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Increased market access through trade liberalization can affect the markups, prices, and marginal costs of exporters. Understanding these dynamics is critical for firms and policymakers, particularly as they formulate export strategies. We examine the impact of China lowering tariffs on Pakistani products under the Pakistan–China Free Trade Agreement (FTA), which gave Pakistani exporters greater market access. Using disaggregated output and price data for textile manufacturers in Punjab, Pakistan, we estimate product-level markups and marginal costs using the methodology of De Loecker, Goldberg, Khandelwal, and Pavcnik (2016) ["Prices, Markups, and Trade Reform." Economterica 84 (2): 445–510]. We then extend this to the firm level by using the methodology of De Loecker and Warzynsksi (2012) ["Markups and Firm-Level Export Status." American Economic Review, 2437–2471]. We find that Pakistani firms exporting to China followed a dynamic pricing strategy by reducing prices to compete with global competitors in the Chinese market. We also find evidence of a decrease in marginal costs as a result of reductions in X-inefficiencies. But because Pakistan's exports to China are relatively homogeneous, the extent of quality differentiation and markup margins was limited. Finally, we find evidence of pro-competitive effects. [ABSTRACT FROM AUTHOR]

This paper investigates the impact on polluting emissions as a result of manufacturing industries in China offering services as well as products. We merge detailed firm-level statistics covering 2000 to 2011, and use two-way linear fixed effects regression to control for firm and year heterogeneities and a host of control variables. The empirical results show that manufacturing servitization significantly reduces the emission intensity of firms. This effect is achieved by improving the total factor productivity of firms, optimizing the efficiency of energy use, and increasing the share of the highly-skilled labour force. Moreover, the emission reduction effect of manufacturing servitization is more profound in the eastern and central regions, pollution-intensive industries, non-state-owned firms, and processing trade firms. In addition, our extended analysis shows that the emission reduction effects of manufacturing servitization can be strengthened through trade liberalization and cohort study. The major policy implication is that governments should undertake industrial policies that reinforce the positive effects of manufacturing servitization in order to achieve win-win outcomes in manufacturing upgrading and environmental protection. [ABSTRACT FROM AUTHOR]

Using data from Canadian and Korean public companies available at Bloomberg, this study attempts to demonstrate the relationship between investment in establishments and trade liberalization, an effect caused mainly by increased competitiveness. This project contributes to the studies previously conducted on the subject and adds information regarding countries with different peculiarities, such as Canada, better known for being the main trading partner of the USA and major producer of commodities, and South Korea, which for some decades has invested to become a reference in technology and world innovation. In line with previous studies, a negative and statistically significant relationship was found between investment and trade liberalization, an effect that was verified mainly for those establishments that are far from the frontier of the sector in which they operate, and for the firms in the frontier this effect is positive. [ABSTRACT FROM AUTHOR]

We examine the welfare effect of trade liberalization in the service industry by focusing on the Chinese movie industry. China has been maintaining an import quota of foreign movies since 1990s. Using a unique Chinese movie dataset, we first estimate a nested logit demand model. And based on the estimated demand parameters, we perform counterfactual tests by removing the movie import quota. Specifically, we quantify the loss to the domestic film makers due to greater competition with foreign competitors, and the gains to consumers from consuming more high quality movies. We find that after trade liberalization, the market share of domestic film makers falls by 21–22% on average during the sample period, whereas the gain in the consumer welfare is comparatively smaller with an increase of around 5–9%. We also find that if the domestic film makers react actively by either strategically changing the release dates or by improving the quality of the home-made movies, then the magnitude of decline in the producer welfare will reduce by a large extent. [ABSTRACT FROM AUTHOR]

This paper examines how frictions in the local business environment where firms operate alter the productivity gains from trade. Using Vietnamese firm-level data from 2006 to 2012, the analysis provides robust evidence of a positive effect of trade opening on firms' efficiency. However, distortions that operate through certain local market features in the form of unenforceable property rights, an ineffective land-titling system, bureaucratic hurdles and labour market frictions play a crucial role in the transmission of trade liberalization shocks. These findings have important policy implications because they suggest that complementary policies addressing local market constraints need to be implemented alongside trade reforms. [ABSTRACT FROM AUTHOR]

This study examines the trade-productivity nexus using manufacturing industry data during Nepal's rapid trade reform period that intensified from the early 1990s. Productivity improvements from trade liberalization only accrue to large industries and the highly efficient industries along the productivity quantiles. Methodologically, the results indicate that one should examine distributional variations as well as conditional mean variations to capture all relevant industry productivity responses to trade policy changes. These results imply that there is ample opportunity for Nepal to continue reaping benefits from the trade liberalization process as more industries grow in size and become more efficient over time. [ABSTRACT FROM AUTHOR]

Data from the World Bank shows that in the 21st century, over 100 million Africans have become poor and about 43% of the African population is extremely poor. Notwithstanding, African governments have over the years liberalized their economies through a low tariff regime, in addition to external debt financing of major projects and social intervention programs. However, no study has explored the nexus between trade liberalization, external debt, and income inequality in Africa. Therefore, this study examines the impact of trade liberalization and external debt on income inequality using the Driscoll and Kraay augmented fixed and random effects models on data from 2000 to 2018 for 30 African countries. The findings reveal that, while external debt worsens income inequality, win-win trade liberalization policies could act as instruments for poverty alleviation and income inequality reduction in Africa. The results further show that growth in per capita income exerts a widening effect on income inequality in Africa, implying that income is concentrated in the hands of only a few as the economies grow. The study, therefore, calls for strengthening member countries' commitments to the African Continental Free Trade Area (AfCFTA), cutting down on external debt financing of major developments projects, rolling out more poverty alleviation programs, and enforcing proper regulatory standards to curb illicit financial flows and repatriation of profits by foreign firms. [ABSTRACT FROM AUTHOR]

Human capital and trade liberalization are playing a central role in growth theories. However, the link between human capital, trade liberalization, and economic growth remains a challenging question due to the inconclusive results of the previous studies. Paper contributes to this debate through asymmetric links among human capital, trade liberalization, and economic growth by incorporating labor and capital for Pakistan's economy by applying the nonlinear autoregressive distributed lag model. Results suggest that the positive and negative asymmetric impact of trade liberalization and human capital on growth substantially vary in the short and long run. In the long run, the increased trade liberalization hurts economic growth, while increased human capital has a minimal positive impact on economic growth in the short and long run. The implications of this paper are for economists and policymakers to strengthen the role of human capital and trade liberalization for Pakistan. [ABSTRACT FROM AUTHOR]

This article estimates the total factor productivity (TFP) growth of Chinese manufacturing firms and quantifies how international sourcing and trade liberalization affect TFP growth. To this end, we estimate stochastic frontier production that decomposes TFP growth into technical changes, returns to scale, and technical efficiency changes. Furthermore, we consider two channels through which external factors affect TFP growth: technical change and technical efficiency change components. We measure international sourcing and trade liberalization by foreign value-added shares and input tariffs, respectively. Several novel findings emerge. First, international sourcing and import tariff reduction positively impact TFP growth by improving technical changes and technical efficiency. Second, international sourcing has a negative effect on the technical changes of processing importers, while it has positive effects on the technical change and technical efficiency change of ordinary importers. Third, input tariff reduction has a substantial and positive impact on the technical efficiency change of processing importers and the technical change of ordinary importers. [ABSTRACT FROM AUTHOR]

Recent empirical studies find that the magnitudes of reductions in bilateral shipping costs are asymmetric within country pairs. Motivated by these findings, I study the welfare effects of asymmetric reductions in transportation costs in Helpman and Itskhoki's [(2010). Labour market rigidities, trade and unemployment. Review of Economic Studies, 77(3), 1100–1137] model of international trade with heterogeneous firms and frictional labor markets. I show that sufficiently asymmetric reductions in bilateral transportation costs result in welfare losses in the importing country, while a uniform reduction in the bilateral transportation costs of both imports and exports always benefits both countries. This paper raises a cautionary note that the phrase 'welfare gains from trade liberalization' implicitly assumes an 'approximately equal' reduction in transportation costs. [ABSTRACT FROM AUTHOR]

This article is part of a series to document the voices and perspectives of La Via Campesina leaders for the 50th Anniversary of the Journal of Peasant Studies and the 30th Anniversary of La Via Campesina. Yoon Geum Soon reflects on Korean women peasant organizing from the local to international level. She discusses the resistance to international trade regimes, organizing strategies rooted in women peasants' daily lives, and the history and trajectory of peasant movements in Korea. [ABSTRACT FROM AUTHOR]

The rise of market power has sparked off increasing public debate over the past decade. Using a novel large-scale firm-level dataset, this paper examines the effect of trade liberalization on corporate market power in emerging and developing economies. We find that opening up to trade significantly reduces market power by promoting competition and improving resource allocation. The cumulative impact is estimated at 4 percent reduction in average markups over a 5-year horizon post each trade liberalization episode. We also draw on machine learning algorithms to account for nonlinearities in the relationship and show that trade reform is complementary to other structural reforms. [ABSTRACT FROM AUTHOR]

Recent trends in inequality have raised concerns among researchers and policymakers globally. The role of globalization, one of the leading forces driving this trend, continues to be intensely debated in academic and policy circles. Invoking standard trade theory, this paper analyses whether and the extent to which trade liberalization has contributed to the recent trends in inequality. The approach and findings of the paper are novel: previous studies of trade liberalization's impact on inequality do not explicitly control the direction of trade. The empirical results show that trade liberalization is associated with decreasing income inequality overall, but contingent on the direction of trade, it has opposing effects: North–North and South–South trade are inequality-reducing while North–South trade is inequality-increasing. Simply put, liberalizing trade between countries of similar developmental levels does not raise inequality. This paper affirms, using recent data, that trade with developing countries raises inequality in developed countries. Additionally, it finds that North–South trade (particularly imports from high-income to low-income countries) may also raise inequality in developing countries, contrary to Heckscher–Ohlin–Stolper–Samuelson model predictions. Skill-biased technical change, a consequence of trade liberalization between North and South, is the main mechanism driving inequality increases in developing countries. [ABSTRACT FROM AUTHOR]

This article examines the extent to which the latest wave of trade and investment treaties has impacted the fiscal stability of the world's nations. We construct two new measures of trade liberalization based on the importance of a country in the global network of trade and investment treaties, namely the number of trade treaty links and the hub connectedness of a country. This analysis is important since many analyses of the welfare impacts of trade liberalization typically do not consider the impact on the fiscal balances of governments or assume that any loss of tariff revenue would be made up by the imposition of indirect taxes, like a Value Added Tax. Using a cross-country regression analysis, we confirm that trade liberalization has, on average, reduced the amount of tariff revenue collected. Furthermore, trade liberalization is not correlated with an automatic compensation for lost tariff revenue through other taxation measures. We find, in some cases, that trade and investment treaties are correlated with a reduction in total fiscal revenues and an increase in government debt. These results suggest that policymakers need to take the fiscal impacts of trade and investment liberalization into account when making decisions about trade and investment policy. [ABSTRACT FROM AUTHOR]

This study investigates the varying effects of trade liberalization on environmental pollution from the perspective of enterprise viability. We find that trade liberalization significantly reduces pollution emissions, and the environmental effect on low viability and high viability enterprises varies. Our results also indicate that the emissions trading policy enhances the abating effect of trade liberalization on environmental pollution in both high viability and low viability enterprises, whereas the voluntary environmental policy reduces this effect. This study not only extends the applicability of new structural economics but also presents empirical evidence for further market opening and actions to improve the environment. [ABSTRACT FROM AUTHOR]

This paper examines the role that trade liberalisation policies play in attracting FDI flows to African economies from 2000 to 2017. This study contributes to the extant literature on the relevance of trade liberalisation policies in developing economies and in particular, African Countries. By employing new measures for trade liberalisation policies, the study estimated a System Generalized Method of Moment model to examine the relationship between trade liberalisation policies and FDI inflows to Africa. The findings suggest that the institutionalisation of policies to enhance trade liberalisation would be germane in attracting higher levels of FDI flows to African economies. [ABSTRACT FROM AUTHOR]

The effects of trade liberalization on wages, inequality, and employment in middle-income countries remains an important empirical question. However, with few exceptions, most of the empirical literature has focused on aggregate impacts at a national or regional level and the effects on skilled versus unskilled workers. This paper focuses on the effects of trade liberalization on industry-specific wages, earnings, and employment in rural and urban areas of Peru, providing more nuanced evidence on the distributional effects of trade. We use an instrumental variable approach and different measures of trade liberalization for the 2001–2016 period. Our main results suggest that, first, trade openness is associated with an increase in urban workers' earnings and wages, with self-employed workers benefitting the most. Second, whereas wages of workers with low and high levels of education decrease as a consequence of trade openness, the earnings of self-employed workers are affected positively, benefiting unskilled workers the most. In addition, while earnings increase in almost all industries in both rural and urban areas, effects are heterogeneous for wages. Overall, both salaried and self-employed agricultural workers benefitted from trade openness, indicative that agriculture is a competitive sector with important export potential. [ABSTRACT FROM AUTHOR]

We evaluate the impact of trade liberalization on the intensive margin of the firm's investment in foreign capital goods. To do so, we use Indian firm-level panel data from a period of a large-scale trade liberalization (1989–1997) to estimate an investment equation using the system-GMM estimator. Importantly, we control separately for the tariffs on capital goods, intermediate inputs and final goods, which allows us to estimate the price elasticity of investment in foreign capital goods. Consistent with theory, we find that reductions in the tariffs on capital goods, and intermediate inputs led to higher investment in foreign capital goods, whereas reduction in the output tariff resulted in lower investment. The impact of the capital goods tariffs is the largest. [ABSTRACT FROM AUTHOR]

Some empirical studies have shown that many developing economies were unable to recover lost trade revenue from domestic taxes after implementing trade liberalizing policies. Ignoring the fiscal cost of trade liberalization when government spending is not completely wasteful may lead to misleading welfare estimates. We address these concerns by developing a model in which government spending augments the production function, enabling it to account for the role of revenue and its impact on welfare. The model is calibrated to capture the features of the Ghanaian economy. We find significant but lower welfare effects of trade liberalization when government spending on infrastructure plays an important role in the production process. The lower welfare impact of trade liberalization is explained by a decline in infrastructure spending caused by shortfalls in revenue emanating from tariff cuts. The implication of the study is that there are further welfare gains to trade liberalization but such gains are significantly reduced when fiscal costs are high. The role of revenue matters in evaluating the welfare implications of trade liberalization. [ABSTRACT FROM AUTHOR]

Using a firm-level dataset, this article investigates the impact of trade liberalization on employment and wages in Vietnamese manufacturing during 2003–2008. Different from the previous researches, we consider indirect effects of trade liberalization via real output for the employment and via rent sharing for the wage adjustments. Overall, we find empirical evidence that trade liberalization has a negative, statistically significant, but minor in magnitude effect on employment and wage. The rent-sharing approach allows a further investigation of heterogeneity in bargaining power across firms by gender and skill composition for the wage response. There exist differences in gender and skill earnings gaps but trade liberalization can moderate these gaps. [ABSTRACT FROM AUTHOR]

The EU–South Korea free trade agreement (FTA) represents a case of comprehensive trade liberalization between two major economies with large automotive industries. This article examines and compares the total and automotive industry trade effects of the EU–South Korea FTA. The empirical gravity analysis shows asymmetric effects between the bilateral exports of EU and Korea. Trade-enhancing effects are found in both gross and value-added trade indicators of EU automotive exports, while no substantial effects are detected in Korean exports. The post-FTA trade dynamics suggest that the removal of industry-specific non-tariff barriers (NTBs) played an important role in facilitating EU automotive exports. [ABSTRACT FROM AUTHOR]

This study investigates the impact of trade liberalization on child labor using micro-level datasets of urban Pakistan. It is anticipated that when economies are open to external competition, this will benefit the poor in those economies, and hence lead to a contraction of child labor. We analyze the geographical differences in the effects of trade policy directed toward the reduction of import tariffs. Trade liberalization and child labor are associated in the case of Pakistan. Trade liberalization reduces child labor in urban Pakistan. Our findings also reveal a statistically significant association between lagged tariffs and child labor. Our findings are robust to various control variables. [ABSTRACT FROM AUTHOR]

The EU is actively pursuing Deep and Comprehensive Free Trade Agreements (DCFTAs) as part of its trade and aid relations with former colonies in North Africa. Utilizing the discourse of pro-poor business growth and win-win free trade, the EU insists that North African countries must acquiesce to DCFTA liberalization to achieve sustainable development. This article critiques the paternalism of EU actors amidst their focus on completing these controversial DCFTAs. Drawing upon Nkrumah's and Fanon's articulation of the concept of neocolonialism, it argues that the EU is cementing colonial-style patterns of production via iniquitous trade and aid arrangements. Moreover, the article illustrates that EU elites in their justification of the DCFTAs are replicating the colonial-era discourse surrounding Eurafrica and the alleged economic "complementarity" and inevitable "interdependence" of the European and African continents: an amnesiac Europe thus simultaneously draws upon European colonial imaginaries in the justification of neocolonial DCFTAs while downplaying, and forgetting, the regressive legacies of colonial trade relations. The article also demonstrates how certain North African campaigners are already drawing attention to the neocolonial contours of the DCFTAs in order to delegitimise these free trade vehicles vis-à-vis North African and European public opinion. [ABSTRACT FROM AUTHOR]

Does international trade enable a country to achieve sustainable development? This study presents two empirical analyses. First, the relationship between international trade and some selected indicators of Sustainable Development Goals is investigated by using data from over 100 countries during the period 1990–2014. The empirical findings reveal a significant relationship in which international trade plays a key role in helping to attain some of the Sustainable Development Goals. The second analysis evaluates the impact of trade liberalization policies under the Greater Mekong Subregion Economic Cooperation Program by linking the results from the Computable General Equilibrium model with the data from Thailand's household socioeconomic survey. The findings show that trade liberalization policy can help Thailand move towards at least three Sustainable Development Goals. [ABSTRACT FROM AUTHOR]

China's economic development has entered a period of transformation. Does trade liberalization reshape transitional China? In this study, from the perspectives of heterogeneous exporters and firm-level pollution emissions, we employ the data of 372,861 samples from China's manufacturing to empirically investigate the impacts of trade liberalization on China's economic transformation. Our results indicate that both import and export liberalization significantly change the behaviors of Chinese exporters, and aggravates pollution emissions. The underlying mechanisms include scale, factor composition and technique effects by trade liberalization. In addition, trade liberalization has heterogeneous impacts on different types of firms, which refers to ownership reforms, manufacturing sector upgrades and regional-coordinated development that are the part of China's economic transformation. Altogether, our findings provide important evidences on the impacts of trade liberalization on China's economic transformation and firm-level pollution emissions. [ABSTRACT FROM AUTHOR]

This study analyzes the effect of trade liberalization on wage inequality through industry wage premiums in Indonesia's manufacturing sector between 2000 and 2015, a period marked by low import tariffs. The study was undertaken by adopting a two-stage estimation approach. Using the national labor force survey dataset from Sakernas (Survei Angkatan Kerja Nasional—Indonesia Labor Force Survey), first, the study estimates industry wage premiums conditional on individual worker characteristics. In the second stage, the data are pooled across industries over time, then regressed on import tariff of final goods as a measure of trade liberalization, controlling for market concentration. The study finds a negative effect of import tariffs on industry wage premiums, implying that industry wage premiums decreased by more in sectors facing a larger tariff hike, and, vice versa, industry wage premiums increased by more in sectors experiencing larger tariff cuts. This suggests that trade liberalization contributes to wider wage inequality through inter-industry wage difference. Therefore, a more selective measure should be taken in implementing trade liberalization by opening wider access for superior commodities and protecting less-competitive commodities with high domestic demand. [ABSTRACT FROM AUTHOR]

The study investigated the possible nexus between trade liberalization and poverty in 21 African countries covering the period 2005–2014. The study deployed the following econometric tests: descriptive statistics; the correlation matrix and variance inflator; the panel unit root test; the pooled OLS technique; and the panel co-integration test (Johansen co-integration test). In order to confirm the robustness and validity of the regression model result, Ramsey RESET, cross dependence, autocorrelation and heteroscedasticity tests were conducted. The findings reveal that foreign direct investment and inflation rate had a positive relationship with the human development index while exchange rates and trade openness were negatively related to poverty level at the 5 percent level. The study recommended urgent policy measures aimed at revamping the poverty alleviation programmes. The study recommended that in a bid to diversify export market, developing countries should target other developing countries in the spirit of South–South cooperation. Such countries should also consider the joining or strengthening of regional economic integration. Incentives for production and human capacity building in the export-oriented sector should be emplaced. Social and economic policies are required to protect any country against the adverse effects of lowered trade barriers. [ABSTRACT FROM AUTHOR]

This study investigates the impact of trade openness on informal sector employment during the drastic 1988s trade reforms of Pakistan. It is generally perceived that increased external competition in less developed countries results in as an expansion in informal sector, which has less compliance with labor market regulations. Using micro-level data of Pakistan, we study the adjustments in the employment of informal sector due to trade openness. We find that informality and trade openness are associated. In Pakistan, trade reforms have given rise to employment in the informal sector. Our findings are robust to different trade-related measures. A substantial flexibility in labor market is required to benefit from the gains of liberalization. [ABSTRACT FROM AUTHOR]

The debate over how to reconcile trade liberalization with cultural policy is a long-standing one. There is great variation in how countries have navigated this debate. Furthermore, evolving individual policy approaches show noteworthy dynamism, largely in response to domestic politics, shifts in the international trading system and technological developments. This special issue explores different approaches to the trade and culture debate across geographic space, as well as the evolution across time through analysis of six cases – Canada, the European Union, South Africa, Latin America, the United States and China. [ABSTRACT FROM AUTHOR]

Endogenous tariff literatures reveal empirically that trade imbalance is negatively related with import tariff, this article gives a theoretical evidence and explanation to support this finding with the methodology of multi-country numerical general equilibrium modelling and simulation. We explore how optimal tariff changes after trade imbalance is introduced, and find that optimal tariffs decrease substantially, either for surplus or deficit countries, when imbalance is considered. Specifically, when the imbalance is modelled in endogenous monetary and inside-money structures, the optimal tariffs decrease by 26% globally on average. Our results suggest that the deepening trade imbalance is beneficial to the global trade liberalization due to its driving tariffs down. [ABSTRACT FROM AUTHOR]

Comparative federalism contributes to a better understanding of the relationship between ‘Brussels’ and member states in international trade policy. Analysing the understudied field of international procurement liberalization and comparing the European Union (EU), the United States (US) and Canada, the article observes that sub-federal resistance has differed across federations. It finds that the more ‘voice’ sub-federal executives enjoy, the less they ‘exit’ from international commitments. Voice hinges on their representation in federation-wide decision-making (council or senate) and the sectoral nature of vertical relations (collaborative or competitive). In the US senate federation, effective means of joint policy-making have not evolved in this non-coercive field, inciting states to exit. In Canada, increasing collaboration has compensated provinces for senate federalism’s low voice, reducing their resistance. EU ‘second chamber federalism’ proves peculiar for constituent units’ decisive role and its dense and trusting regime of collaboration. Member states’ high voice has encouraged their low resistance. [ABSTRACT FROM AUTHOR]

This article aims to evaluate a possible relation between increased Brazilian trade openness and increasing observed rates of overweight and obesity during the last 25 years. We develop an economic model where formal trade barriers are eliminated, and resulting sociocultural outcomes such as the adoption of westernized lifestyle in traditional non-western countries prevails, which could imply a health externality. In order to empirically analyse the influence of trade flows on overweight and obesity in Brazil, a balanced fixed-effects panel model has been estimated. Data for the 26 Brazilian states plus the Federal District are run for 1988/1989, 2002 and 2008. We found that an increase in trade openness leads to an increase in overweight and obesity ratios in Brazil. Hence results seem to point that there is a health externality in Brazil due to trade liberalization. However, more consistent evidence may be necessary to convince politicians and policymakers that any interference will be necessary to correct this externality. [ABSTRACT FROM AUTHOR]

Incorporating family decisions in a two-period model of the world economy, we predict that trade liberalization raises the skill premium and reduces child labour in developing countries where the adult labour force is sufficiently well educated to attract production activities from abroad that will increase the demand for skilled relative to unskilled labour. Elsewhere, liberalization will reduce the skill premium, but it will not necessarily raise child labour. Our prediction is not rejected by the data, and it explains why child labour is negatively associated with trade openness in those developing countries where the labour force was relatively well educated when the liberalization took place, but not elsewhere. [ABSTRACT FROM AUTHOR]

De Ville and Siles-Brügge (2016) argue that the politics of the Transatlantic Trade and Investment Partnership (TTIP) negotiations are entirely new and that it will lead to 'regulatory chill'. We think these two statements are untenable from a logical and empirical standpoint. While distributive political conflict is relatively absent because of firms' integration into global value chains, civil society organizations voice value-based opposition to the prospective agreement, just like in the past. TTIP is also unlikely to undermine contracting parties' ability to regulate the market to promote fundamental social values, because regulatory convergence is generally decided upon in a piece-meal fashion, and is subject to a super-majoritarian (dis)approval threshold in the Council, the European Parliament and national parliaments. Moreover, we show why it is plausible to expect TTIP to result in an upgrading of world trade rules, a benign development on the global level. [ABSTRACT FROM AUTHOR]

This article examines the impact of trade reform on technical efficiency on the Indonesian chemicals industry using firm-level panel data. The effects of trade reform on technical efficiency are analysed using a stochastic frontier approach. Two variables represent trade reform in this model: effective rate of protection (ERP) and import ratio (IMP). The findings of the present study suggest that both trade reform variables have significant effects on technical efficiency. The coefficient of ERP has a positive sign and is statistically significant, which means that an increase in ERP increases the inefficiency (or decreases the technical efficiency) of firms in the chemicals industry. The coefficient of IMP is negative and statistically significant, which represents the negative impact of IMP on technical inefficiency (or positive on technical efficiency). Thus, trade reform, a reduction in ERP or an increase in IMP, has an unambiguously positive effect on technical efficiency in the Indonesian chemicals industry. [ABSTRACT FROM AUTHOR]

This paper, motivated by the so-called North–South problem in trade, analyzesex antetrade preferences and the source of potential political conflicts regarding trade liberalization. Developing a dynamic extension of the traditional Heckscher–Ohlin model with imperfect labor mobility and tracking overall dynamic paths from the autarky to free-trade steady states, we demonstrate that in the presence of inter-sectoral migration barrier, bilateral free-trade agreements can be welcomed (opposed) by the majority of workers in a capital-abundant (labor-abundant) country, which is inconsistent with the welfare prediction by Stolper and Samuelson. This paper also proposes a numerical algorithm to solve for the entire transition path of the model under rational expectation. Our simulation experiments further reveal that preannounced and delayed implementation can facilitate a bilateral free-trade agreement by partially neutralizing short-run transitional gains and losses so as to persuade the losers to support the reform without affecting the beneficiaries’ trade preferences. [ABSTRACT FROM PUBLISHER]

We develop a dynamic and heterogeneous firm model that embodies a firm’s joint decisions to export and innovate and allows both decisions to affect the firm’s production growth. We then calibrate the model with data obtained from Chilean manufacturing plants between 2005 and 2007 and simulate the impact of trade liberalization under different combinations of industry age and speed of trade liberalization. On the one hand, a quickly implemented trade liberalization policy significantly increases the exports intensity of a young industry newly opening up to the world. The increase in exports intensity is greater with quicker implementation of trade liberalization. On the other hand, trade liberalization for a mature industry does not lead to a significant impact on exports intensity. [ABSTRACT FROM AUTHOR]

In 2006, the European Commission released its Global Europe Communication, in which it announced a shift from a multilateral to a bilateral trade strategy. One of the key pillars of this new strategy was to strengthen the bilateral trade relations with key Asian countries. In contrast to existing analyses that focus on European Union (EU) decision-makers’ agency, we propose an explanation for this notable shift in the EU's trade policy that stresses the political role of import-dependent firms. In light of the increasing integration of such firms into global value chains, the article argues that a plausible case can be made, both theoretically and empirically, that import-dependent firms had a clear stake in the signing of preferential trade agreements between the EU and Asian countries and that their lobbying efforts significantly affected the EU's decision to start negotiations on such agreements with South Korea, India and Vietnam. [ABSTRACT FROM PUBLISHER]

Using a large panel dataset that covers 116 countries and 62 renewable energy products over the period 2000–2012, this study evaluates the effects of trade liberalization on the export expansion of China’s renewable energy products. The results reveal that trade liberalization plays a crucial role in encouraging the exports of renewable energy products. Specifically, tariff reduction, in general, not only encourages the entry into new export markets, but also induces an increase in the volume of renewable energy products already traded. In addition, the positive effects of trade liberalization are more pronounced for foreign-owned exporters than for state-owned or privately-owned exporters. Also, the ways in which trade liberalization promotes exports of renewable energy products differ by the type, destination or origin of the renewable goods being exported. [ABSTRACT FROM AUTHOR]

Proponents of the Comprehensive Economic and Trade Agreement (CETA) emphasize its prospective economic benefits, with economic growth increasing due to rising trade volumes and investment. Widely cited official projections suggest modest GDP gains after about a decade, varying from between 0.003% and 0.08% in the European Union and between 0.03% and 0.76% in Canada. However, all these quantitative projections stem from the same trade model, which assumes full employment and neutral (if not constant) income distribution in all countries, excluding from the outset any of the major risks of deeper liberalization. This lack of intellectual diversity and of realism shrouding the debate around CETA’s alleged economic benefits calls for an alternative assessment grounded in more realistic modeling premises. In this paper, we provide alternative projections of CETA’s economic effects using the United Nations Global Policy Model (GPM). Allowing for changes in employment and income distribution, we obtain very different results. In contrast to positive outcomes projected with full-employment models, we find CETA will lead to intra-EU trade diversion. More importantly, in the current context of tepid economic growth, competitive pressures induced by CETA will cause unemployment, inequality, and welfare losses. At a minimum, this shows that official studies do not offer a solid basis for an informed decision on CETA. [ABSTRACT FROM PUBLISHER]

Developing countries are being confronted with severe fiscal challenges in the global economy. Over the last two decades, governments have been accepting significant reductions in trade taxes to support trade liberalization. This is particularly problematic for developing economies because trade taxes have been a key source of government revenues. In this paper, we investigate the conditions under which international financial institutions (IFIs) successfully assist developing countries with recovering the lost revenue from trade liberalization by implementing various domestic tax reforms. We argue that regime type mediates the effectiveness of IFI assistance in developing economies, after trade reforms have been adopted. More specifically, IFIs will be more effective at assisting authoritarian regimes with domestic tax reforms as a substitute for trade taxes than they will be in poor democracies. Democratically elected leaders inadvertently undermine multilateral assistance with tax reforms because they are more susceptible to middle- and upper-class demands for lower taxes in a competitive global economy. In authoritarian regimes, on the other hand, IFIs such as the World Bank and International Monetary Fund tend to be more effective because dictators are likely to experience far fewer political consequences for accepting IFI assistance and implementing tax reform in the global economy than their democratic counterparts. [ABSTRACT FROM AUTHOR]

For a long time, governments relied heavily on trade taxes as the main source of public finance, and for some countries, mainly less developed ones, they still account for a large share of revenue. Yet, with trade liberalization, governments have been forced to abandon these easy-to-collect taxes and to adopt modern hard-to-collect taxes, mainly internal income and consumption taxes. Surprisingly, we know little about how governments across the world have addressed this common challenge. In this paper, we analyze the rise of the most important present taxes: the personal and corporate income tax, the general sales tax and the value-added tax. Based on a self-coded dataset, we provide a historical-descriptive outline of the expansion of modern taxes since 1842 and test the effect of trade liberalization on the probability to adopt hard(er)-to-collect taxes. While trade is an important determinant for the legislation of modern taxes, we find that its influence is not universal but depends on the tax type. Only the personal income tax and the value-added tax have served as a revenue substitution to trade taxes, while the general sales tax and the corporate income tax were rather fueled by other factors such as spending pressures. [ABSTRACT FROM AUTHOR]

There has been a proliferation of preferential trade agreements within the last two decades. This paper analyzes the effects of free trade agreements (FTAs) on external tariffs in small economies where protection decisions are made politically. Our model determines tariff rates endogenously instead of assuming they are fixed during or after the formation of FTAs as commonly done in the literature. We show that when an FTA is established, the tariff rates that apply to non-members essentially decline. More importantly, we investigate the interaction between endogenous tariff determination and the feasibility of an FTA. We find that the expectation of tariff reductions under endogenous tariffs could make an otherwise feasible FTA if tariffs were fixed become infeasible. However, if domestic import-competing sectors are relatively smaller and the government places a significant weight on political contributions relative to social welfare, an FTA with endogenous tariffs may be more likely to be feasible than an FTA assumed to fix external tariffs. [ABSTRACT FROM AUTHOR]

Given Canada’s extended geography and regional economic diversity, individual provinces have differing exposures to particular international trade agreements. We demonstrate this by estimating the impacts of the Canada-Korea free trade agreement on the province of Ontario, using a dynamic general equilibrium model to generate Canada-level impacts, which are then decomposed on the basis of partial equilibrium model simulations on a trade dataset in which Ontario is represented as a separate international trading entity. We show that geography and sectoral specialization matter and that general equilibrium effects must be taken into account in partial equilibrium assessments of sectoral impacts of major trade agreements. [ABSTRACT FROM PUBLISHER]

The impact of women's rights on a country's competitiveness in the global economy is a source of contention. While educational opportunities for women, as well as political empowerment, are linked to a variety of positive outcomes, the impact of economic rights is mixed. Toward better understanding these issues, we focus on the role of women's rights in attracting foreign direct investment (FDI). Though foreign capital plays a key role in the development strategies of many countries, and many of the growth areas in FDI rely heavily on women's labor, extant literature on the determinants of FDI largely ignores gender. To gain insight into these issues, we examine the impact of women's political, economic, and educational rights across four different types of US FDI into the developing world. We find a mixed relationship between women's rights and FDI that varies across industrial sectors. [ABSTRACT FROM PUBLISHER]

This article examines the literature on trade liberalization and economic development. It also briefly looks at the theory of comparative advantage which is seen as justification for global trade liberalization under the auspices of the World Trade Organization. The study is important because once again the international institutions strongly advocate trade liberalization in the developing countries. Such policies may increase vulnerability and make the developing countries further hostages to international finance capital. It seems that trade liberalization is being presented as a suitable developmental strategy for developing countries despite weak empirical findings. It appears that with the current agenda of universal trade liberalization, not only will development space shrink but also self-determination and economic sovereignty will be undermined. [ABSTRACT FROM PUBLISHER]

In this article, we study the impact of trade liberalization, including reductions in both tariff and nontariff trade barriers, on environmental goods (EGs) exports. Using bilateral trade data from 20 Asia-Pacific Economic Cooperation members, we find that tariff reduction in an exporting country has a larger positive impact on its exports of EGs than tariff reduction in an importing country. Our results also show that a lower nontariff barrier in an importing country increases its imports of EGs. A considerable amount of heterogeneity also exists in subsample results based on countries’ income levels. [ABSTRACT FROM PUBLISHER]

This paper develops a framework for studying the general equilibrium effects of endogenous quality upgrading, a new margin of trade, on the welfare impact of trade liberalization. The theoretical model introduces product quality differentiation amongst heterogeneous firms and focuses on supply-side determinants of international trade. Among other results, in general equilibrium, trade liberalization decreases the share of high-quality varieties in exports and the average productivity of exporters. These changes affect average export price in opposite ways. Nevertheless, trade liberalization in the quality-extended model increases consumers’ welfare by more than in the benchmark model. [ABSTRACT FROM AUTHOR]

This paper develops a two-country trade model with frictional labor market structures to investigate the link between increased openness to trade and cross-country income inequality. Calibrated to US–Canadian data, the model simulation results show that the Canada–US Free Trade Agreement benefited Canada, the country with relatively higher capital intensity, more due to its capacity to flexibly expand in response to an increase in product demand. The results from counterfactual experiments indicate that increased capital intensity in the US is expected to increase gains from trade in both countries while making the distribution of gains less unequal. [ABSTRACT FROM PUBLISHER]

Contrary to the predictions of the 2 × 2 × 2 Heckscher–Ohlin model, empirical evidence shows that the skill premium increased in some developing countries and decreased in others after trade liberalization. Khalifa (2014) attempts to reconcile the empirical evidence with the theoretical predictions by introducing a theoretical set-up that includes the additional aspect of South–South trade. The model shows that South–South trade openness can cause the skill premium to increase in the Southern country that is relatively more skill abundant, and to decrease in the Southern country that is relatively less skill abundant. This article introduces an empirical analysis to test the theoretical predictions of Khalifa (2014) using threshold estimation techniques introduced by Hansen (1999). The results suggest the presence of a statistically significant skill abundance threshold, below which the estimate of the coefficient of the relationship between South–South trade openness and wage inequality is negative, and above which the point estimate is positive. [ABSTRACT FROM PUBLISHER]