International trade

Randolph Bruno, Nauro F. Campos, Saul Estrin, Meng Tian, 05 May 2016

The current Brexit debate has highlighted questions about the benefits and costs of EU membership. This column considers the effect of membership on foreign direct investment (FDI). Using several measures, EU membership is found to increase FDI inflows by 14–38% between 1985 and 2013. These results support arguments for economic integration, and indicate that, like international trade, FDI is a key channel through which payoffs are delivered.

Peter A. Petri, Michael Plummer, 30 April 2016

The Trans-Pacific Partnership faces serious a political challenge in the US, with some viewing it as primarily benefitting the wealthy. This column argues that it will slightly favour middle- and low-income US households, while also generating substantial benefits for poorer developing countries. As with any trade agreement, the gains and losses will be asymmetrically distributed, but the gains should permit ample support for individuals adversely affected.

Juergen Matthes, Berthold Busch, 27 April 2016

Studies attempting the quantify the economic effects for the UK of Brexit have come up with conflicting results – ranging from significant advantages to marked losses. Using a meta-analysis, this column shows this can be explained by different methods and assumptions, as well as varying coverage of effects. The forward-looking, model-based studies are unable to capture many positive effects of economic integration on welfare and growth. In comparison, backward-looking studies tend to find significantly larger trade effects of economic integration agreements. The meta-analysis suggests that in case of Brexit, GDP losses for the UK in the range of 10% or more cannot be ruled out in the long run.

Giovanni Federico, Antonio Tena-Junguito, 18 April 2016

The slowdown of global trade growth since the Global Crisis has raised concerns across the world. This column puts recent changes into perspective by presenting evidence on the export/GDP ratio and a rough measure of the gains from trade back to 1830. It shows that the interwar period was marked by a reversal of globalisation that makes recent trends look like a small blip. 

Francesco Di Comite, Jacques-François Thisse, Hylke Vandenbussche, 12 April 2016

The trade literature has long focused on firms’ productivity as an explanation for export performance. But what about the demand side? This column looks at firms’ appeal in terms of quality and consumer taste. Using Belgian firm-level data, it suggests that tastes could account for 45% of the variation in export quantities across countries.

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