chain where the allocation of resources and capabilities does not correspond to the standard theories studied in economics, but follow a heuristic behavioral rule called “probability matching.” It has been found in nature and in experimental research that subjects appeal to probability matching when seeking survival. We find that a robust supply chain will reproduce this behavioral outcome. In fact, a multinational optimizing under uncertainty follows a probability matching which leads to an allocation that is suboptimal from the individual producer point of view, but rules out the possibility of supply disruptions.

This study explores the effects of renewable and nonrenewable energy demand on export product diversification, economic growth, natural resources, human capital, and trade in GCC (Gulf Cooperation Council) countries using data of six countries from 1990 to 2019. The empirical analysis integrates the panel unit root tests (IPS and CIPS), panel quantile regression, and fully modified OLS models. The empirical results confirm that there exists a significant negative relationship between renewable energy and export diversification; signifying that diversification of products will reduce renewable energy. Similarly, when compared to the square of export product diversification, it shows a positive and significant correlation. The empirical findings highlighted the presence of Kuznets's hypothesis between export product diversification, renewable, and non-renewable energy consumption. Furthermore, the findings suggest that natural resources and economic growth may increase overall energy consumption in GCC countries. It implies an important policy suggestion that encouraging export diversification will reduce GCC countries' reliance on oil to meet energy demand.

Following the trade collapse in 2009, Globalisation has recovered but the growth rate slowed down compared to the preceding period of Hyper Globalisation. The persistence of this slowdown is remarkable. We argue that increased awareness of firms for the costs of involvement in global supply chains can explain the recent developments in trade flows. We formalise the existence, length and consequences of changes in fragmentation cost along global supply chains. From a theoretical point of view, we allow tasks to be a combination of different occupations while the model endogenises production fragmentation, allowing for multiple production stages in multiple countries, while remaining tractable. From an empirical point of view, the model explains both the period of Hyper Globalisation and the subsequent Slowbalisation in terms of changing fragmentation costs along global supply chains. The model is also consistent with developments regarding labour market polarisation associated with modern globalisation: the labour market position of medium-skilled workers in advanced countries has deteriorated relative to high- and low-skilled workers, which can be understood by changing global supply chains. Our model implies, however, that even with zero fragmentation costs the demand for certain occupations does not fall to zero for any country.

This paper explores the link between trade liberalization and firms’ performance in Egypt combining macro and micro data. Using the Economic Census of Egypt 2013, we examine the association between tariffs and non-tariffs measures (NTM) imposed on intermediate input sand total factor productivity (TFP). In a first step TFP is estimated as the residual of a Cobb-Douglas/Translog production function and in thesecond, TFP is regressed on weighted tariffs and NTM imposed on intermediate inputs. Egyptian input-output tables are used to construct the weights. Our main findings show a positive and significant association between imported inputs and value-added and a significantly negative relationship between tariffs and TFP.

Manufacturing has long been the center of industrialization strategies for poor developing countries This article first investigates the effects of labor supply constraints on industrialization, which may have been caused by the coronavirus disease 2019 (COVID-19) Then, it examines how manufacturing automation could affect industrialized developing economies based on the premise that manufacturers may accelerate production automation in response to the COVID-19 pandemic The model predicts declines in developing economies' manufacturing competitiveness and a heterogeneous pattern of recovery from the COVID-19 recession In comparison, developing economies with large manufacturing bases would recover relatively quickly, whereas those with weaker manufacturing bases would suffer from a long-term decline and manufacturing contraction trends (undesirable deindustrialization) Manufacturing automation can enhance economic welfare, causing a contraction in the unproductive nontradable good (service) sector However, with low labor mobility, the welfare effect is ambiguous, thereby widening the wage gap between skilled and unskilled labor © 2021 Institute of Developing Economies

We construct a novel index of households’ macroeconomic environment (HOME) based on the data from 22 high-income European countries between 2002 Q1 and 2018 Q4. The resulting index is in line with the broad features of the countries’ business and financial cycles and captures well households’ perception of their underlying economic situation. We discuss joint properties of the HOME index and the widely employed survey-based consumer confidence indicator. We show that households’ expectations are tightly linked to current macroeconomic conditions. This finding echoes the literature linking consumer attitudes and actual economic developments. The HOME index also reflects the importance of asset prices and lending conditions for households’ behavior. In a single-country case study, we provide empirical evidence that links the proposed index to new credit extended to households. The evidence suggests that households need a longer period of good macroeconomic conditions to decide to take on a mortgage than they do in the case of a consumer loan. Supplementary Information The online version contains supplementary material available at 10.1007/s11205-021-02626-6.

This paper attempts to examine Pakistan’s trade patterns with South Asian countries by using a gravity model of trade. The main objective of the study is to quantify the long‑run impacts of gravity variables. To achieve this objective, a panel data set for the period 2003 to 2017 has been used. Based on the mixed evidence of the results of panel unit root tests, Pooled Mean Group (PMG) and Panel Dynamic Ordinary Least Square (DOLS) techniques are applied. The outcome of the PMG and Panel DOLS models justifies the theoretical background of the gravity model and suggests that all the basic gravity variables haveusual signs. The RGDPs and population of both Pakistan and the partner country have a positive impact on their bilateral trade. On the other hand, the distance between the two trading countries and the exchange rate have a negative impact on bilateral trade.The uniqueness of this study is that it measures the impacts of qualitative variables along with basic gravity variables. Language similarities and common borders have a positive impact on bilateral trade. Pakistan has borders with India and Afghanistan, but their trade relations are not worth mentioning. The military conflicts between Pakistan and India, and the political suspicions between Pakistan and Afghanistan hinder their trade relations. W artykule podjęto próbę zbadania wzorców handlowych widocznych w relacjach Pakistanu z krajami Azji Południowej przy użyciu grawitacyjnego modelu handlu. Głównym celem badania było ilościowe określenie długoterminowego wpływu zmiennych grawitacyjnych. Aby osiągnąć ten cel, wykorzystano zestaw danych panelowych dla lat 2003–2017. Ponieważ wyniki testów panelowych pierwiastka jednostkowego były niewiarygodne, zastosowano techniki Pooled Mean Group (PMG) i Panel Dynamic Ordinary Least Square (DOLS). Wyniki modeli PMG i Panel DOLS uzasadniają teoretyczne podstawy modelu grawitacyjnego i sugerują, że wszystkie podstawowe zmienne grawitacyjne mają typowe znaki. Realny PKB i liczba ludności zarówno Pakistanu, jak i kraju partnerskiego mają pozytywny wpływ na ich handel dwustronny. Z drugiej strony odległość między dwoma krajami dokonującymi wymiany handlowej oraz kurs walutowy mają negatywny wpływ na handel dwustronny. Wyjątkowość tego badania polega na tym, że mierzy ono jednocześnie wpływ zmiennych jakościowych oraz podstawowych zmiennych grawitacyjnych. Podobieństwa językowe i wspólne granice mają pozytywny wpływ na handel dwustronny. Jednakże, choć Pakistan graniczy z Indiami i Afganistanem, ich relacje handlowe nie są istotne. Konflikty zbrojne między Pakistanem a Indiami oraz polityczna podejrzliwość w relacjach Pakistanu z Afganistanem komplikują ich stosunki handlowe.

Recent empirical studies argue that traditional trade models ignore product quality, usually leading to bias in price elasticities, which prevents the correct evaluation of trade determinants and the development of trade policies. This article quantifies the effect of quality on Brazilian imports. For that, we estimate import demand equations, including a proxy for the quality of imported goods, according to pooled data panel. Results show that price affects the demand for Brazilian imports more than quality, unlike literature results in developed countries. Introducing the quality proxy increased the price coefficient. This occurred more significantly in estimates for the manufacturing sector, supporting the hypothesis of elasticities bias when estimation does not consider product differentiation.

We study the impact of intra-industry trade and capital mobility on steady state welfare and on the stability properties of two countries with identical technologies and preferences. We consider a two-factor overlapping generations model, featuring one-sector of differentiated goods with taste for variety. There is imperfect competition in the output market and increasing returns to scale in production (fixed costs and externalities). In one country there is full employment and saddle path stability in autarky, whereas in the other there are efficiency wages, and the autarkic equilibrium may be locally indeterminate. After opening the borders, the rigid wage country may export indeterminacy to the full employment country, particularly if it is big enough. In contrast, when the full employment country is sufficiently big, local indeterminacy, and therefore expectations driven fluctuations may be eliminated in the world. In any case, stochastic and deterministic fluctuations (associated with local indeterminacy and bifurcations) are possible with smaller externalities, whatever the relative size of the two countries. Steady state welfare improves in the full employment country with free trade and capital mobility, while unemployment increases in the country with labor market rigidities, reducing welfare. We also find that taste for variety (and therefore intra-industry trade), reduces the likelihood of local indeterminacy, but leads to flip bifurcations under more plausible values of the model parameters.

The COVID-19 pandemic triggered a major disruption in global value chains (GVCs) that pushed the global economy into a recession that promises to be worse than the 2008 crisis. This article illustrates the mechanisms through which the COVID-19 pandemic affected GVCs in the context of a changing configuration of the global economy. In particular, it is argued that GVCs became the main transmission channels of “economic contagion”. Finally, we posit that the pandemic provides an opportunity to revive the role of industrial policy as to govern the landslides of a world economy constantly pressured by globalization and deglobalization forces.

This paper presents a property rights model of the international organization of production, where heterogeneous headquarter firms source from suppliers in the Global South. Due to weak regulatory stringency in the Global South, suppliers can employ a cost-saving technology. Consumers, however, consider this technology as unethical and may therefore participate in a consumer boycott, if they consider a firm to be responsible for its supplier's conduct. The paper analyzes how the international organization of production and the choice of technology interact with each other as well as sectoral characteristics. It identifies three mechanisms that govern whether integration is preferred by high-productivity firms in a given sector: the Antràs mechanism (severity of underinvestment by headquarter vs. supplier), the unethical mechanism (cost savings vs. boycott risk) and the deniability mechanism (higher boycott risk under integration than under outsourcing). The equilibrium share of active firms who integrate in a sector increases with productivity dispersion and decreases in the sector's cost advantage of unethical production.

In recent years, young brain drain within Italian provinces has increased at higher speed than ever. While is premature to assess whether this process is transitory or permanent, it should be analysed and monitored by researchers and policy makers for its many socio-economic consequences. Previous empirical studies have demonstrated that Italian net skilled migration is influenced by economic factors, such as income per capita and employment, and, with a less extent, by the search of places endowed with more amenities. In the crossroad between these factors, this paper investigates corruption as key element of the Italian skilled mobility. To this end, a comprehensive framework with Zero-Inflated Poisson and Pseudo-Poisson Maximum Likelihood with High Dimensional Fixed Effects models for bilateral data on the Italian students’ flows is used. Results suggest the dual role of push and pull mechanisms at play, as high corruption incentivizes Italian skilled mobility to destinations that, instead, exhibit lower corruption. Moreover, sensitivity of the prospective tertiary students to corruption varies according to their field of study of interest. Finally, empirical evidence on skilled flows from the lagging Mezzogiorno to the North of Italy, suggests that the push and pull effects of corruption stir up the endurance of the well-known socio-economic dualism between these two parts of the country.

Geopolitical conflicts have increasingly been a driver of trade policy. We study the potential effects of global and persistent geopolitical conflicts on trade, technological innovation, and economic growth. In conventional trade models the welfare costs of such conflicts are modest. We build a multi-sector multi-region general equilibrium model with dynamic sector-specific knowledge diffusion, which magnifies welfare losses of trade conflicts. Idea diffusion is mediated by the input-output structure of production, such that both sector cost shares and import trade shares characterize the source distribution of ideas. Using this framework, we explore the potential impact of a "decoupling of the global economy," a hypothetical scenario under which technology systems would diverge in the global economy. We divide the global economy into two geopolitical blocs -East and West -based on foreign policy similarity and model decoupling through an increase in iceberg trade costs (full decoupling) or tariffs (tariff decoupling). Results yield three main insights. First, the projected welfare losses for the global economy of a decoupling scenario can be drastic, as large as 12% in some regions and are largest in the lower income regions as they would benefit less from technology spillovers from richer areas. Second, the described size and pattern of welfare effects are specific to the model with diffusion of ideas. Without diffusion of ideas the size and variation across regions of the welfare losses would be substantially smaller. Third, a multi-sector framework exacerbates diffusion inefficiencies induced by trade costs relative to a single-sector one.

We present a unified dynamic framework to study the interconnections between international trade and business cycle models. We prove an aggregate equivalence between a competitive, representative firm model that has aggregate production externalities and dynamic trade models that feature monopolistic competition, endogenous entry, and heterogeneous firms. The production externalities in the representative firm model have to be introduced in the intermediate and final good sectors so that the model is isomorphic to dynamic trade models that embody love-of-variety and selection effects. In a quantitative exercise with multiple shocks, we show that to improve the fit of the dynamic trade models with the data, the most important ingredient is negative capital externality in the intermediate good sector. We conclude that this presents a puzzle for the literature as standard dynamic trade models provide micro-foundations for positive capital externality.

Предложение стратегии развития «Один пояс, один путь» способствовало развитию отношений сотрудничества между Китаем и Казахстаном. С продвижением стратегии «Один пояс, один путь» торгово-экономическое сотрудничество между Китаем и Казахстаном будет и дальше углубляться. В этом контексте логистическая отрасль Казахстана откроет хорошие возможности для развития. В статье резюмируется состояние развития логистической и транспортной отрасли Казахстана и предлагается способствовать развитию логистической отрасли Казахстана с трех сторон: содействие строительству основных логистических объектов, усиление подготовки международных логистических талантов и углубление сотрудничества между Китаем и Казахстаном.В статье также анализируется экономический и международный статус Китая за последние годы реформ и также сотрудничество между Китаем и Казахстаном как «союзник» Китая. Так как Казахстан и Китай являются развивающимися странами с хорошими международными отношениями, впереди эта тема должна углубленно изучатся в контексте развития «пояса и пути» и извлекать дополнительные уроки из пути развития Китая. В дальнейшем, рамках «Один пояс, один путь» Казахстан должен воспользоваться возможностью сотрудничества для энергичного развития отечественной логистической отрасли и содействия экономическому развитию., «Бір белдеу, бір жол» даму стратегиясының ұсынысы Қытай мен Қазақстан арасындағы ынтымақтастық қатынастарының дамуына септігін тигізді. «Бір белдеу, бір жол» стратегиясын ілгерілетумен Қытай мен Қазақстан арасындағы сауда-экономикалық ынтымақтастық одан әрі тереңдей береді. Бұл тұрғыда жаңа бастама Қазақстанның логистикалық саласы дамуы үшін жақсы мүмкіндіктер ашады. Мақалада Қазақстанның логистикалық және көлік саласының даму жағдайы баяндалады және Қазақстанның логистикалық саласының дамуына үш жақтан: негізгі логистикалық объектілердің құрылысына жәрдемдесу, халықаралық логистикалық таланттарды даярлауды күшейту және Қытай мен Қазақстан арасындағы ынтымақтастықты тереңдету ұсынылады.Сондай-ақ мақалада Қытайдың соңғы жылдардағы реформалардағы экономикалық және халықаралық мәртебесі, сондай-ақ Қытайдың «одақтасы» ретінде Қытай мен Қазақстанның ынтымақтастығы талданады. Қазақстан мен Қытай халықаралық қарым-қатынастары жақсы дамып келе жатқан елдер болғандықтан, болашақта бұл тақырыпты «белдеу мен жолды» дамыту аясында тереңірек зерттеп, Қытайдың даму жолынан көбірек сабақ алу керек. Алдағы уақытта Қазақстан «Бір белдеу, бір жол» бастамасы аясында отандық логистика саласын қарқынды дамытып, экономикалық дамуға жәрдемдесу үшін ынтымақтастық мүмкіндігін пайдалануы керек., The proposal of the "One Belt, One Road" development strategy contributed to the development of cooperation relations between China and Kazakhstan. With the promotion of the "One Belt, One Road" strategy, trade and economic cooperation between China and Kazakhstan will continue to deepen. In this context, the logistics industry of Kazakhstan will open up good opportunities for development. The article summarizes the state of development of the logistics and transport industry of Kazakhstan and proposes to contribute to the development of the logistics industry of Kazakhstan from three sides: promoting the construction of major logistics facilities, strengthening the training of international logistics talents and deepening cooperation between China and Kazakhstan.The article also analyzes the economic and international status of China in recent years of reforms and also the cooperation between China and Kazakhstan as an "ally" of China. Since Kazakhstan and China are developing countries with good international relations, in the future, this topic should be studied in depth in the context of the development of the "belt and road" and learn more lessons from China's development path. Going forward, under the Belt and Road Initiative, Kazakhstan should seize the opportunity of cooperation to vigorously develop the domestic logistics industry and promote economic development., Международные отношения и Регионоведение, Выпуск 1 (47) 2022

Since several years, the fragility of global supply chains (GSCs) is at historically high levels. In the same time, the landscape of hybrid threats is expanding. This paper aims to assess the economies' foreign input reliance and foreign market reliance, identify possible vulnerabilities by simulating shocks to GSCs in presence of uncertainty. We stress test supply chains by simulating most demanding circumstances and crystallise relevant, effective and efficient policy solutions. Conceptually, we employ a newly developed modelling framework, which is specially designed to account for the increasingly inter-dependent GSCs and study resilience and robustness in presence of hybrid shocks. The scalable data model is parameterised by combining World-Input Output Tables with those from the Inter-Country Input-Output. We study how the decision of a GSC input sourcing diversification changes in the presence of uncertainty and what are the implications for supply chain robustness and resilience. Model-based simulations facilitate decision making by providing interoperable and directly comparable quantifications of counterfactual resilience and robustness strategic choices and allow to identify policy solutions towards baseline resilience requirements.

This paper investigates the effects of mergers on the product mix of multiproduct firms. Thus, we open the black box of post-merger efficiency improvements to reveal a new margin of adjustment along the product dimension. We analyze horizontal mergers in a theoretical model where oligopolistic firms employ a flexible manufacturing technology and allocate assets between differentiated varieties. After a merger, acquirers drop products from their consolidated domestic product portfolio and reallocate assets towards core varieties. We further demonstrate that such merger-induced efficiency gains imply greater activity in foreign markets. Using detailed Danish register data, we document novel facts regarding mergers and multiproduct firms and find empirical evidence strongly supporting the model's predictions. Our results show that the number of domestic products of the post-merger acquirer falls relative to the sum of the premerger acquirer and target, that skewness of domestic sales rises towards core products, and that export activity increases.

This paper analyses the effect of rising competition from Chinese exports on the skill premium of Mexican plants. Using detailed product-plant-level production data from Mexico and bilateral product-level trade data for 1994-2007, we provide evidence that Mexican plants reduce their skill premium in response to increasing competition from Chinese exports, and the effect is more pronounced among non-exporting plants. Thus, we develop a model linking competition and wage inequality between skilled and unskilled workers by introducing these two types of labour to a model with heterogeneous firms and quality differentiation. Our model predicts that tougher competition leads plants to downgrade quality, which induces a decline in the wage difference between skilled and unskilled workers. We investigate this hypothesis empirically by analysing the effect of Chinese competition on the product quality of Mexican plants. Consistent with the fall in the skill premium, we document a downgrading impact of China's rise on Mexican plants' product quality and this quality downgrading is less intense for products sold in the foreign market. These findings provide empirical support for the predictions of our model.

Customs data reveal heterogeneity and granularity of relationships among buyers and sellers. A key insight is how more exports to a destination break down into more firms selling there and more buyers per exporter. We develop a quantitative general equilibrium model of firm-to-firm matching that builds on this insight to separate the roles of iceberg costs and matching frictions in gravity. In the cross section, we find matching frictions as important as iceberg costs in impeding trade, and more sensitive to distance. Because domestic and imported intermediates compete directly with labor in performing production tasks, our model also fits the heterogeneity of labor shares across French producers. Applying the framework to the 2004 expansion of the European Union, reduced iceberg costs and reduced matching frictions contributed equally to the increase in French exports to the new members. While workers benefited overall, those competing most directly with imports gained less, even losing in some countries entering the EU.

We find that the CPI and PPI inflation indexes co-moved strongly throughout the late 20th century, but their correlation has fallen substantially since the early 2000s. We offer a structural explanation for this divergence based on the growth of global supply chains since 2000. This finding offers a unique perspective for the future design of optimal monetary policy., Nous constatons que l���IPC et l���IPP ont ��volu�� pratiquement en parall��le tout au long de la fin du 20e si��cle, mais que leur corr��lation a consid��rablement diminu�� depuis le d��but des ann��es 2000. Nous proposons une explication structurelle de cette divergence fond��e sur la croissance des cha��nes d���approvisionnement mondiales depuis 2000. Cette d��couverte offre une perspective unique pour la conception future de politiques mon��taires optimales.

This paper studies the market and welfare effects of income heterogeneity in monopolistically competitive product markets in the context of nonhomothetic preferences. In a closed economy, where richer individuals' expenditures are less sensitive to price change compared to poorer ones', a mean-preserving contraction of income distribution entices firms to charge higher markups, reduce output, and fosters creation of new varieties. General equilibrium effects have a negative impact on poorer individuals and, in specific circumstances, on the whole population. In an open economy with free trade, lower income inequality in one country creates price divergence between trading countries. Lower inequality not only further decreases trade volumes and values but also creates a general equilibrium effect that may negatively affect poor individuals. Finally, general equilibrium effects are shown to be quantitatively nonnegligible.

This paper scrutinizes the effects of the European Directive on Copyright in the Digital Single Market on platform competition in media markets. Platforms that are Online Content-Sharing Service Providers must have a license agreement with collective management organizations that control the content platform users may (or must not) upload to the platform. The paper shows that the new directive may imply market concentration and an aggregate welfare loss. The reason is that only users of the large platform will be allowed to upload content if the content asset controlled by a collective management organization is sufficiently valuable and if network effects are strong.

Activists denouncing firms for what they consider unethical conduct (e.g., poor treatment of labor or practices that are harmful to the environment) often pressure firms through consumer boycotts. This paper presents a model of international trade with heterogeneous firms and endogenous campaigns conducted by social activists. Being the target of campaigns damages the reputation of a firm, reducing the perceived quality and therefore sales of its variety. Campaigns require funding by consumers who support the activists' mission. The paper analyzes the effect of such demand-reducing campaigns on firms. It identifies a feedback effect of campaigns that increases mark-ups in the presence of social activism, which stems from large firms attracting more campaigns while campaigns also decrease sales. The paper further shows that social activism reduces the elasticity of bilateral trade flows with respect to trade costs.

Following the trade collapse in 2009, Globalization has recovered but the growth rate slowed down compared to the preceding period of Hyper Globalization. The persistence of this slowdown is remarkable. We argue that increased awareness of firms for the costs of involvement in global supply chains can explain the recent developments in trade flows. We formalize the existence, length, and consequences of changes in fragmentation cost along global supply chains. From a theoretical point of view, the model endogenizes production fragmentation, allowing for multiple production stages in multiple countries, while remaining tractable. From an empirical point of view, the model explains both, the period of Hyper Globalization and the subsequent Slowbalization in terms of changing fragmentation costs along global supply chains. The model is also consistent with developments regarding labor market polarization associated with modern globalization: the labor market position of medium-skilled workers in advanced countries has deteriorated relative to high- and low- skilled workers, which can be understood by changing global supply chains. Our model implies, however, that even with zero fragmentation costs the demand for certain occupations does not fall to zero for any country.

This paper empirically investigates the state of trade interdependency for coronavirus disease (COVID-19) essential medical goods-vaccines and their value chains, personal protective equipment, and diagnostic test kits-across 29 Asia and the Pacific economies. Expanding on Hayakawa and Imai (2022), the analysis investigates whether trade facilitation, proxied by membership in regional trade agreements (RTAs), can help mitigate any adverse impact on trade in essential medical goods. The results confirm that while trade is critical for Asian economies, its nature differs. Low-income economies are largely dependent on imports, whereas selected middle- and high-income economies are part of two-way trade and engaged in low end of vaccine value chain. We find that onset of the pandemic had hurt exports of these goods. This adverse effect is found to be lowered for economies engaged in RTAs. This emphasizes role of governments in committing to RTAs and implementing trade facilitation measures.

How does import protection affect export performance? In trade models with scale economies, import liberalization can reduce industry-level exports by cutting domestic production. We show that this export destruction mechanism reduced US export growth following the permanent normalization of trade relations with China (PNTR). But there was also an offsetting boost to exports from lower input costs. We use our empirical results to calibrate the strength of scale economies in a quantitative trade model. Counterfactual analysis implies that while PNTR increased aggregate US exports relative to GDP, exports declined in the most exposed industries because of the export destruction effect. On aggregate, the US and China both gain from PNTR, but the gains are larger for China.

A striking pattern in transaction-level data is the concentration of international shipments in the hands of a few large firms. One common feature of dominating high-performance firms is that they produce multiple products and ship them to many destinations. Motivated by the emergence of highly detailed data at the firm-product-destination level, a series of theoretical and empirical papers studies the role of multi-product firms (MPFs) in international trade. This survey reviews the evidence on the importance of MPFs in international markets and highlights the key theoretical as well as empirical results that the literature has produced in the last decade.

The conventional immigration and trade literature regards immigrants as mediators for informal barriers such as institutional and cultural differences. However, this notion neglects network effects stemming from short visits. This paper investigates the ways in which international student migration relates to trade. Unlike other immigrants, international students make a special case because of their short stay and high education level. Leveraging panel data on 34 mostly OECD host countries and 172 origin countries between 2000 and 2018, I employ a gravity-type trade model to examine this relationship. I find that overall immigration contributes to trade and international students par- ticularly increase their host countries’ exports to their origin country. Further results suggest that the student effect varies by country and product. While their ability to foster the most information-intensive trades is limited relative to the average immigrant, international students have an advantage in promoting trust between institutionally distant countries.

In this paper we investigate whether trade liberalization leads to more stringent product standards in a developing country context, uncovering the role that the connected firms’ market share plays in markets dominated by imports. We estimate a two-part model using data over the period from 2002 to 2010 to test whether additional product standards emerge in sectors where politically connected firms have a higher market share. Our main results show that the mechanisms we anticipated are in fact at play in Tunisia. During the implementation period of the EU-Tunisia association agreement, we find that sectors with a higher import share of connected firms – linked to the Ben Ali family – tend to have a higher probability of an increasing number of technical barriers to trade. This result is robust to addressing endogeneity issues and to the introduction of dynamics into the model.

While international remittance inflow is globally recognized as a key source of income for improved standard of living and poverty reduction, there is an ongoing intellectual debate that persistent remittance inflow causes deterioration in trade balances, by inducing import-led consumption expenditures, especially in developing countries like Nigeria. The study investigated the impact of international remittance inflows on Nigeria’s trade balances from 1990 to 2016. The study uses the contemporary econometric techniques of Zivot-Andrew (ZA) structural break unit root test, as well as the Gregory- Hansen cointegration test that allows for a single most significant unknown structural break in both the intercept and the entire coefficient vectors. The results show that remittance inflows to Nigeria have significant negative effect on trade balance, meaning that the Dutch disease effect of remittance inflows prevails in Nigeria. Based on this finding, the study recommends that the remittance inflows to Nigeria should follow the channel of private savings which, in turn, is released to productive domestic investment in order to expand the pool of manufactured products. This will definitely overcome the Dutch disease symptom being experienced in Nigeria.

Hereditary angioedema is a rare inherited disorder characterized by recurrent episodes of the accumulation of fluids outside of the blood vessels, causing rapid swelling of tissues in the hands, feet, limbs, face, intestinal tract, or airway. Mutations in SERPING1, the gene that encodes C1-INH (C1 esterase inhibitor), are responsible for the majority of cases of hereditary angioedema. C1 esterase inhibitor (C1-INH) is a major regulator of critical enzymes that are implicated in the cascades of bradykinin generation, which increases the vascular permeability and allows the flow of fluids into the extracellular space and results in angioedema. Moreover, a dominantly inherited disease has been described that has a similar clinical picture to C1-INH-HAE (Hereditary angioedema due to C1 inhibitor deficiency), but with normal C1-INH level and activity. This new type of HAE has no mutation in the SERPING1 gene and it is classified as nC1-INH-HAE (HAE with normal C1-INH). Currently mutations in six different genes have been identified as causing nC1-INH-HAE: factor XII (F12), plasminogen (PLG), angiopoietin 1 (ANGPT1), Kininogen 1 (KNG1), Myoferlin (MYOF), and heparan sulfate (HS)-glucosamine 3-O-sulfotransferase 6 (HS3ST6). In this review we aim to summarize the recent advances in genetic characterization of angioedema and possible future prospects in the identification of new genetic defects in HAE. We also provide an overview of diagnostic applications of genetic biomarkers using NGS technologies (Next Generation Sequencing).

This paper aims to analyze how credit constraints affect the chances to export from firms in eighteen countries in Latin America. The study used data from 7,764industrial firms and a non-linear probability model (probit) was used the estimation.The results indicate that credit access is positively associated with the decision of thefirms get into the international market, which confirm the influence of financial constraints on the probability of firms becoming exporter. It was also found that larger firmsand with foreign share in the capital structure are more likely to export. O objetivo deste estudo é analisar como as restrições de crédito afetam adecisão de exportar de empresas em 18 países da América Latina. Realiza-se a investigação por meio da estimação de um modelo de probabilidade não linear (probit),utilizando-se dados de 7.764 firmas industriais. Os resultados indicam que o acesso aocrédito foi positivamente associado à decisão de participação das firmas no mercadointernacional, o que indica a influência das restrições financeiras na probabilidade deexportação das empresas. Constata-se, também, que firmas maiores e com participaçãoestrangeira na estrutura do capital têm mais chances de se tornarem exportadoras.

O objetivo deste estudo é analisar como as restrições de crédito afetam adecisão de exportar de empresas em 18 países da América Latina. Realiza-se a investigação por meio da estimação de um modelo de probabilidade não linear (probit),utilizando-se dados de 7.764 firmas industriais. Os resultados indicam que o acesso aocrédito foi positivamente associado à decisão de participação das firmas no mercadointernacional, o que indica a influência das restrições financeiras na probabilidade deexportação das empresas. Constata-se, também, que firmas maiores e com participaçãoestrangeira na estrutura do capital têm mais chances de se tornarem exportadoras., This paper aims to analyze how credit constraints affect the chances to export from firms in eighteen countries in Latin America. The study used data from 7,764industrial firms and a non-linear probability model (probit) was used the estimation.The results indicate that credit access is positively associated with the decision of thefirms get into the international market, which confirm the influence of financial constraints on the probability of firms becoming exporter. It was also found that larger firmsand with foreign share in the capital structure are more likely to export.

This paper sets up a model of trade, in which two countries with differing levels of technology specialize on the production of subsets of the global value chain. In the open economy equilibrium, the technologically backward country exports intermediates in exchange for imports of a homogeneous consumption good from the technologically advanced country. This vertical specialization pattern gives the two countries access to different instruments for appropriating rents in the open economy. The technologically advanced country can impose an import tariff on intermediates to lower foreign wages and increase national welfare. An import tariff is ineffective for the technologically backward economy, which can instead lower institutional quality and allow its workers to partially expropriate firms and directly consume intermediate goods at a utility discount. In a non-cooperative policy equilibrium, welfare levels of the two countries will fall to their autarky levels. This gives scope for a trade agreement that conditions tariff reductions on institutional quality improvements and is beneficial for both countries. A beneficial trade agreement may not exist if the import tariff has an upper bound.

This paper develops a novel theory of capital mis-allocation within firms that stems from managers’ empire building and informational frictions within the organization. Introducing an internal capital market into a two-factor model of multi-segment firms, we show that international competition imposes discipline on managers and reduces capital mis-allocation across divisions, thereby lowering the conglomerate discount. The theory can explain why exporters exhibit a lower conglomerate discount than non-exporters (a new fact we establish). Testing the model’s predictions with data on US companies, results suggest that Chinese import competition significantly reduces managers' over-reporting of costs and improves the allocation of capital within firms.

International trade is dominated by a small number of very large firms. Models of trade with heterogeneous firms have been developed to study the causes and consequences of this observation. The canonical model of trade with heterogeneous firms shows that trade leads to between-firm reallocations and selection: it shifts employment towards firms with the best attributes and forces marginal firms to exit. The model also illustrates the role of heterogeneity, and its various sources, in explaining the volume of trade and the firm-level margins of adjustment. Consistent with the model, the empirical literature has documented that exporting is a rare activity, that exporting firms are larger and more productive than other firms, and that trade liberalization reallocates market shares towards the best-performing firms in various countries. Studies using transaction-level data have unveiled additional salient features of trade flows. First, sales by foreign firms are very heterogeneous and highly concentrated. Second, both the extensive margin (number of exporting firms) and the intensive margin (average export per firm) are important in explaining the level of exports and its changes over time. More heterogeneity in sales across firms is associated with a higher volume of trade along both margins. Third, increased foreign competition reallocates market shares towards top firms and hence can increase concentration from any country of origin. Numerous extensions of the benchmark model have been proposed to study other important aspects, such as the relevance of multi-product and multinational firms, the import behavior of firms, and the extent to which heterogeneity is endogenous to firms. choices, but some open challenges still remain.

We study the effect of trade liberalization and intellectual property rights (IPR) protection on the unemployment rate of migrants relative to non-migrants. We build a North-South trade and growth model with a positive steady state rate of migration. We find that bilateral trade liberalization decreases the relative unemployment rate of migrants when migration is low and increases the relative unemployment rate when the migration rate is high. The results do not rely on assumptions about network effects, the probability to find a job for a migrant is independent of the relative size of the migrant diaspora. IPR protection leads to a higher relative unemployment rate of migrants regardless of the size of migration. We empirically test and confirm the theoretical predictions on trade liberalization and IPR protection using data for 20 OECD (Organisation for Economic Co-operation and Development) countries over the period 2000-2014. Wir untersuchen die Wirkungen einer Handelsliberalisierung und des Schutzes geistigen Eigentums auf die Arbeitslosenquote von Migrantinnen und Migranten im Vergleich zu Einheimischen im Zielland. Die Analyse stützt sich auf ein Nord-Süd-Handelsmodell mit Wirtschaftswachstum und einer positiven Migrationsrate. Eine bilaterale Handelsliberalisierung führt zu einer niedrigeren Arbeitslosenquote von Migrantinnen und Migranten bei geringer Migration und zu einer höheren Arbeitslosenquote, wenn die Migrationsrate hoch ist. Dieses Ergebnis beruht nicht auf Netzwerkeffekten: Die Wahrscheinlichkeit eine Stelle zu finden ist unabhängig von der Größe der Diaspora. Ebenso führt der Schutz geistigen Eigentums zu einer höheren Arbeitslosenquote von Migrantinnen und Migranten unabhängig von der Größe der Diaspora. Die theoretischen Hypothesen des Modells wurden anhand von Daten aus 20 OECD Ländern in der Periode 2000-2014 empirisch getestet. Die empirischen Ergebnisse bestätigen die theoretischen Vorhersagen des Modells.

This text aims to provide evidence regarding the adverse effects of anti-dumping measures on the competitive market strategies in different sectors of economic activity. To map firms' strategic behaviour, as well as the evolution of their market power, our empirical model consists of estimating the Lerner index as a mark-up measure. To reach our goal, we use the Orbis database, with firm-level data between 2006 and 2014. Such measures are generated considering a time window in which industries achieved antidumping protection and had their exports punished in foreign markets. On average, our results suggest a positive relationship between anti-dumping barriers and the increase in firms' market power. This pattern proves to be especially greater for Latin America when compared to other emerging economies. Moreover, the effects on market power are more substantial in the long run and, depending on the specification of the country set, null in the short run.

We look at the effect of domestic redistribution policy on offshoring in an asymmetric two country model of monopolistic competition, heterogeneous firms and occupational choice. The redistribution scheme is modeled by a combination of a progressive income tax and a lump-sum transfer. We find that the redistribution scheme lowers the degree of globalization measured by the share of offshoring firms in the economy. The intuition for this result is straightforward. The progressive income tax changes the factor allocation in the economy making it more attractive to become a worker. This leads to downward pressure on the domestic wage and thereby to a fall in the cost advantage of the host country. Changes in the domestic tax rate therefore affect the domestic economy not only directly but also via changes in the amount of offshoring. This has important implications both for aggregate income and for inequality.