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Begin New Search Topic International Trade and Finance Political Geography Global Focus Content Type Working Paper Publication Year within 10 Years

21. Interactions Between Global Value Chains and Foreign Direct Investment: A Network Approach

Author:
Amat Adarov
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
The world economy is increasingly shaped by cross-border production and investment activity. The paper uses complex network analysis along with panel data econometric techniques to study the structure and interactions between the networks of global value chains (GVC) and foreign direct investment (FDI). The analysis reveals that both FDI and GVC networks have a distinct core-periphery structure dominated by a relatively small number of countries with the USA constituting the global hub interlinked with regional European and Asian clusters, which, in turn, are centered around regional hub countries like China and Germany. Simultaneous equation model regressions using three-stage least squares suggest that FDI centrality facilitates GVC centrality of countries. However, FDI centrality is driven to a large extent by the FDI statutory restrictions and tax offshore regulations, rather than GVC connectivity.
Topic:
International Trade and Finance, Foreign Direct Investment, Borders, Networks, Macroeconomics, and Global Value Chains
Political Geography:
Global Focus

22. Labour Taxes and International Trade: The Role of Domestic Labour Value Added

Author:
Amat Adarov, Mario Holzner, Branimir Jovanovic, and Goran Vukšić
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper revisits the relationship between labour taxation and international trade, focusing on the role of domestic labour value added. Using sectoral data from 41 EU and OECD economies over the period 2005-2014, we assess how labour taxes affect exports and imports and how domestic labour value added shapes this relationship. We find that higher labour taxes reduce exports but that the effect depends to a large extent on the share of domestic labour value added, which differs by industries, countries and time periods. Imports do not seem to be affected. This implies that changes in labour taxes will not affect all sectors and countries in the same way and that policy makers should be aware of this when deciding on labour taxes. We also calculate the contribution of labour tax changes to the export dynamics in the analysed period and sample of countries, finding that in general the contribution is small.
Topic:
International Trade and Finance, Labor Issues, Tax Systems, Exports, and Imports
Political Geography:
Global Focus

23. Impact of Technical Barriers to Trade on the Trade in Goods in the Information and Communications Technology Sector: Differentiating by Aim of the Regulatory Measure

Author:
Mahdi Ghodsi
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
In this modern digital world, goods from the information and communications technology (ICT) sector are the engine of the global economy. While tariffs levied on ICT goods have been eliminated or significantly reduced since the conclusion in December 1996 of the Information Technology Agreement of the World Trade Organization (WTO), non-tariff measure (NTMs) have come to be used more frequently with regard to imports of these goods. Technical barriers to trade (TBTs), as the most important trade policy measure imposed on imports of ICT goods, form the focus of this study. This paper analyses how different types of TBTs imposed on imports of ICT goods globally affected the values and volumes of imported goods at the six-digit level of the Harmonised System (HS) during the period 1996-2018. Keywords cited in the TBTs notified to the WTO give an indication of the aims behind the imposition of TBTs. Therefore, this study digs deeper into the impact of 30 types of TBT, using the keywords cited. The methodology used in this paper controls for zero trade flows using the Pseudo Poisson Maximum Likelihood (PPML) technique; and it controls for endogeneity bias using the exogenous instrumental variable approach. Furthermore, the paper provides more detailed analysis of the impact of TBTs across five ICT product categories that are defined by the United Nations Conference on Trade and Development (UNCTAD). The results indicate that TBTs have a generally strong positive impact on the value of imports of ICT goods. While many keywords cited in TBTs notified to the WTO affect the values and volumes of imports in a positive way, certain other TBTs function as trade barriers that reduce their values and volumes.
Topic:
International Trade and Finance, Communications, World Trade Organization, Tariffs, and Information Technology
Political Geography:
Global Focus

24. Source – Assembly – Sink: Value Added Flows in the Global Economy

Author:
Robert Stehrer
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
In this paper we provide a method to characterise global value chains and a related decomposition of bilateral gross exports by distinguishing three different stages of the value-added flows: (i) the source of value added, (ii) the final assembly stage of a product, and (iii) the final absorption (sink) of this product. Methodologically this is embedded in a simple framework using matrix algebra allowing for intuitive interpretations of the individual decomposition terms and results. The approach leads to a novel decomposition of bilateral gross export flows and related value-added trade indicators. It is shown how these correspond to existing measures using the property of inverse matrices. Specifically, the paper sheds light on the nature of the double-counting terms discussed in the literature. Finally, the approach outlined is extended by incorporating insights from the hypothetical extraction method. We argue that this is a complementary approach which however can be used to flexibly define the value chains of interest and characterise the respective flows that are considered part of this defined value chain, again carefully differentiating the source, assembly, and sink dimensions.
Topic:
International Trade and Finance, Economy, Exports, Global Value Chains, and Decomposition
Political Geography:
Global Focus

25. Heterogeneous Effects of Non-tariff Measures on Cross-border Investments: Bilateral Firm-level Analysis

Author:
Amat Adarov and Mahdi Ghodsi
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
We analyse the heterogeneous effects of technical regulations and safety standards embodied in non-tariff measures on foreign direct investment using global firm-level panel data of bilateral cross-border ownership relationships over the period 2008-2018. To this end, we develop a novel measure of time-varying bilateral ad valorem equivalents of sectoral non-tariff measures, which reveals that technical barriers to trade (TBTs) played a much greater role as a trade-inhibiting factor in comparison with import tariffs and sanitary and phytosanitary (SPS) measures over the period 1996-2018, with their relative importance increasing in the post-Great Recession period. Estimations using the Poisson pseudo-maximum likelihood framework reveal the importance of non-tariff measures as a driver of foreign direct investment, with heterogeneous effects observed for the measures imposed by the host and the home country, as well as across sectors and types of non-tariff measures. Among other results, we find that an increase in the stringency of technical barriers to trade imposed by the host country is associated with higher investment in the foreign subsidiaries operating in this country, pointing to the regulatory barrier-jumping motive of foreign direct investment. The effect is much stronger for the multinational corporations operating in the information and communications technology sector.
Topic:
International Trade and Finance, Foreign Direct Investment, Economy, and Business
Political Geography:
Global Focus

26. How do Corporate Taxes affect International Trade?

Author:
Mario Holzner, Branimir Jovanovic, and Goran Vukšić
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper investigates how corporate income taxes affect international trade, and identifies the underlying channel. Using data on 33 NACE sectors, for 34 EU and OECD economies, over the period 2005-2014, we find that corporate income taxes reduce exports and imports only when the stock of foreign direct investment (FDI) is high. The effect is present primarily in the service sector and in countries with low corporate taxes. We interpret these findings as evidence that multinational enterprises reduce their operations in countries that raise their corporate taxes. The effect has been found to be small on aggregate, implying that the expected increase in corporate taxes in the future, arising from the global minimum tax, is unlikely to hurt international trade.
Topic:
International Trade and Finance, Foreign Direct Investment, Tax Systems, Exports, Profit, Imports, and Corporations
Political Geography:
Global Focus

27. The Nature of Money and the Theory of International Trade: Thornton and Ricardo

Author:
Isabella Weber
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
A rich recent literature reinvestigates the nature of money, but little attention has been paid to the ramifications of the ways in which we theorize money for the theory of international trade. This paper examines the logical relationship between the neutrality of money and self-balancing trade based on Henry Thornton and David Ricardo as two foundational contributions to credit and commodity money theories respectively. I show that both authors theorize trade as self-balancing whenever money is conceptualized as neutral. I distinguish two notions of the neutrality of money: ex ante and ex post neutrality. In Thornton’s Paper Credit money is not neutral ex ante: there can be temporary trade imbalances. But in the long-run money is neutral ex post and international trade boils down to self-balancing barter. In Ricardo money is neutral both ex ante and ex post and international trade is always balanced unless central bank policy undermines monetary neutrality.
Topic:
International Trade and Finance, Economy, Money, and Trade
Political Geography:
Global Focus

28. Exploring ‘Non-Tariff Measures Black Box’: Whose Regulative NTMs on Which Products Improve the Imported Quality?

Author:
Mahdi Ghodsi
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Regulative non-tariff measures (NTMs), such as technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) measures, have frequently been imposed to regulate the quality of imported goods when the market fails to address some issues of concern regarding harmful products with low standards. The impact of NTMs on trade values and trade volumes has been extensively modelled and analysed in the literature, while their quality impact has usually been studied using the unit values of imports. In this paper a monopolistic competition framework is presented, in which firms choose both the quality and the price of their exports subject to the compliance costs of NTMs behind the border and a fixed cost of technological change. Using the solutions of this model including NTMs, the quality of products at the six-digit level of the harmonised system (HS) traded globally and bilaterally during the period 1996–2017 is estimated. Using these estimates, the impacts of TBTs and SPS measures on trade values, volume, unit value and quality are estimated. On average and across all global bilateral trade, TBTs restrict imports while improving quality significantly. SPS measures stimulate trade and improve the average imported quality. Then, by estimating the importer-specific impact of NTMs on traded value, quantity, unit value, quality, and quality-adjusted price for each product, the ‘NTM Black Box’ is opened and analysed. This provides evidence of whether the quality of traded goods to an importing country has been upgraded despite the trade restrictiveness of NTMs.
Topic:
Economics, International Political Economy, International Trade and Finance, and Non-Tariff Measures
Political Geography:
Global Focus

29. Assessing national laws for the implementation of CITES

Author:
Pascal Blickle, Angela Min Yi Hou, and Laura Störi
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:
This TradeLab project analyses the domestic legislation of 14 developing countries in implementing the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). The present memo summarises the main findings across the 14 Parties. This memo finds that most assessed Parties have implemented the CITES' core requirements, and recommendations provided in the resolutions of the Conference of the Parties (CoP). The project identifies a minority of three African countries for which the CITES Secretariat may wish to review their Category 1 status. These Parties fall short of all or several of the following elements: they failed to appropriately designate Management and Scientific Authorities by law, circumscribe the Authorities' tasks and responsibilities, or – by exclusively regulating native species – appear not to comprehensively cover species listed in the Convention's three Appendices.
Topic:
Environment, International Trade and Finance, Science and Technology, Trade, Ecology, and Biology
Political Geography:
Africa and Global Focus

30. Social clauses in trade agreements: implications and action points for the private sector in developing countries

Author:
Anna Liz Thomas, Jarrod Suda, and Gaia Grasselli
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:
Since the 1990s, more free trade agreements have come to include social clauses, which make reference to domestic and international labour standards. As this international legal web continues to grow, so too will the questions and concerns from employers and businesses. This Tradelab report, for the International Organisation of Employers, provides practical guidance for those employers and businesses. It does so by taking the diverse array of actors, the tensions within, and the opportunities set forth by free trade agreements and elaborating upon them using three case studies.
Topic:
International Political Economy, International Trade and Finance, Treaties and Agreements, Labor Issues, Free Trade, Trade, International Business, and Labor Market
Political Geography:
Global Focus