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Bilateral trade relationships between countries vary across products. Such heterogeneity poses challenges when assessing the economic impacts of trade agreements. This paper estimates bilateral trade elasticities at the product level and explores these impacts using a hypothetical no‐deal Brexit as an example. Our findings indicate that the European Union's demand for the United Kingdom products is often less elastic compared to products from other trading partners. We also observed substantial heterogeneity in the elasticities across products and a negative correlation between these elasticities and tariffs. These factors mitigate extent of trade welfare losses compared to a scenario using homogeneous elasticities. [ABSTRACT FROM AUTHOR]

We examine how variation in the severity of government intervention in response to the COVID‐19 pandemic impacted trade, using a novel dataset on monthly bilateral trade flows between Canadian provinces and U.S. states. Our results show that differences in the collections of policy responses employed by states and provinces throughout the course of the pandemic have had a significant and heterogeneous impact in accounting for variation in changes in aggregate province‐state trade flows. Government interventions around workplace closures and gathering restrictions are associated with the largest drop in bilateral trade flows, especially when introduced by U.S. states and during periods when COVID‐19 case rates are rising, while many pandemic restrictions have no statistically significant impact on trade flows. [ABSTRACT FROM AUTHOR]

A health crisis can impact GVCs adversely by raising bilateral trade costs and via supply‐ and demand‐side shocks in the exporting and importing countries. Focusing on trade in select GVC‐intensive sectors, we disentangle the effects of these different channels in the context of SARS and MERS in a structural gravity framework. The estimated effects are found to be small in magnitude and show significant heterogeneity by sector, channel and disease outbreak. SARS‐induced rise in bilateral trade costs is found to reduce the export value and number of products traded of both intermediate and final goods, while similar adverse effects from MERS are only observed on intermediate goods export value. There is more evidence for the adverse effects of supply‐shocks from both SARS and MERS in our results, while the expected negative effects of the demand‐shock are only observed for MERS. The SARS effects are found to diminish over time, pointing to resilience of the associated value‐chains. We also find suggestive evidence for SARS in particular being associated with geographical diversification and widening of value‐chains. [ABSTRACT FROM AUTHOR]

This article employs structural vector autoregression and local projection methods to examine the impacts of the deterioration in the US–China political relations on bilateral trade between Australia and China. Three scenarios are considered to reflect the evolution of US geopolitical strategies in recent years such as "America First", "China Threat Theory" and "The Protection of US Allies". The simulation results illustrate that worsening the US–China political relations has a negative impact on Australian exports to and imports from China. It is also found that economic conditions in the US play a more important role in the transmission of this impact than those in China and Australia. In addition, various options are explored to check the robustness of the findings in this article. [ABSTRACT FROM AUTHOR]

This study delves into the impact of exchange rate fluctuations on the bilateral semiconductor trade between Korea and China. We present compelling evidence emphasising the significant role of exchange rate changes in Korea's semiconductor trade with China, affecting both short‐term and long‐term dynamics. Our analysis also reveals an asymmetrical effect of bilateral exchange rates on Korea's semiconductor trade with China. Specifically, we find that exchange rate asymmetries primarily manifest as a long‐term phenomenon in Korea's semiconductor exports to China. At the same time, they influence both short‐ and long‐term dynamics in Korea's semiconductor imports from China. [ABSTRACT FROM AUTHOR]

Cultural differences represent significant trade barriers between transitional economies and their trading partners, which has been overlooked in recent studies. This paper investigates the effect of cultural distance (CD) on bilateral trade from Bangladesh. We conceptualize a research model by employing the extended gravity model as a theoretical base, where we amplify the theory by proposing that linguistic distance (LD) as a part of cultural distance has a profound effect on bilateral trade based on bilateral trade data from 1995 to 2019 and Hofstede's culture indices between Bangladesh and 157 trading partner countries. Using a pseudo‐poisson maximum likelihood model, we find that cultural distance has a significant and negative impact on Bangladesh's trade, with a significance level of 1%. Our empirical results indicate that one unit increase in cultural distance decreases trade by 40.84% and cultural distance has a greater impact on Bangladesh's exports than on its imports. Findings also reveal that the effect is substantial with high‐income nations than with low‐income nations, and for manufacturing products than primary products trade. Further, this study suggests that in addition to cultural distance (CD), linguistic distance (LD) from trading partners has a tantamount effect on bilateral trade, which is significant at 1%. Theoretically, this study suggests that linguistic distance (LD) should be added on gravity model for analyzing effects of cultural distance on bilateral and multilateral trade. Practically, this study contributes by providing valuable insights to policymakers to pay attention to cultural differences, especially during these economic transition periods to increase bilateral trade. [ABSTRACT FROM AUTHOR]

Regional trade agreements (RTAs) have experienced significant growth worldwide, leading to an increase in studies assessing their impact on bilateral trade flows. With the availability of disaggregated trade data, numerous studies have examined the influence of these agreements specifically on agri‐food trade. However, the results of these studies exhibit heterogeneity, posing challenges for policymakers seeking to understand the effects of RTAs on agri‐food trade. To address this issue, we conducted a meta‐analysis of 61 studies investigating the effects of various RTAs on agri‐food trade. Using funnel asymmetric testing, our analysis reveals the presence of publication bias in the existing literature. By accounting for this bias, we found robust evidence that RTAs positively and significantly promote agri‐food trade. Notably, the extent of this effect depends on the depth of economic integration within the RTA, distinguishing between customs unions and free trade agreements, as well as the classification of agri‐food products as primary or processed. The ex‐post effects of RTAs on agri‐food trade are less pronounced when we control for both publication bias and heterogeneity, compared to controlling only for publication bias. [ABSTRACT FROM AUTHOR]

We estimate the policy effect of belt and road initiative (BRI) on China's import. We use highly detailed, product‐country level data from China Customs Trade Statistics Database which covers 5364 types of products and 201 economies from 2010 to 2017 to investigate the policy effects and the underlying mechanisms. We find that the BRI has significantly boosted China's imports from countries along the route. The BRI have significant expansion effect on imports of existing products as well as positive effects on imports of new product import and product exit, which means BRI may also contribute to the optimization of product structure and growth in value of China's imports. Moreover, BRI have positive effects on both general trade and processing trade. Mechanism analysis shows that policy coordination, cultural affinity, and maritime transportation connectivity have strong explanatory power on the policy effects of BRI. We also find that the BRI has played a "boosting" role for import boost for new RTA partner as well as non‐RTA members along the route. We further examine the impact of BRI on global bilateral trade, and the result shows that BRI has generally promoted bilateral trade among all countries along the route, not limited to origin‐China pairs. [ABSTRACT FROM AUTHOR]

In recent decades, China has risen to prominence in the global economy with breakneck speed. Many have hypothesised that Chinese economic actors undermine the global drive to promote good governance in developing countries, and in Africa in particular, by disproportionately engaging economically with countries that suffer from poor governance outcomes. Using bilateral trade data, this paper explicitly compares how different aspects of African countries' governance levels impact their trade patterns with China and the West. It finds that African countries with better corruption controls and improved democratic development levels export more to the Western countries sampled, though the opposite is true with regard to their exports to China. Interestingly, democratic development is associated with greater imports from both the West and China, but the opposite holds with regard to respect for human rights. Finally, political stability has no significant impact on African trade—with either the West or China. However, when oil exporters are excluded from the sample, the relationship between political stability and African exports strengthens dramatically, which suggests that both Western and Chinese importers are willing to tolerate political instability to secure oil. [ABSTRACT FROM AUTHOR]

This paper contributes to the literature on the economic impact of interstate conflicts by focusing on empirical analysis of the impact of interstate soft conflicts on bilateral trade. Interstate soft conflicts arising from the failure of diplomacy when a military operation seems too radical may act as a policy tool and have a negative impact on bilateral relations. The empirical approach is based on the use of balanced panel data with annual observations and a theory-consistent structural gravity framework, augmented by a new measure of interstate soft conflict. The results of standard gravity estimators show that interstate soft conflicts have a sustained negative impact on bilateral trade, regardless of the control for omitted variables (presence of regional trade agreements, various types of sanctions, state acts, and militarised interstate disputes) and different model specifications. [ABSTRACT FROM AUTHOR]

Economic integration ranks as one of the leading development strategies in Africa. The newly created African Continental Free Trade Area (AfCFTA) and the proposed Tripartite Free Trade Area (TFTA) linking three major regional blocks offer a new impetus to studying trade policy effects. Using a structural gravity model of bilateral manufacturing trade between the African Union member states and all countries in the world, the trade effects of African economic integration agreements (EIAs) are assessed. The findings suggest that economic integration, in aggregate, enhances total African exports. Disaggregating the effects by type of agreement and by subgroups of countries, free trade agreements (FTAs) and partial scope agreements (PSAs) are found to increase extra African exports, but have no effects on intraAfrican exports. A positive and significant effect on intra African exports is introduced when the FTA dummy is combined with AfCFTA in contrast to a neutral effect stemming from the joint FTA-TFTA dummy. The findings suggest that a continentwide FTA yields greater benefits when compared with integrating the subregions. [ABSTRACT FROM AUTHOR]

The recent COVID-19 pandemic has highlighted the importance of global access to human vaccines. There is, however, no empirical work on either the unequal distribution of international trade or on its determinants. Applying a gravity model to the UN Comtrade database between 2000 and 2019, we explain the patterns of bilateral trade across 116 countries. Using the Poisson Pseudo-Maximum Likelihood methodology, our results show that inequalities in international vaccine trade have steadily increased. In general, supply and demand drivers play a role in explaining the flow of human vaccines. The impact of these drivers varies depending on the income level of the importing country. High-income countries intensify their flows with demand factors such as GDP per capita, or supply factors such as the location of big pharmaceutical companies. Conversely, low-income countries receive more vaccines according to their population. Our results show that a poor country that houses a big pharmaceutical company acts as an exporting platform to developing and poor countries. Middle-income countries present features similar to rich countries both by producing more and also by exporting more. The imbalance endangers the global fight against the current COVID-19 pandemic. [ABSTRACT FROM AUTHOR]

ASEAN organizations play a vital role in sustaining bilateral trade between China and ASEAN countries. However, the COVID‐19 pandemic has introduced disruptions to global bilateral trade. Therefore, research should investigate the impact of ASEAN organizations on the trade between China and ASEAN nations, particularly during the pandemic. This study aims to address the effectiveness of ASEAN organizations in managing bilateral trade during the pandemic and gauging their influence. The study's sample includes nine ASEAN countries, and the data span from 2016 to 2021. The analysis uses the difference‐in‐differences model, with the parallel trend test verifying the differences between investigated variables. The results demonstrate that the influence of the ASEAN organization is significant on trade activities between China and the ASEAN member countries, positively impacting bilateral trade during the COVID‐19 period. These findings not only contribute to our understanding of bilateral trade during a special period but also offer insights for enhancing the efficacy of the ASEAN organization and governments to promote bilateral trade. [ABSTRACT FROM AUTHOR]

Oman's trade performance achievements with Singapore are assessed within the Gulf–Singapore Free Trade Agreement (GSFTA) framework. Since coming into force in January 2015, Oman's total export value to Singapore has plunged significantly. The number of imported products from Singapore remained significantly higher than the number of Oman's exports to Singapore, confirming that Omani exports have a weaker presence in the Singaporean market. In the post‐2015 period, Oman's export partner share in trade remained below its import partner share. Although Oman's comparative advantage strengthened in consumer goods, intermediate goods, chemicals and metals since 2015, animals, food, vegetables and wood consistently revealed their comparative disadvantage since 2000. Between 2015 and 2018, Oman's export share of capital and intermediate goods to Singapore fell from 45.23% to 33.57%, while it rose for consumer goods, chemicals, fuels, machinery and electrical products. Oman's trade reforms have resulted in weighted average tariffs on all products falling from around 5% in 2005 to below 0.60% in 2018. While GSFTA has delivered on expanding trade between Oman and Singapore (though with different magnitudes), it has fallen short of delivering the 'level playing field' as expected of Oman's bilateral trade. [ABSTRACT FROM AUTHOR]

Using nearly 200 countries' bilateral trade data and the gravity equation, this paper provides evidence that COVID‐19 has led countries to trade more with their closer countries. The negative distance effect is greater during the pandemic period, with a greater number of infected cases, deaths or stricter control policies. A simple model of a transportation sector that was affected by the pandemic was built to explain our empirical findings. [ABSTRACT FROM AUTHOR]

This paper exploits the three eastward expansions of NATO after the Cold War as a quasi‐natural experiment to investigate the relationship between military alliance and trade. To identify the impact of alliance membership on trade, we adopt the difference‐in‐differences method to estimate a gravity model with global bilateral trade data from 1995 to 2015. The results show that joining NATO has a positive effect on new member countries' exports, as well as an enhancing effect on both imports and exports between old and new members. Further analysis of subdivided data reveals that formal alliance between old and new members boosts bilateral trade of security‐sensitive products, facilitates specialisation and helps mitigate trade disputes, suggesting that deepening of mutual strategic trust is a possible channel of influence. [ABSTRACT FROM AUTHOR]

This research shows that misreporting of trade is rampant, which markedly reduces the quality of reported bilateral trade data. We devise a novel methodology to correct for misreported bilateral trade while accounting for the composition of product types and for trading partners. Based on bilateral data for 196 countries in the world at the product level over the period 1996–2017, we find that (i) our corrected trade data are significantly more reliable than reported data; (ii) our corrected data are significantly more reliable than data based on conventional misreporting correction methods; (iii) corrected trade balances are often quite distinct from their reported counterparts; (iv) capital flight is the most important source of misreporting and (v) the misreporting propensity tends to cluster geographically, with the main offenders often deviating from common perceptions in the literature. Based on estimates of the gravity model, we show that geographical characteristics are more influential than institutional variables in explaining misreporting. [ABSTRACT FROM AUTHOR]

This paper analyses the determinants of trade in natural gas through a political economy lens. In addition to the economic determinants of trading in natural gas, the latter could be affected by political determinants such as sanctions and the institutional gap between trading partners. Moreover, while the literature considers the effect of tariffs, less attention has been attributed to non‐tariff measures (NTMs) that might also be imposed for political reasons. To quantify the impact of these different determinants on natural gas trade, we use a gravity model that explains bilateral trade for pipeline natural gas (PNG) and liquefied natural gas (LNG) over the period 2000–2017. We also consider the zero trade flows of natural gas by using the Poisson pseudo‐maximum‐likelihood estimator. Our results show that economic sanctions have reduced bilateral LNG trade by 24% on average. We also find that the institutional gap between trading partners exerts a significant negative effect on bilateral PNG and LNG trade, pointing out that institutions could be considered as fixed export cost in the natural gas market. Moreover, in addition to tariffs, NTMs have a significant negative effect on trade in natural gas. [ABSTRACT FROM AUTHOR]

The Belt and Road Initiative (BRI) intends to enhance China's international integration, strikingly by enhancing infrastructure and bolstering trade and investment links among the economies involved. Poor transport infrastructure and border restrictions are significant deterrents to trade expansion, economic growth, and bilateral trade. Using panel structural gravity model estimations, this study investigates the impact of Transportation infrastructure inheritances on bilateral trade across the Belt and Road member countries, particularly in Eastern Africa. The study considers the potential effect of the BRI roads, railways, and Information and Communication Technology (ICT) infrastructure network on the bilateral trade and economies of the Eastern African countries. The empirical analysis offers robust evidence that transport infrastructure promotes trade. The study found that transport infrastructure has a significant and positive effect on trade. These results imply that transport infrastructure exerts a strong effect on trade and growth in Eastern Africa. Policies for increasing access and affordability of transport infrastructure are highly recommended to promote trade and economic growth in the Eastern Africa sub‐region. [ABSTRACT FROM AUTHOR]

We develop a gravity trade model based on a theoretical analysis of heterogeneous firms that engage in horizontal Foreign Direct Investment (FDI) or exporting. The model allows firms' endogenous choice between exporting or FDI to impact the proportion of exporting firms and subsequently bilateral trade. Based on the theoretical results, we propose a three‐stage estimation procedure: First, estimate firm selection into horizontal FDI; second, use predicted probabilities from the first stage in the estimation of firm selection into exporting; and third, use predicted probabilities from the previous two stages in the gravity estimation of bilateral trade. We apply this procedure to the European Union (EU) processed food industry, which engages in worldwide FDI and trade. We estimate a baseline model of a standard gravity equation, a two‐stage model without FDI selection, and our proposed three‐stage model and quantify bias corrections in the coefficient estimates of the trade friction variables in the baseline and two‐stage gravity models. The bias corrections can be large. For instance, the inclusion of the proportion of Multinational Enterprises (MNEs) in the trade‐selection equation leads to a sign reversal of the distance coefficient estimate and results in an upward bias correction of 173%. The three‐stage gravity corrects a downward bias of 31% in the coefficient estimate of distance in the baseline but an upward bias of 77% in the two‐stage method, which indicates that the two‐stage method overcorrects the downward bias in the baseline gravity. [ABSTRACT FROM AUTHOR]

This paper analyzes intra‐Common Market for Eastern and Southern Africa (COMESA) trade in services by establishing its determinants and exploring the role of trade facilitation on the same. The study relies on the Poisson Pseudo Maximum Likelihood (PPML) estimator of the gravity model on bilateral services trade data for total services and eight categories of services in 17 COMESA countries from 2005 to 2019. Results reveal that several factors determine intra‐COMESA services trade, the salient ones being GDP (exporter's and importer's), distance, contiguity, and time zone differences. Trading under a service‐specific trade agreement affects a few services: transport and other business services exports. The effect is positive for transport services and negative for other business services exports. Trade facilitation measures, especially broadband technologies, significantly improve services trade across various sectors. A key policy implication of our results is that service trade is more likely to grow through digital, information, and communication infrastructure development. Thus, policy should prioritize increasing access and usage of broadband technologies. [ABSTRACT FROM AUTHOR]

Owing to globalisation‐induced fragmentation of production across regions and reorganisation of global value chains (GVCs), more attention is being paid to the impact of deep preferential trade agreements (PTAs) on GVC participation. We examine how the promotional effect of deep trade agreements on GVC participation changes with GVC production position distance between member countries. We argue that production position distance has an inverted U‐shaped effect on the relationship between deep trade agreements and bilateral GVC participation. Specifically, starting with a short production position distance, an increase in production position distance can strengthen the promotional effect of deep trade agreements on bilateral GVC participation. However, when the production position distance reaches a certain threshold, an increase in production position distance weakens the promotional effect of deep trade agreements on bilateral GVC participation. Analysis of panel data, which covers 43 countries over the 2000–2014 period, supports our predictions. Further analysis shows that the inverted U‐shaped effect of production position distance on the relationship between deep trade agreements and bilateral GVC participation is more likely to take place in the manufacturing sector rather than in the services sector. [ABSTRACT FROM AUTHOR]

Over time, the trade agreements are witnessing a substantial change in their provisions by encompassing provisions beyond their conventional trade domain, such as labour market regulations, environmental regulations and competition policies. Theoretically, studies argued the role of signing an agreement with deep provisions to promote trade in value‐added, but empirical verification in favour of a few is rarely available. The present study attempts to identify this set of provisions included in deep trade agreements (DTAs) that positively impact the bilateral trade in value added. Using the traditional gravity model framework and its estimation through modern econometric and machine learning tools, the study shows that incorporating provisions relating to establishing and preserving economic rights in trade agreements promotes trade in value‐added among member countries. Notably, the study found the combination of three main policy areas: technical barriers to trade, competition policy and labour market regulations. Both econometric and machine learning methods confirm the significant impact of these three provisions. Understanding the significance of specific provisions holds relevance in the current scenario where major trading economies are calibrating trade agreements. From the policy perspective, disentangling a set of provisions might be relevant for designing and negotiating trade agreements. [ABSTRACT FROM AUTHOR]

The real bilateral exchange rate between Korean won and Chinese yuan is a crucial factor in balancing trade between Korea and China and has implications for both academics and policymakers. Prior research using symmetry hypotheses on bilateral trade and its heterogeneity among industries is limited. This study re‐examines the symmetric and asymmetric J‐curve phenomenon between them, employing the linear and nonlinear autoregressive distributed lag models. It considered the January 2008–June 2022 trade balance of 75 industries. This analysis shows support for the symmetric (asymmetric) J‐curve in 4 of 12 industries from the linear (nonlinear) model, accounting for 58.55% of the total trade between Korea and China. Furthermore, short‐ and long‐run asymmetries are detected in most industries, affirming the suitability of the nonlinear ARDL method. [ABSTRACT FROM AUTHOR]

The COVID‐19 pandemic resulted in large and varying declines in bilateral trade flows. This study investigates whether these diverse effects can be explained by differences in trade costs as measured by pre‐existing trade policies (e.g. tariffs, non‐tariff measures and trade agreements). Results indicate that trade flows subject to higher trade costs declined more than average during 2020. The results also show that trade costs have heterogeneous effects depending on the thickness of trade relationships, with small exporters being relatively more affected by the presence of trade costs. We interpret the results as evidence that the fall in demand during 2020 caused higher‐cost and less‐established suppliers to be squeezed out of international markets. [ABSTRACT FROM AUTHOR]

The negative effect of a currency appreciation on a country's exports may be attenuated as its export basket becomes more sophisticated. This paper investigates whether exchange rate changes affect China's exports differently depending on their sophistication levels, as measured by the Product Complexity Index (PCI). We estimate exchange rate elasticities for 1242 export categories disaggregated at the HS‐4‐digit level from 1995 to 2018 using bilateral trade data between China and 190 partner economies. Results indicate that exchange rate fluctuations have negative effects on China's export values, and exchange rate effects are less for more sophisticated exports. This decreasing of exchange rate elasticities for more sophisticated exports holds even when controlling for tariffs. The evidence also shows that, as China has upgraded its export basket over time, the impact of exchange rates on exports has become smaller and less significant. Moreover, the effect of exchange rate related policies on export values via the exchange rate is smaller and less significant for China's more sophisticated exports. [ABSTRACT FROM AUTHOR]

The aim of this article is to analyse the impact of climate change on bilateral trade flows. To this end, we estimate a theory‐grounded gravity model using bilateral trade flows on a sample of 67 countries over the period from 1986 to 2016. We use temperatures and extreme weather events (and their consequences) as indicators of climate change. In general, we find that international trade flows are less affected by the evolution of temperatures than domestic ones, while the opposite occurs with extreme weather events. However, there is a clear heterogeneity across countries and types of events. In particular, the results suggest that biological events, such as (epidemics and insect infestation), extreme temperatures, storms and landslides have a negative impact on international flows relative to internal ones. Interestingly, the influence of China and Japan on the global result is decisive, especially for storms in the first case and extreme temperatures in the second. Finally, our General Equilibrium estimations suggest a more detrimental impact of insect infestation and extreme temperatures on welfare than the rest of events. [ABSTRACT FROM AUTHOR]

As digital trade expands worldwide, the importance of policy factors in digital trade is garnering attention. However, the effectiveness of digital trade‐related policies on digital trade flow is empirically underinvestigated because of challenging data requirements. To overcome this, we combine recently developed, but separately used digital trade‐related datasets to empirically test how digital trade policies affect digital trade flows. In particular, we examine the effects of digital trade policies from two dimensions: unilateral domestic regulations and bilateral trade agreements. Our results reveal that a pair of countries experiences an increase in digital trade flow when they have a trade agreement containing digital trade‐related provisions. This tendency is even stronger when digital trade agreements contain more specific rules. On the contrary, domestic regulations recognised as digital trade barriers actually inhibit digital trade flows, and their negative effect is greater when the regulations are implemented by the importing country than the exporting one. Decomposing the barriers into several areas of regulations, we examine which area is more crucial than the others. These results may seem rather obvious, but conversely, they confirm the validity of our approach to measure digital trade flows across countries and the relevance of the digital trade policy variables. [ABSTRACT FROM AUTHOR]

This paper examines the impact of the bilateral investment treaties (BITs) on a large dataset of service trade using recently developed Poisson pseudo‐maximum likelihood (PPML) estimator regression models with multiple high‐dimensional fixed effects to estimate the structural gravity equations. The model in this paper theoretically demonstrates that BITs reduce service trade from foreign direct investment (FDI) source countries by decreasing the additional variable costs of operating a foreign affiliate. This paper also empirically confirms that BITs decrease service exports from developed to developing economies through analysing a comprehensive WTO‐OECD Balanced Trade in Services Data from 1995 to 2006. [ABSTRACT FROM AUTHOR]

This study aims to analyse the spatial and temporal characteristics of the transfer of pollutants, including carbon monoxide (CO), ammonia (NH3), non‐methane volatile organic compounds (NMVOCs), sulphur dioxide (SO2), nitrogen oxide (NOX), and particulate matter with particle size below 10 microns (PM10), which are embodied in the bilateral trade between China and India, and the transfer paths between various industries. A multiregional input–output model (MRIO) is constructed based on the EORA Database to track the economic connections and the effects of specific products across regional supply chains. The empirical results indicate the following significant findings. China is a net exporter of embodied pollutants in bilateral trade, and India is a net importer. CO accounted for the most significant amount of pollutants emitted by the bilateral trade between China and India. The energy intensity has mainly adverse effects on emissions of six pollutants, while the consumption scale has overall positive effects. Metal products and mining and quarrying are the top two industries producing the highest emissions at the export ends. The emissions of certain pollutants, such as SO2, are also particularly pronounced in individual sectors. Construction and electrical and machinery are the highest CO‐importing sectors of China and India. [ABSTRACT FROM AUTHOR]

We study the effect of trade liberalisation and intellectual property rights (IPR) protection on the unemployment rate of migrants relative to nonmigrants. We build a North–South trade and growth model with a positive steady state rate of migration. We find that bilateral trade liberalisation 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 provide suggestive empirical evidence in line with the theoretical predictions on trade liberalisation and IPR protection using data for 20 OECD countries over the period 2000–2014. [ABSTRACT FROM AUTHOR]

In December 1956, Japan gained membership of the United Nations, marking a significant milestone in Japan's return to international society. In approximately five years since the San Francisco Peace Treaty took effect in April 1952, this had been a difficult diplomatic issue for the Australian government. This article examines how the Australian government dealt with this issue by focusing upon the intersection of Australia's policy towards Japan and Japan's status as a member of the emergent Afro‐Asian bloc. This article argues that Japan's engagement with the rest of the bloc was a rising factor in Canberra's consideration of Japan's place in the world, thereby helping revisit the orthodox historiography of Australia–Japan relations during the early Cold War era which often overemphasises rapid growth of bilateral trade. [ABSTRACT FROM AUTHOR]

This paper investigates the direct and combined impacts of trade facilitation and information and communication technology (ICT) on bilateral flows of 25 sub‐Saharan countries. For that purpose, we select time to export and import as specific trade facilitation indicators and broadband use to study ICT impacts. Our sample covers a total of 93 countries over the period 2004–2018. By preprocessing data analysis, we impute time costs missing values, an essential shortcoming of the available databases, to study trade facilitation over time. Lastly, we employ a gravity model and implement a Bonus Vetus Estimation. Our results show that broadband use exerts a positive and significant effect on trade, especially relevant for intra‐African trade flows. Furthermore, the combined effects indicate that broadband also modulates the negative impacts of time to export and time to import in the case of intra‐SSA countries' trade. The more significant result is found for time to export. Our results also confirm that time costs are not only particularly harmful to intra‐African trade but also negatively impact trade flows from SSA countries to the rest of the world. These outcomes show the importance of coordinating trade facilitation and digital transformation policies, particularly those devoted to digitally transforming African customs. [ABSTRACT FROM AUTHOR]

This article presents an analysis of the Farm to Fork Strategy (F2F Strategy) on animal welfare matters though the lens of EU trade policy and public participation. It shows that the mix of cooperation tools contained in bilateral agreements with trade components support in aggregate the Strategy's actions on animal welfare. However, individual bilateral agreements may need to be renegotiated and modernised to include more powerful cooperation tools to achieve sustainable food systems through the adoption and implementation of animal welfare standards. One way of achieving this is to negotiate the inclusion of sustainable food systems chapters that highlight the linkages between animal welfare, agriculture, sustainability, climate, environment, and public health. However, such robust chapters should be monitored and enforced in a correspondingly robust manner, for example, by restructuring chapters' committees and work groups. The article concludes that enhanced public participation, both at the level of legislative proposals (public consultations) and at the level of trade policy (domestic advisory groups, standardisation committees), may better support achieving policy objectves of animal welfare measures of the F2F Strategy. [ABSTRACT FROM AUTHOR]

Using Chinese Customs data for the 2007–2018 period, we investigate how Chinese exporters respond to the Belt and Road Initiative (BRI). Based on a difference‐in‐differences identification strategy, we find that the BRI causes a substantial increase in China's total exports to BRI countries at the HS‐8 digit product level, and this export‐promoting effect is due to a significant increase in export quantity. We also find that exports increase more to countries along the Maritime Silk Road than those along the Land Silk Road. Moreover, the BRI contributes to optimising the export structure by increasing the proportion of general exports, promoting intermediate exports, improving upstreamness of exports and cutting excess capacity through international market demand. Combined with the existing studies focusing on the impacts on bilateral or global trade, our study helps develop a complete picture of the BRI effects from the perspective of the sponsor country. [ABSTRACT FROM AUTHOR]

This article employs gravity modeling to examine the effect of COVID‐19 on global and intra‐Commonwealth trade. It uses bilateral monthly exports, number of COVID‐19 cases and deaths and the stringency of measures. The main novelty is the use of price indices as proxies for multilateral resistance terms, which allow us to identify, supply, and demand effects of COVID‐19 on bilateral trade. The incidence of COVID‐19 impacts Commonwealth trade flows, the effect varies with the development level. High numbers of COVID‐19 cases, including deaths, in low‐income importers reduced Commonwealth exports unlike high‐income importers that show higher exports. The incidence of COVID in an exporters' neighbouring countries impacted trade and restrictions in high‐income countries increased Commonwealth trade. Short‐term trends project a negative change in both exports and imports of Commonwealth countries. [ABSTRACT FROM AUTHOR]

Using bilateral capital‐flow data from 10 advanced reporting economies, with over 186 bilateral country pairs, from 2000 to 2016, this paper provides evidence of the significance of gravity factors, such as information asymmetries and economic ties, in explaining cross‐border bilateral financial‐asset flows. In addition, this study offers new evidence of regional contagion, with bilateral capital flows decreasing more for pairs of countries with closer geographic proximity (or with less information friction) than for those that are farther apart when global risk aversion rises. These findings have policy implications for the importance of information frictions, bilateral trade ties and regional cooperation in determining the level of bilateral financial‐asset flows. [ABSTRACT FROM AUTHOR]

The prevailing notion for this research is anchored on determining the magnitude of alliances as trade determinants. Alliances are segregated into defence pact, non‐aggressive alliance and entente, which additionally integrates as trade cost in a gravity model. The Poisson pseudo maximum likelihood technique is adopted for the analysis with country pair‐effects exploited. Even though literature acknowledged three different kinds of alliance formation, the homogenous effects as trade cost have not been previously examined. Authors found that alliances' response to bilateral trade is homogenous irrespective of conceptualization and operationalism. All categories of alliance positively influence bilateral trade but could be more effective as trade determinant when rooted in a regional trade agreement. The result is more convincing in the NATO sample than the ECOWAS sample, which could not be unconnected with the level of economic and technological development in both cases. Militarized inter‐state conflict should be discouraged irrespective of the cause due to its negative effect on bilateral trade, especially in the region of its occurrence. [ABSTRACT FROM AUTHOR]

We incorporate forward-looking capital accumulation into a dynamic discrete choice model of migration. We characterize the steady-state equilibrium; generalize existing dynamic exact-hat algebra techniques to incorporate investment; and linearize the model to provide an analytical characterization of the economy's transition path using spectral analysis. We show that capital and labor dynamics interact to shape the economy's speed of adjustment toward steady state. We implement our quantitative analysis using data on capital stocks, populations, and bilateral trade and migration flows for U.S. states from 1965-2015. We show that this interaction between capital and labor dynamics plays a central role in explaining the observed decline in the rate of income convergence across U.S. states and the persistent and heterogeneous impact of local shocks. [ABSTRACT FROM AUTHOR]

The contribution of the current article is to detect the asymmetric impact that exchange rate fluctuations have on Korea's trade with Vietnam. To this end, the nonlinear autoregressive distributed lag (NARDL) process is applied to export and import data disaggregated by 25 commodities. We uncover that the ups and downs of exchange rates have an asymmetric impact on some, though not all, types of Korea's commodities exported to and imported from Vietnam in both the long‐ and short‐run. [ABSTRACT FROM AUTHOR]

It is commonly assumed that smaller powers are prone to getting trapped and lost in the game of contrasting powers; however, the story of six major powers and their relations with Myanmar over the past 70 years has shown that the smaller party does not always take a passive, victimised position in these relations but can achieve an active, relatively independent position. Myanmar accomplished this position by shielding itself from sanctions from the United States, UK, and Japan using China's assistance; implementing selective trade and investment; and diversifying its weapon suppliers, including Russia and other players in the arms market. In this paper, the data on 70 years of arms transfer are analysed to exemplify the defence policy of Myanmar towards major powers, the bilateral trade and foreign direct investment (FDI) data are used for economic policy, and the three indicators provide a simplified but concise picture of Myanmar's long‐term relations with world major powers. Myanmar is a relatively small power in the global landscape of larger powers, but it has maintained its independence in policy making and has made full use of the competition for power among major powers for its own benefit. Thus, it is not the big fish but the small one that has helped shape Myanmar's relations with major powers. [ABSTRACT FROM AUTHOR]

This paper builds an observable delay game in endogenous timing to study the possible occurrence of trade wars in a vertical, bilateral trade model. It examines the effects of production cost differences and order of moves on optimal tariffs, market equilibria, dumping margin and social welfare in both fixed timing and endogenous timing games. In a fixed timing game, it shows that price dumping in the intermediate good market arises from differences in country‐specific final good production costs. Different from Bernhofen (1995; Journal of International Economics), trade costs resulting from reciprocal tariffs in upstream markets can reverse the price dumping under certain conditions. In an endogenous timing game, this paper finds that the magnitude of cost differences significantly influences countries' decisions on the order of moves in a strategic tariff‐making game. Both countries want to be the first movers under a small cost difference and consequently reach a simultaneous equilibrium result. This demonstrates that the second‐best equilibrium proceeds under certain conditions. Under a large cost difference, sequential policy‐making is the subgame perfect Nash equilibrium. If the cost difference is sufficiently large, both countries have an incentive to launch a trade war as a multiple equilibrium game. [ABSTRACT FROM AUTHOR]

The paper assesses the ex‐post trade effect of sub‐regional trade agreements (RTAs), financial integration and other non‐tariff barriers on intra‐regional trade involving 43 Sub‐Saharan Africa (SSA) countries. The objective is to find out if RTAs within SSA had increased trade flows to inform current efforts of establishing a successful continental free trade area in SSA. Estimating a gravity model augmented with measures of trade agreements and financial integration, the paper made use of bilateral trade flows and key gravity covariates from CEPII database over the period 1960–2015. After controlling for the endogeneity of the trade agreement dummy, multilateral price resistance and zero‐valued trade flows, we find RTAs within SSA and especially among Economic Community of West African States and Southern Africa Development Community members to have had a positive and significant impact on bilateral trade. Financially integrated trading partners also traded more, while we also found distance, landlockedness, common currency and colonial link to have an impact on trade costs and bilateral trade flows within SSA. The results indicate the need to focus on policies to expand and integrate regional markets in SSA by removing impediments to trade and improving on trade facilitation measures to significantly improve trade performance under the newly established African Continental Free Trade Area. [ABSTRACT FROM AUTHOR]

With the goal of maximizing expected gains from trade, this paper analyzes the jointly optimal information structure and mechanism in a bilateral trade setting. The difference in gains from trade between the optimal information structure and first best constitutes the minimal loss due to asymmetric information. With binary underlying types it is shown that more than 95% of first best can be achieved while the optimal mechanism without information design may achieve less than 90% of first best. For more general type distributions, the optimal information structure is a monotone partition of the type space and the optimal mechanism is deterministic. Necessary conditions for the optimal information structure are derived and a closed form solution is given for the binary type case. [ABSTRACT FROM AUTHOR]

Renewable energy and energy storage are essential technologies for decarbonizing energy systems. Expansion planning of the two technologies considering source‐side carbon responsibility has been well studied. However, expansion planning considering both source‐side and load‐side carbon responsibility, which may simultaneously stimulate the carbon reduction potential of source and load, has been rarely studied. To fill this research gap, this paper proposes a bi‐layer wind turbine generator (WTG) and demand‐side battery (DSB) coordinated planning framework considering wind power and load uncertainties. Moreover, a novel source‐load bilateral carbon trading (BCT) mechanism based on the Aumann–Shapley method is proposed to stimulate the WTG and DSB configuration. In the bi‐layer planning framework with BCT mechanism, WTG and DSB capacity planning with the two‐stage stochastic optimization are conducted in the upper and lower layer, respectively. Finally, test results on a modified IEEE 24‐bus system demonstrate that the proposed framework with BCT mechanism can effectively motivate the planning configuration of WTG and DSB and carbon mitigation. Compared with the models with unilateral carbon trading mechanisms, the proposed model has advantages in stimulating configuration of WTG and DSB, reducing carbon emissions, and balancing source‐load economic burden from carbon trading. [ABSTRACT FROM AUTHOR]

We estimate the bilateral trade balance model of the United States with each of its 12 largest trading partners from South America in order to test both the symmetric and asymmetric J‐curve effect. When a linear ARDL model was estimated, we found support for the symmetric J‐curve in the U.S. trade balance with Argentina, Colombia, Guyana, Peru, Uruguay and Venezuela. However, when a nonlinear ARDL model was estimated, asymmetric J‐curve hypothesis was supported in the U.S. trade balance with Argentina, Bolivia, Brazil, Chile, Colombia, Guyana, Peru, Suriname and Uruguay. Thus, these countries can reduce their trade deficit with the United States by devaluation or depreciation. [ABSTRACT FROM AUTHOR]

In the informed principal model with common values, I provide conditions that allow for the characterization of the set of equilibria of the game in which the principal makes a take‐it‐or‐leave‐it offer of a mechanism to the agent. I further examine if and when restriction to direct revelation mechanisms is without loss of generality. Last, I provide clear guidelines for solving economic applications, such as insurance, procurement, security design, and bilateral trading, of the informed principal model. The results are compared with and shown to significantly differ from those obtained in Maskin and Tirole (1992). [ABSTRACT FROM AUTHOR]

This study investigates whether trade costs have a systematic influence on the composition of developing countries' exports, one which is distinct from their effect on the volume of trade. It uses the World Bank's bilateral trade cost dataset and incorporates trade flows for a large set of developing countries. The identification strategy exploits the variation in trade costs across countries and the differences in trade cost sensitivity across industries and employs a cost shifter as an instrument to overcome the potential endogeneity of trade costs. The paper finds that the export composition of developing economies is fashioned by trade costs, with higher trade costs lowering (other things constant) the share of an industry's exports in the country's total exports more for more trade‐cost‐sensitive industries. The policy implication is clear: reducing trade costs encourages a shift in the composition of developing country exports in favor of relatively more trade‐cost‐intensive exports, which tend also to be more technologically advanced. [ABSTRACT FROM AUTHOR]

World trade contracted dramatically during the global economic crisis induced by the COVID‐19 pandemic. Disruptions in international supply chains were widely reported as governments imposed containment measures (lockdowns) to halt the spread of the disease. At the same time, demand declined as households and firms scaled back spending. This paper attempts to disentangle the supply and demand channels in trade by quantifying the causal effect of supply spillovers from lockdowns. We utilise a novel dataset of daily bilateral seaborne trade and design a shift‐share identification strategy that leverages geography‐induced cargo delivery lags to track the transmission of supply disruptions across space. We find strong but short‐lived supply spillovers of lockdowns through international trade. Moreover, the evidence is suggestive of the downstream propagation of countries' lockdowns through global supply chains. The short‐lived nature of the disruptions despite the unprecedented scale of the shock caution against any blunt use of trade and tax policies to create costly redundancies in global supply chains. [ABSTRACT FROM AUTHOR]

The agri‐food trade has expanded considerably over decades, with a remarkable increase in the market share of developing countries. The upward trend in trade flows has been parallel to the proliferation of non‐tariff measures, particularly of sanitary and phytosanitary (SPS) measures in the agri‐food sector. SPS measures may have a dual impact on trade, that is. standards as catalysts versus standards as barriers, and the net effect is likely to depend on the level of economic development of countries involved. We investigate whether the trade effects of SPS measures are correlated with the economic development of trading partners. In particular, we disentangle the trade effects of SPS measures implemented by developed and developing countries and look at differential impacts due to a mismatch in the economic development of trading partners. Using a structural gravity approach on bilateral trade and regulation data, we conclude that SPS measures are catalysts for developing importers, whereas no evidence is found for developed importers. We also find a pro‐trade effect of SPS measures when traders have different levels of economic development. Our findings have important policy implications: sharing SPS measures is strategic for economies characterised by different abilities to alter trade terms. [ABSTRACT FROM AUTHOR]