The US and the EU have announced their intentions to launch trade talks – the Transatlantic Trade and Investment Partnership. This column argues that this should not be thought of as a standard tariff-lowering deal with a few extras thrown in for good measure. Rather, we don’t really know what it will do because trade economists have failed to develop the necessary tools for understanding its impact. It is time for policy analysts to re-tool.
Simon Evenett, Robert Stern, 21 March 2013
Ganeshan Wignaraja, 21 February 2013
Until 2012, the past decade saw Indonesia’s growth maintain a respectable momentum. This column argues that recent hints of political dirigisme presents Indonesia with a stark development choice. Policymakers can continue their tightening of political control – staving off the trade effects of a global crisis in the run up to elections next year – or they can orient the economy outward, with complementary policies to sustain long-term growth.
Hylke Vandenbussche, Jozef Konings, 30 January 2013
The rise of international production sharing – ‘global value chains’ – has transformed international commerce and pushed economists into new territory. This column argues that there is evidence to suggest that old-fashioned protection can have an unexpected negative effect on firms that are part of a global value chain. In an increasingly globalised world, exporters’ success seems to positively depend on the free entry of imports rather than the other way round.
Jérôme Héricourt, Sandra Poncet, 19 January 2013
The increasing volatility of exchange rates after the fall of the Bretton Woods agreements has been a constant source of concern for both policymakers and academics. Does exchange-rate risk dangerously increase transaction costs and reduce gains to international trade? This column uses recent research to argue that there is indeed a negative impact of exchange-rate volatility on firms’ exporting behaviour, magnified for financially vulnerable firms and dampened by financial development. Thus, emerging countries should be careful when relaxing their exchange-rate regime.
Klaus Desmet, Esteban Rossi-Hansberg, 16 January 2013
There are two ways to deal with climate change: mitigation and adaptation. This column argues that in order to adapt, we need to take another look at an age-old coping mechanism: migration. Indeed, if overall hotter temperatures lower productivity in hot regions but raise productivity in what are currently cooler regions, the negative economic effects of climate change are likely to stem from frictions preventing the movement of people and goods. Without these frictions, adapting to climate change becomes that much easier. Climate change policy ought to aim at alleviating mobility frictions.
Paul Brenton, 08 January 2013
Africa is not achieving its potential in food trade, increasing the risk of widespread hunger and malnutrition. This column argues that the most serious problems for the continent are problems of political economy and barriers along the value chain. The good news is that, despite demand for food throughout Africa predicted to double over the next decade, governments can act now to overcome these problems. With a regional approach to food security, African governments can spur on benefits to farmers and consumers as well as job creation along the value chain of staples.
Paola Conconi, Giovanni Facchini, Max Steinhardt, Maurizio Zanardi, 07 January 2013
As populations in rich nations continue to age and skill shortages begin to emerge, concern over getting immigration policy right is set to intensify. This column discusses new research on US policymaking, showing that many of the determinants of policymakers’ attitudes towards trade are also in operation when it comes to migration. Using the Heckscher-Ohlin model, it finds that US House members from districts where skilled labour is abundant are more likely to support both trade liberalisation and a more open policy for unskilled immigration.
Fabrice Defever, Alejandro Riaño, 04 January 2013
The West perennially complains about China subsidising industry geared towards its domestic market. But what will happen when China enacts its latest Five Year Plan’s emphasis on domestic growth? This column argues that ending ‘pure-exporter subsidies’ – subsidies that boost Chinese exports while simultaneously protecting the least efficient, domestically oriented firms – will benefit Chinese consumers, but will cost the rest of the world.
Juan Marchetti, Michele Ruta, Robert Teh, 02 January 2013
Globally, large current account imbalances prevail. This column argues that they also continue to represent a systemic risk for the world economy. The WTO has a clear-cut role in the institutional effort to address these imbalances. However, this role has more to do with opening services and government procurement markets than with the often invoked trade sanctions in response to exchange rate misalignments.
Susan Ariel Aaronson, 22 December 2012
The internet is an expanding opportunity for growth. This column argues that in recent years, however, policymakers and market actors have been undermining its potential. Governments and market actors are reducing both access to information and freedom of expression, as well as moving towards a splintered, non-global internet. Commitment to an open, free and global internet will be hard, but if bilateral, regional or multilateral trade agreements encourage interoperability, we might see some harmony among signatories’ privacy, online piracy, and security policies.
Rudolfs Bems, Robert Johnson, 06 December 2012
With the rise of complex, globalised supply chains is the real effective exchange rate (REER), the most commonly used measure of competitiveness, now outdated? If it is, what should replace it? This column presents a ‘Value-Added REER’ and shows that it differs substantially from the conventional REER. Because it is possible to construct a new Value-Added REER from existing data, policymakers interested in improving their understanding of competitiveness might well consider including it in their toolbox.
Marc Auboin, Martina Engemann, 03 December 2012
What effect does trade finance have on international trade? This column uses new data to stress the importance of trade finance for international trade both in crisis and in non-crisis periods. The major policy lesson is that there must be high levels of market incentives for supplying trade credit, particularly during a period of ‘deleveraging’ of the financial system. That said, trade credit statistics could be vastly improved if we wish to continue comparing global trade finance transactions against global trade.
Laura Alfaro, Paola Conconi, Harald Fadinger, Patrick Legros, Andrew Newman, 02 December 2012
Increasingly, people are pointing the finger of blame for economic woe at large firms. This column argues that organisation design is often affected by government trade policy. If firm organisation design has implications for consumer welfare (in terms of prices and quality of product), evidence suggests that governments should make sure that in future, trade policy and corporate governance policy are more complementary.
Alireza Naghavi, Chiara Strozzi, 18 November 2012
Does emigration create a brain drain or – as commentators have recently been suggesting – do diasporas in fact represent a net brain gain? This column argues that if sending countries can protect intellectual property rights, they will foster the necessary diaspora knowledge networks to significantly help economic development in sending countries.
Thorvaldur Gylfason, Per Wijkman, 04 November 2012
Today, most of Europe is free from dictatorships and conflict. Yet, these spectres loom in neighbouring states and nearby regions. This column suggests that this year’s Nobel Peace Prize, awarded to the EU, was perhaps a call to action. Can the EU, preoccupied as it is with a growing Eurozone crisis, encourage peace and democracy in its neighbourhood? And what are the lessons we can learn from recent EU policy history?
Monica Eaton, Michael Ferrantino, 04 September 2012
The Eurozone debt crisis is not simply a problem for industrialised countries. This column shows how its effects are being felt throughout Africa.
Oleg Itskhoki, Marc Muendler, Stephen Redding, Elhanan Helpman, 20 May 2012
What is the effect of trade on inequality? This column presents a unique study examining wage inequality in Brazil after liberalisation. Starting from a closed economy, the column finds that wage inequality will initially rise as only some firms take advantage of the new opportunities. But as trade costs continue to fall and more firms start to trade, wage inequality peaks and begins to fall back.
The Editors, 30 June 2011
This CEPR/World Bank volume seeks to facilitate, and in the process develop methodologies for, a rigorous impact evaluation of trade-related interventions.
Simon Evenett, 20 July 2011
The 9th GTA report shows that the pick-up in protectionism since the Seoul G20 summit coincides with the deterioration in economic sentiment.
Nicholas Bloom, Mirko Draca, John Van Reenen, 03 February 2011
Chinese exports are often blamed for job losses and firm closures in developed economies. This column tracks the performance of more than half a million manufacturing firms in 12 European countries over the past decade. It finds that competition with Chinese exports is directly responsible for around 15% of technical change and an annual benefit of almost €10 billion in these countries – the wider productivity effects may well be larger.