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1471. How COVID-19 medical supply shortages led to extraordinary trade and industrial policy

Author:
Chad P. Bown
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Early in the COVID-19 pandemic, a global shortage of hospital gowns, gloves, surgical masks, and respirators caused policymakers around the world to panic. This paper examines international trade in this personal protective equipment (PPE) during the crisis, with a focus on China, the European Union, and the United States. As the pandemic first hit, China increased imports and decreased exports of PPE, removing considerable quantities of supplies from global markets. For the European Union and United States, the decrease in their imports from China was not immediately replaced by increased trade from other foreign suppliers. Early shortages led to EU and US export controls on their own, domestically produced PPE and other extraordinary policy actions, including a US effort to reserve for itself supplies manufactured in China by a US-headquartered multinational. By April 2020 China’s exports had mostly resumed, and over the rest of the year its export volumes of some products surged, more than doubling compared to pre-pandemic levels. But China’s export prices also skyrocketed and remained elevated through 2020, reflecting severe and continued shortages. This paper documents these facts. It also explores these and other government actions, such as US trade war tariffs and the emergence of US industrial policy in the form of over $1 billion of subsidies to build out its domestic PPE supply chain, as well as potential lessons for future pandemic preparedness and international policy cooperation.
Topic:
Industrial Policy, Economy, Trade, COVID-19, Health Crisis, and Supply
Political Geography:
Global Focus

1472. How COVID-19 vaccine supply chains emerged in the midst of a pandemic

Author:
Chad P. Bown
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Many months after COVID-19 vaccines were first authorized for public use, still limited supplies could only partially reduce the devastating loss of life and economic costs caused by the pandemic. Could additional vaccine doses have been manufactured more quickly some other way? Would alternative policy choices have made a difference? This paper provides a simple analytical framework through which to view the contours of the vaccine value chain. It then creates a new database that maps the COVID-19 vaccines of Pfizer/BioNTech, Moderna, AstraZeneca/Oxford, Johnson & Johnson, Novavax, and CureVac to the product- and location-specific manufacturing supply chains that emerged in 2020 and 2021. It describes the choppy process through which dozens of other companies at nearly 100 geographically distributed facilities came together to scale up global manufacturing. The paper catalogues major pandemic policy initiatives—such as the United States' Operation Warp Speed—that are likely to have affected the timing and formation of those vaccine supply chains. Given the data, a final section identifies further questions for researchers and policymakers.
Topic:
Vaccine, COVID-19, Health Crisis, and Supply Chains
Political Geography:
Global Focus and United States of America

1473. How economic ideas led to Taiwan’s shift to export promotion in the 1950s

Author:
Douglas A. Irwin
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Taiwan was the first developing country to adopt an export-oriented trade strategy after World War II. The factors usually associated with big shifts in policy—a macroeconomic crisis, a change in political power or institutions, lobbying by export interests, pressure from international financial institutions—were not present; it was ideas that were key. In 1954, economist S. C. Tsiang proposed that Taiwan boost export earnings rather than squeeze import spending to deal with its chronic shortage of foreign exchange. He recommended a currency devaluation to establish a realistic exchange rate and a market-based system of foreign exchange allocation to end the inefficient rationing by the government. Four years later, a policymaker, K. Y. Yin, fought for the adoption of Tsiang’s proposal, helping clear the way for Taiwan’s phenomenal growth in trade.
Topic:
Economics, History, Exports, and Trade
Political Geography:
Taiwan and Asia

1474. From hermit kingdom to miracle on the Han

Author:
Douglas A. Irwin
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
In 1960, South Korea’s exports were about 1 percent of GDP, and the country’s ability to import depended almost entirely on US aid. After changing its foreign exchange and trade policies in the mid-1960s, Korea saw a surge in exports to more than 10 percent of GDP by the end of the decade. What factors account for the shift in policy that enabled this dramatic export growth to occur? The United States helped initiate the process by withholding financial assistance, pressuring Korea to devalue its currency and reform its foreign exchange regime. Initially, the Korean government resisted taking these steps, but in 1964 it became firmly committed to an export promotion strategy to boost foreign exchange earnings and end its dependence on American aid.
Topic:
Economics, Foreign Exchange, Reform, Exports, and Trade
Political Geography:
Asia and South Korea

1475. Low inflation bends the Phillips curve around the world: Extended results

Author:
Jami Forbes, Joseph E. Gagnon, and Christopher G. Collins
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper revises and extends PIIE Working Paper 20-6. It continues to find strong support for a Phillips curve that becomes nonlinear when inflation is "low"—which our baseline model defines as less than 3 percent. The nonlinear curve is steep when output is above potential (slack is negative) but flat when output is below potential (slack is positive) so that further increases in economic slack have little effect on inflation. This finding is consistent with evidence of downward nominal wage and price rigidity. When inflation is high, the Phillips curve is linear and relatively steep. These results are robust to placing the threshold between the high and low inflation regimes at 2, 3, or 4 percent inflation or for a threshold based on country-specific medians of inflation. In this nonlinear model, international factors play a large role in explaining headline inflation (albeit less so for core inflation), a role that has been increasing since the global financial crisis.
Topic:
Economics, Financial Crisis, Inflation, and Philips Curve
Political Geography:
Global Focus

1476. Dollar not so dominant: Dollar invoicing has only a small effect on trade prices

Author:
Joseph E. Gagnon and Madi Sarsenbayev
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper estimates and tests four models of the effects of exchange rate changes on export prices. It supports the Goldberg and Knetter (1997) canonical result that exporters adjust their prices by about half of any movement in exchange rates. A new twist is that exchange rate movements against importing countries account for only three-fifths of this price adjustment, while exchange rate movements against a dominant currency account for the other two-fifths. The dominant currency is the euro in Europe and Africa and the US dollar in Asia and the Western Hemisphere. The recent claim that the dollar is the most important driver of export prices (Gopinath et al. 2020) is shown to be valid only for the smallest exporting economies. For the bulk of international trade, the extra effects of the dollar (or the euro) beyond their effects as exporter or importer currencies are relatively modest.
Topic:
Foreign Exchange, Exports, Currency, Trade, and Dollar
Political Geography:
Global Focus

1477. Preventing Violent Islamic Radicalization: Experimental Evidence on Anti-Social Behavior

Author:
Pedro C. Vicente and Inês Vilela
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Kellogg Institute for International Studies
Abstract:
Violence perpetrated by radicalized Muslims is a major problem around the world. We collaborated with the main Islamic authority in Mozambique, which sponsored two randomized interventions to prevent violence related to youth radicalization: a religious campaign against extremist views of Islam, targeting change in beliefs; and a training module on entrepreneurship and employment, aiming to increase the opportunity cost of conflict. Our measurement focuses on anti-social behavior in a Joy-of-destruction lab game. We find that only the religious treatment decreased the propensity to destroy the payoffs of others. Consistently, surveys show increased trust in the state and decreased support for extremism.
Topic:
Development, Political Economy, Religion, Economic Growth, Youth, Conflict, Violence, and Peacebuilding
Political Geography:
Africa and Mozambique

1478. Toxic Conflict: Understanding Venezuela's Economic Collapse

Author:
Juan Carlos Fernández-Rodríguez
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
Kellogg Institute for International Studies
Abstract:
This paper discusses the causes of Venezuela’s recent economic collapse, the largest in modern Latin American economic history and one of the largest in modern world history outside of wartime. I argue that Venezuela’s economic implosion is a combination of two crises. The first one reflects the standard unraveling of a populist macroeconomic cycle fed by overspending during a resource boom, while the second one reflects the severing of the country’s trade and financial links with the global economy. This severing is the consequence of the decision by political actors to adopt “scorched earth” strategies with large negative aggregate economic spillovers in their fight for power. I argue that the inability of Venezuela’s high-stakes, winner-take-all political system to deal with the large negative 2014–16 trade shock precipitated the change in political strategies and the descent into economically destructive political conflict.
Topic:
Development, Political Economy, Democracy, Economic Growth, Conflict, Institutions, and Peacebuilding
Political Geography:
South America and Latin America

1479. Paraguay's Compliance With The Inter-American Human Rights System

Author:
Aníbal Pérez-Liñán, Madeline Soiney, and Andrés Hernández
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Kellogg Institute for International Studies
Abstract:
Why do new democracies comply with international human rights obligations? We analyze Paraguay’s compliance with all reparation measures requested by the Inter-American Human Rights System over the past two decades. In contrast to most studies, which focus on reparation measures ordered by a single organ in the system, our study covers all orders resulting from friendly settlements, reports published by the Inter-American Commission on Human Rights, and rulings by the Inter-American Court of Human Rights. We provide a novel classification of human rights cases, and evaluate three competing explanations for compliance: legal factors, international pressures, and domestic political will. Our analysis of 1,426 reparation-years underscores the importance of changes in political will over time.
Topic:
Human Rights, Democracy, Rule of Law, and Institutions
Political Geography:
Latin America, Paraguay, and Global Focus

1480. The Space of Utopia: Christians for Socialism in Chile

Author:
Denisa Jashari
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Kellogg Institute for International Studies
Abstract:
This paper examines the intellectual production of the Chilean clerical movement, Christians for Socialism (CpS). It does so by contextualizing the emergence of CpS within the Chilean Church’s own transformations in theological practices and in grassroots interactions with workers and the poor. The election of self-declared Marxist Salvador Allende in 1970 inspired a sector of the clergy to rethink both the role of the Church in society and the role of the poor in the nation. I draw on Ernst Bloch’s concept of concrete utopia to argue that in Chile Christians for Socialism not only creatively converged Marxist and religious thinking but contributed to altering conventional notions of the two. The notion of transcendence and the construction of a “New Man” appealed to the utopian aspects of both religious and Marxist thinking. Moreover, the Chilean CpS had a Latin American impact, as evidenced by the First Latin American Encounter of Christians for Socialism in Santiago, Chile, in 1972, and a world impact, seen in the formation of the Ecumenical Association of Third-World Theologians in 1976. While the legacy of CpS and liberation theology in Chile is far more visible in the grassroots work undertaken during the dictatorship of Augusto Pinochet, an examination of this movement’s theological and ideological productions before the coup is critical to comprehending members’ subsequent material, on-the-ground actions.
Topic:
Civil Society, Human Rights, Religion, Social Movement, Violence, and Catholic Church
Political Geography:
South America, Latin America, and Chile