Rafael Dix-Carneiro, Brian Kovak, 14 September 2017

Rafael Dix-Carneiro, Rodrigo R. Soares, Gabriel Ulyssea, 31 August 2017

Local economic shocks induced by the Brazilian trade liberalisation had substantial effects on homicides. This column examines these effects and attempts to disentangle the mechanisms through which they occurred. Reductions in employment rates appear to have been the main driving force.

Rafael Dix-Carneiro, Brian Kovak, 23 August 2017

The effects of foreign competition have been shown to vary substantially across regions within a country. Using administrative and household survey data from Brazil, this column examines the various margins of adjustment in response to trade-induced regional shocks. The results demonstrate a key role for the non-tradable sector and informal employment in the adjustment process.

Pinelopi Goldberg, Nina Pavcnik, 21 June 2017

Yuichi Ikeda, Hideaki Aoyama, Hiroshi Iyetomi, Takayuki Mizuno, Takaaki Ohnishi, Sakamoto Yohei , Tsutomu Watanabe, 22 July 2016

Econophysics is an emerging field applying theories and methods from physics to economic problems and data. This column explores the collective motions of trade and the effects of trade liberalisation, using global data from the past two decades. Econophysics methods reveal how business cycles synchronise, and how economic risk propagates throughout the global economic network. The results also highlight inherent problems of structural controllability that are induced during economic crises.

Miaojie Yu, 18 May 2016

When China opened up, Chinese income increased and China went from a poor to a middle-income country. In this video, Miajie Yu discusses the impact of trade liberalisation on firm productivity in China. Openness to trade had a big impact on processing trade – such as putting together iPhones – and now accounts for half of Chinese trade. This video was recorded in March 2016 during the Royal Economic Society’s Annual Conference held at the University of Sussex.

Hiau Looi Kee, Heiwai Tang, 09 December 2015

While domestic content in exports has been declining globally, the opposite trend has been observed in China. This column argues that this is mainly due to the structural transformation and FDI liberalisation in the country since 2000. As a result, individual processing exporters have substituted domestic for imported materials, both in terms of volume and varieties. These results indicate that China has become more competitive, particularly in the intermediate input sectors, which supports its ascent along the global value chains.

Italo Colantone, Rosario Crinò, Laura Ogliari, 04 December 2015

Influential studies have shown that trade liberalisation is associated with substantial adjustment costs for workers in import-competing jobs. This column uses UK data to shed light on one such cost that has not been considered to date – subjective well-being. Import competition is found to substantially raise mental distress, through worsened labour market conditions and increased stress on the job. These findings provide evidence of an important hidden cost of globalisation.

Pablo Fajgelbaum, Amit Khandelwal, 28 November 2015

Recent studies have established a causal link between trade and rising wage inequality. This column suggests there is also a pro-poor bias of trade. In moving from autarky to trade, the relative prices of goods consumed intensively by the poor, such as food, fall more. The gains from opening to trade are estimated at 63% for the 10th percentile of the income distribution and 28% for the 90th percentile. 

Bernard Hoekman, Petros Mavroidis, 16 July 2014

The proliferation of trade ‘clubs’ indicates that governments are keen on engaging in trade liberalisation. This column argues that the creation of new trade clubs under the umbrella of the WTO is inevitable. Such issue-specific (plurilateral) agreements keep the cord with the WTO tight, while allowing countries to cooperate on issues outside of WTO’s grounds.

Kerem Cosar, Nezih Guner, James Tybout, 07 July 2014

Trade liberalisations are often accompanied by labour market reforms, making it difficult to isolate their effects. This column discusses the effects of trade liberalisation, globalisation, and labour-market reforms on the Colombian labour market. Reduced trade frictions increased cross-firm wage inequality and shifted the firm-size distribution rightward, with offsetting effects on overall wage inequality. Average income increased, but the gains were concentrated among employees of large, productive firms with access to export markets. Greater trade openness also increased job turnover.

Jayant Menon, 09 June 2014

With the rise of mega-regional trade agreements, the world trade system resembles a jigsaw puzzle. This column discusses the difficulties involved in consolidating free trade agreements at the regional level, and argues that piecing together the blocs around the world will be even more challenging. A potential way forward is to return to the most widely used modality of trade liberalisation – unilateral actions – but this time involving the multilateralisation of preferences rather than unreciprocated reductions in tariff rates.

Elías Baracat, Michael Finger, Julio Nogués, Raúl Thorne, 28 October 2013

Trade reforms must be durable if countries are to reap the benefits of international specialisation and trade. Whereas Peru has sustained the reforms it carried out in the 1990s, Argentina has introduced multiple trade restrictions in recent years. This column argues that Peru’s success is due to two factors. First, Peruvian trade reform was part of a broader reform effort. Second, by highlighting the success of Asian countries and negotiating bilateral agreements, Peru’s political leaders fostered a positive vision of Peru’s role in the world economy.

Beata Javorcik, Yue Li, 15 February 2013

Retailing has experienced disruptive technology progress in recent decades – what might be called Walmartisation. This column explains how the entry of global retail chains may transform the retail sector and the supplying industries in the host economies. Focusing on the Romanian case, it shows that a 10% increase in the number of foreign chains’ outlets is associated with a 2.4% to 2.6% increase in the productivity in the supplying industries.

Julia Cagé, Lucie Gadenne, 04 August 2012

One negative side-effect of trade liberalisation that has often been underplayed is the fiscal aspect. This column provides evidence from 110 trade-liberalisation episodes that tariff cuts lead to lower tax revenues as a share of GDP. The drop is highest in poor countries that don’t have the capacity to compensate for lost tariff revenues with domestic taxes.

Richard Baldwin, 30 May 2012

In the late 1980s, developing nations that had eschewed all forms of liberalisation began to cut their import tariffs unilaterally. This column explains how the communication-technology revolution was the shock that altered the political-economy equilibrium against infant-industry protection and in favour of joining international supply chains which involved tariff liberalisation.

Ganeshan Wignaraja, 20 October 2011

South-South trade and trade agreements are booming amid the stalled Doha trade talks and a fragile world economy. In Asia alone, trade agreements have grown from only 3 to 61 between 2000 and 2010. This column examines Asia’s experience and argues that South-South trade agreements should increase their coverage of goods and services and improve consistency with global rules to fully support South-South trade.

Jens Arnold, Beata Javorcik, Aaditya Mattoo, 01 October 2011

Compared to the goods sector, we know relatively little about the effects of trade liberalisation on the services sector, despite this being the main employer in many countries. This column presents firm-level data from the Czech Republic that suggests that services sector reform can improve the performance of domestic manufacturing firms – something that protectionist sympathisers should be wary of.

Ann Harrison, Leslie Martin, Shanthi Nataraj, 22 March 2011

It is broadly agreed that trade liberalisation can increase productivity. The question is how. Earlier literature emphasises the role of firms “learning” to be more productive, whereas recent studies suggest that more productive firms are “stealing” market share from less productive ones, thus raising overall productivity. Presenting evidence from India’s trade liberalisation since 1991, this column finds evidence for both but argues that learning outweighs stealing.