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31. Grey Zones in Global Finance: the Distorted Geography of Cross-Border Investments

Author:
Vincent Vicard, Amélie Guillin, and Anne-Laure Delatte
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Tax avoidance schemes generate artificially complex cross-border financial structures inflating measured international investment stocks in tax havens. Using a standard gravity framework, we estimate that about 40% of global assets (FDI, portfolio equity and debt) are `abnormal' – unexplained – stocks. Abnormal stocks are increasing over time and concentrated in a limited number of jurisdictions. Six jurisdictions including three European countries are the largest contributors: Cayman, Bermuda, Luxembourg, Hong Kong, Ireland and the Netherlands. Interestingly, the Luxleaks in 2014 do not appear to have diverted cross-border investments away.
Topic:
Economics, International Political Economy, International Trade and Finance, Finance, Borders, Investment, and Stock Markets
Political Geography:
Global Focus

32. Cross-border Investments and Uncertainty Firm-level Evidence

Author:
Rafael Cezar, Timothée Gigout, and Fabien Tripier
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
This paper studies the impact of uncertainty on cross-border investments. We build a data-set of firm-level outward Foreign Direct Investments between 2000 and 2015. We create a time and country varying measure of uncertainty based on the dispersion of idiosyncratic investment returns. An increase in uncertainty delays cross-border flows to the affected country. Yet, this average effect hides strong heterogeneity. Firms with low ex-ante performance durably reduce their foreign investments. Meanwhile high-performing firms increase their investments after the initial shock. We interpret these results as the evidence of a cleansing effect of uncertainty shocks among multinational firms in the presence of financial frictions.
Topic:
Economics, International Political Economy, Foreign Direct Investment, Borders, and Investment
Political Geography:
Global Focus

33. Does Birthplace Diversity affect Economic Complexity? Cross-country Evidence

Author:
Dany Bahar, Hillel Rapoport, and Riccardo Turati
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
We empirically investigate the relationship between a country’s economic complexity and the diversity in the birthplaces of its immigrants. Our cross-country analysis suggests that birthplace diversity is strongly and positively associated with economic complexity. This holds particularly for diversity among highly educated migrants and for countries at intermediate levels of economic complexity. The results are robust to accounting for previous trends in birthplace diversity as well as to using alternatives diversity measures. We address endogeneity concerns by instrumenting diversity through predicted stocks from a pseudo-gravity model as well as from a standard shift-share approach. Finally, we provide evidence suggesting that birthplace diversity boosts economic complexity by increasing the diversification of the host country’s export basket.
Topic:
Economics, International Political Economy, Multiculturalism, Immigrants, Diversity, and Economic Complexity
Political Geography:
Global Focus

34. Refugees’ Integration into the Austrian Labour Market: Dynamics of Occupational Mobility and Job-Skills Mismatch

Author:
Mahdi Ghodsi and Robert Stehrer
Publication Date:
10-2020
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Eight multilateral rounds of negotiations under the General Agreement on Tariffs and Trade (GATT) and international agreements under the World Trade Organisation (WTO) have contributed significantly to the reduction of tariffs among WTO members. However, over the years legitimate reasons for the imposition of non-tariff measures (NTMs) within regulations have triggered their extensive use. Among these measures, technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) measures allow countries to impose restrictions on the import of low-quality products suspected of harming domestic consumers’ health, plant life or the environment. Such trade policy instruments may lead to higher standards in the import market, in addition to improving market efficiency through information requirements such as mandatory labelling. This paper analyses two types of regulative and standard-like NTMs – TBTs and SPS measures – and the quality improvement of traded products that is driven by their imposition, which might be a general underlying motive for the adoption of such regulations. Based on a model framework involving both the supply and the demand side of trade and using four types of measures of these NTMs, this paper assesses the impact of TBTs and SPS measures on the quality of traded products. A dummy variable measuring the existence of these NTMs and a count variable indicating their stringency are used in the analysis. Moreover, two other variables indicate flows of NTMs imposed in each year and stocks of these NTMs accumulated over years. The results indicate that TBTs and SPS measures do indeed imply a higher quality of traded products, which is also consistent with the model when NTMs enter as a specific trade cost. Stringent TBTs with more regulations imposed in each year (i.e. flows of count TBTs) have the largest impact on the quality of traded products. However, for SPS measures only the existence of a regulation (i.e. the dummy variable on flows of SPS measures) on a traded product has the strongest impact on its quality.
Topic:
Economics, International Political Economy, International Trade and Finance, WTO, Non-Tariff Measures, and GATT
Political Geography:
Europe and Global Focus

35. World Oil Security On A Precipice

Author:
Charles F. Doran
Publication Date:
06-2020
Content Type:
Research Paper
Institution:
Brown Journal of World Affairs
Abstract:
By attacking a major Saudi oil facility at Abqaiq on 13 September 2019, Iran established a new norm regarding oil security. Now, no oil field, pipeline, refinery, supertanker, or port facility is free from internecine warfare between oil-producing (OPEC) governments. Ironically, in attempting to defend a country from supply interruption, the United States risks worsening the magnitude and scope of that supply interruption rather than preventing its occurrence. In the era of highly accurate drones and missiles, the old oil field motto “all oil comes from a single barrel” has taken on a newly negative connotation. World oil stability rests on a precipice. Both exporters and importers suffer from supply interruption, although perhaps not equally, universally, or simultaneously. Supply interruption may benefit those who have oil to sell through resultant oil price increases if their own exports have not been interrupted. The same cannot be said for buyers who, unless they are energy speculators on the futures market, ardently want to prevent supply interruption and the virtually certain subsequent (though sometimes not lasting) increase in price.
Topic:
Energy Policy, Environment, International Political Economy, Oil, OPEC, and Pipeline
Political Geography:
Saudi Arabia and Global Focus

36. Growth Models and the Footprint of Transnational Capital

Author:
Patrick Kaczmarczyk
Publication Date:
06-2020
Content Type:
Research Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
The definition of various growth models is the latest innovation of comparative capitalism (CC) research. Yet, the literature has its weaknesses in explaining the dynamics within and the interdependencies between different growth models. I argue that this weakness stems inter alia from an inadequate conceptualization of transnational corporations (TNCs). I provide empirical evidence on the footprint of international capital in the global economy and outline how including TNCs as a unit of analysis can help us to better understand economic outcomes. This leads to several implications for the growth models literature, which I conclude my argument with.
Topic:
Economics, International Political Economy, Global Political Economy, Economic Growth, Transnational Actors, Multinational Corporations, and Macroeconomics
Political Geography:
Global Focus

37. Restraining Ourselves: Helping by Not Hurting

Author:
Nathan Nunn
Publication Date:
01-2020
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
In this brief, I discuss the current state of economic development policy, which tends to focus on interventions, usually funded with foreign aid, that are aimed at fixing deficiencies in developing countries. The general perception is that there are inherent problems with less-developed countries that can be fixed by with the help of the Western world. I discuss evidence that shows that the effects of such ‘help’ can be mixed. While foreign aid can improve things, it can also make things worse. In addition, at the same time that this ‘help’ is being offered, the developed West regularly undertakes actions that are harmful to developing countries. Examples include tariffs, antidumping duties, restrictions on international labor mobility, the use of international power and coercion, and tied-aid used for export promotion. Overall, it is unclear whether interactions with the West are, on the whole, helpful or detrimental to developing countries. We may have our largest and most positive effects on alleviating global poverty if we focus on restraining ourselves from actively harming less-developed countries rather than focusing our efforts on fixing them.
Topic:
Development, Economics, International Political Economy, Developing World, and Economic Development
Political Geography:
United States and Global Focus

38. Beyond Compliance and Cooperation? Rethinking Corporate Social Responsibility in Global Value Chains in the Age of COVID-19

Author:
Peter Lund-Thomsen and Jacob Ramirez
Publication Date:
12-2020
Content Type:
Working Paper
Institution:
Centre for Business and Development Studies (CBDS), Copenhagen Business School
Abstract:
In this article, we explore whether COVID-19 has led to a rethink of the two dominant ways of conceptualizing corporate social responsibility (CSR) in global value chains (GVCs): the compliance and cooperation paradigms. Hence, we examine whether any changes have taken place in the drivers, main features, theoretical underpinnings, and limitations of these two approaches to CSR in GVCs in the light of COVID-19. We contend that COVID-19 has been associated with an expanded version of the compliance paradigm. However, COVID-19 has not directly challenged the cooperation approach as a conceptual model. Instead the partial failure of buyers to act responsibly in relation their purchasing practices and restrictions on international travel have highlighted the limitations of this approach in the age of COVID-19. The conclusion highlights the main findings, research and policy implications of this analysis.
Topic:
International Political Economy, Business, Economic Policy, Pandemic, Global Value Chains, and COVID-19
Political Geography:
Global Focus

39. Making Peace with Climate Adaptation

Author:
Louise Van Schaik, Camilla Born, Elizabeth Sellwood, and Sophie de Bruin
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
Climate change poses risks to poor and rich communities alike, although impacts on the availability and distribution of essential resources such as water, food, energy and land will differ. These changes, combined with other social, political and economic stresses and shocks, can increase tensions within and between states, which, if unmanaged, can lead to violence. Climate-related changes to transboundary waters, food security and trade patterns, sea levels, and Arctic ice, as well as the transition to a low-carbon economy, have profound geopolitical implications. Largescale climate-related migration may also affect the stability of states, and relations between states. Climate action itself may prove destabilizing: (mal)adaptation can disrupt economic and social relations, particularly if implemented without appropriate political economy analysis and risk assessments. In response to analyses linking climate change to security, peace and security actors increasingly realize that interventions to promote peace and stability are more likely to be effective if they incorporate such analyses. At the United Nations, member states have agreed to shift towards a “preventive” approach to conflict risks, grounded in sustainable development. The UN leadership is adjusting institutional structures to better understand and respond to climate-related security risks at all levels, including a newly established climate security mechanism in New York. Many regional intergovernmental institutions have also recognized the links between climate change, peace and security. Some, such as the Intergovernmental Authority on Development in East Africa and the European Union, have incorporated climate-related factors into their conflict early-warning mechanisms. We are only just beginning to understand the realities of adapting to unprecedented climate change, however. Climate-related factors will need to be incorporated systematically into political analysis, risk assessment, and early warning, accompanied by deeper integration of climate-security risk assessment into planning and political engagement in the field. Similarly, more consistent analysis of climate-related security risks must contribute to politically informed, conflict-sensitive adaptation strategies.
Topic:
Conflict Prevention, Climate Change, International Political Economy, Peace, and Sustainability
Political Geography:
Global Focus

40. Fostering the Development of the Coffee Global Value Chain

Author:
Dennis Görlich, Aoife Hanley, Wan-Hsin Liu, and Finn Ole Semrau
Publication Date:
12-2020
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The overarching aim of the study is to investigate the key factors that determine how and how intensively countries can be integrated into the coffee global value chain (GVC) and thus can better reap the globalization benefits. The empirical analysis shows how the international trade in coffee has developed across regions/countries over the past three decades. It provides evidence-based insights into the key determinants of countries’ GVC integration in the coffee industry. It discusses countries’ functional and product upgrading for their GVC integration. Based on the empirical results obtained, policy implications are derived to support the further development of the coffee GVC. This study serves as a background study for the Coffee Development Report 2020 in preparation by the International Coffee Organisation.
Topic:
International Political Economy, Food, Global Value Chains, Coffee, and Value Chains
Political Geography:
Global Focus