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22. Gains Associated with Linking the EU and Chinese ETS under Different Assumptions on Restrictions, Allowance Endowments, and international Trade
- Author:
- Malte Winkler, Sonja Peterson, and Sneha Thube
- Publication Date:
- 05-2021
- Content Type:
- Working Paper
- Institution:
- Kiel Institute for the World Economy (IfW)
- Abstract:
- Linking the EU and Chinese Emission Trading Systems (ETS) increases the cost-efficiency of reaching greenhouse gas mitigation targets, but both partners will benefit – if at all – to different degrees. Using the global computable-general equilibrium (CGE) model DART Kiel, we evaluate the effects of linking ETS in combination with 1) restricted allowances trading, 2) adjusted allowance endowments to compensate China, and 3) altered Armington elasticities when Nationally Determined Contribution (NDC) targets are met. We find that generally, both partners benefit from linking their respective trading systems. Yet, while the EU prefers full linking, China favors restricted allowance trading. Transfer payments through adjusted allowance endowments cannot sufficiently compensate China so as to make full linking as attractive as restricted trading. Gains associated with linking increase with higher Armington elasticities for China, but decrease for the EU. Overall, the EU and China favor differing options of linking ETS. Moreover, heterogeneous impacts across EU countries could cause dissent among EU regions, potentially increasing the difficulty of finding a linking solution favorable for all trading partners.
- Topic:
- Climate Change, Environment, International Trade and Finance, Regional Cooperation, and European Union
- Political Geography:
- China, Europe, and Asia
23. China and Geoeconomic Dynamics in Central Asia: Balancing Global Strategies, Local Interests and Multiple Partners
- Author:
- Aliya Tskhay
- Publication Date:
- 10-2021
- Content Type:
- Working Paper
- Institution:
- Finnish Institute of International Affairs
- Abstract:
- Central Asia is at the core of China’s ambitious Belt and Road Initiative (BRI), which promises to bring connectivity, trade, and improved infrastructure, as well as overall economic development to the states of the region. Yet beyond the official rhetoric, China is promoting its power through geoeconomic means. This paper looks at areas of cooperation (energy, infrastructure, trade, and finance) and identifies the ways in which China is involved with the region. Through a combination of loans, investments, and infrastructure projects, the research shows how China ‘binds’ the region closer to itself and ‘wedges’ out alternative partners. It also shows how Central Asian states utilise the funding within the BRI framework for national development programmes, whilst navigating avenues for mitigating the establishment of a dependent relationship with China. The paper concludes with some policy implications for China, Central Asia, and the wider region.
- Topic:
- Development, International Trade and Finance, Infrastructure, Hegemony, Belt and Road Initiative (BRI), and Strategic Interests
- Political Geography:
- China and Asia
24. Estimating the Arms Sales of Chinese Companies
- Author:
- Nan Tian and Fei Su
- Publication Date:
- 01-2020
- Content Type:
- Working Paper
- Institution:
- Stockholm International Peace Research Institute
- Abstract:
- Quantitative research on the finances of the Chinese arms industry has been limited by the scarcity of available data. A scoping study to estimate the financial value of the arms sales of companies in the Chinese arms industry—using a new methodology—found information on four companies: the Aviation Industry Corporation of China (AVIC), the China Electronics Technology Group Corporation (CETC), the China South Industries Group Corporation (CSGC) and the China North Industries Group Corporation (NORINCO). These four companies cover three main sectors of conventional arms production: aircraft, electronics and land systems. The estimates suggest that China is the second-largest arms producer in the world, behind the United States and ahead of Russia. All four of the profiled companies would be ranked among the 20 largest arms-producing and military services companies globally in 2017, with three—AVIC, NORINCO and CETC—in the top 10. The new methodology improves the understanding of the structure, size and evolution of the global arms industry.
- Topic:
- International Trade and Finance, Weapons, Arms Trade, and Military Spending
- Political Geography:
- China and Asia
25. Input Allocation Behaviour on Tariff Changes: The Case of Indonesia’s Manufacturing Industries
- Author:
- Samuel Nursamsu, Dionisius Narjoko, and Titik Anas
- Publication Date:
- 02-2020
- Content Type:
- Working Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- Can firms reallocate their imported inputs to domestic sources when faced with import tariffs? To answer this question, we analyse the input allocation behaviour of Indonesian medium and large-sized manufacturing firms in responding to the movement of import tariffs from 2000 to 2013 by utilising plant-level input data of Indonesian manufacturing. We find that an increase in tariffs only creates a weak substitution effect. Our findings indicate that firms reallocate their inputs towards domestic sources, although this is accompanied by a decrease in the firms’ value added. This implies that domestic inputs are worse substitutes for imported inputs and that firms’ capacity to switch over to domestic products is limited, suggesting that firms will immediately switch back to importing when the tariff is removed. We find no evidence that firms make any adjustment towards more domestic-oriented input composition over time; and heterogeneity exists within the result, as industries with a strong basis in the domestic market are more capable of adjusting.
- Topic:
- Industrial Policy, International Trade and Finance, Tariffs, and Manufacturing
- Political Geography:
- Indonesia and Asia
26. Learning-to-Export Effect as a Response to Export Opportunities: Micro-Evidence from Korean Manufacturing
- Author:
- Chin Hee Hahn and Yong-Seok Choi
- Publication Date:
- 02-2020
- Content Type:
- Working Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- This paper aims to investigate whether empirical evidence supports the learning-to-export hypothesis, which has received little attention in the previous literature. By taking full advantage of plant–product level data from the Republic of Korea during 1990–1998, we find some evidence for the learning-to-export effect, especially for innovated product varieties with delayed exporters: their productivity, together with research and development and investment activity, was superior to their matched sample. On the other hand, this learning-to-export effect was not significantly pronounced for the industries protected by import tariffs. Thus, our empirical findings suggest that it would be desirable to implement some policy tools to promote the learning-to-export effect, while tariff protection cannot be justifiable for that purpose.
- Topic:
- Industrial Policy, International Trade and Finance, Tariffs, Manufacturing, and Productivity
- Political Geography:
- Asia and South Korea
27. Labour Market Impacts of Import Penetration from China and Regional Trade Agreement Partners: The Case of Japan
- Author:
- Kazunobu Hayakawa, Tadashi Ito, and Shujiro Urata
- Publication Date:
- 04-2020
- Content Type:
- Working Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- The impacts of imports on the domestic labour market have been hotly debated recently. The purpose of this paper is to empirically examine the effects of not only imports from China but also those under regional trade agreements (RTAs) on employment in Japan. As in previous studies in the literature, we found that the rise in import penetration from China significantly decreases employment in Japan. However, import penetration under RTA regimes is found to have insignificant effects on employment. The finding suggests that the increase in imports under RTA regimes might not be harmful to the domestic labour market. In addition, we did not find significant effects of import penetration via input–output linkages. This insignificant result may be because imports by Japanese manufacturing firms are mostly conducted in the form of intra-firm trade, enabling them to avoid negative impacts on employment.
- Topic:
- International Trade and Finance, Regional Cooperation, Labor Issues, Employment, and Manufacturing
- Political Geography:
- Japan, China, and Asia
28. Trade Reform and the Evolution of Agglomeration in Vietnamese Manufacturing
- Author:
- Đoàn Thi Thanh Ha and Hông Quỳnh Nguyen
- Publication Date:
- 04-2020
- Content Type:
- Working Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- It is well-documented that agglomeration contributes to productivity growth. However, concentrations of workers could also lead to increasing regional income disparities. Therefore, understanding the evolution of agglomeration is relevant for the formulation of industrial policy and inclusive growth. This study documents the extent, pattern, and determinants of agglomeration in Vietnamese manufacturing during 2002–2016, a period when substantial economic reform took place. Our major findings are three-fold. First, agglomeration, as measured by the Ellison–Glaeser index, has declined since the mid-2000s. Second, there exists significant sectoral heterogeneity in the level and trend of agglomeration. Third, we do not find a significant impact of trade and foreign direct investment on agglomeration per se. However, foreign direct investment in port districts does contribute to disagglomeration.
- Topic:
- International Trade and Finance, Reform, Manufacturing, and Productivity
- Political Geography:
- Asia and Vietnam
29. The Economic Impact of Globalisation in Indonesia
- Author:
- Kiki Verico and Mari Pangestu
- Publication Date:
- 08-2020
- Content Type:
- Working Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- This paper analyses the economic impact of globalisation in Indonesia from the end of the 1960s to date. The analysis found that globalisation generated a positive impact on Indonesia’s economic growth through the trade and investment channel; reduced wage inequality and child labour participation; and increased labour absorption, including women's participation in the labour market. Through the trade channel, globalisation also contributed to Indonesia’s productivity and structural economic transformation, benefited small and medium-sized enterprises (SMEs), contributed to poverty alleviation and reduced inequality, and increased trade in services such as tourism. Through the investment channel, there is evidence of the spillover effect of technology transfer, technology progress, improvement of the role of SMEs, and contribution to poverty alleviation. The waves of open and more restrictive trade and investment policies, which Indonesia has gone through in the last few decades, reflect the political economy reality – that is, the impact of globalisation is dynamic and only felt in the medium term, whereas the cost and potential negative impact is often felt more immediately throughout trade creation. The trade creation increases imports from countries with which free trade agreements have been negotiated, decreasing the domestic producer surplus. Since globalisation will create net benefits in the long run, Indonesia should continue its process of globalisation and integration with the world economy to ensure the net benefits and to move forward in its structural transformation, while managing the costs of globalisation and its transition process.
- Topic:
- Globalization, International Cooperation, International Trade and Finance, and Economic Growth
- Political Geography:
- Indonesia, Asia, and Indo-Pacific
30. Toward a Robust Architecture for the Regulation of Data and Digital Trade
- Author:
- Dan Ciuriak and Maria Piashkina
- Publication Date:
- 04-2020
- Content Type:
- Working Paper
- Institution:
- Centre for International Governance Innovation
- Abstract:
- The rapid digital transformation occurring worldwide poses significant challenges for policy makers working within a governance framework that evolved over centuries. Domestic policy space needs to be redefined for the digital age, and the interface with international trade governance recalibrated. In this paper, Dan Ciuriak and Maria Ptashkina organize the issues facing policy makers under the broad pillars of “economic value capture,” “sovereignty” in public choice and “national security,” and outline a conceptual framework with which policy makers can start to think about a coherent integration of the many reform efforts now under way, considering how policies adopted in these areas can be reconciled with commitments under a multilateral framework adapted for the digital age.
- Topic:
- International Trade and Finance, Reform, Digital Economy, Multilateralism, and Digitization
- Political Geography:
- United States, China, Europe, Asia, and North America