Tariffs across the world may be set to increase for the first time in generations, but the impact of this on trade will depend on the way in which exporters and potential exporters make decisions. Using data on Ireland's manufacturing exports, this column describes how the evolution of quantities and prices for export entrants suggests an important role for the customer base in explaining exporter behaviour.
Doireann Fitzgerald, Stefanie Haller, Yaniv Yedid-Levi, 25 March 2017
Italo Colantone, Piero Stanig, 20 February 2017
The revival of nationalism in western Europe, which began in the 1990s, has been associated with increasing support for radical right parties. This column uses trade and election data to show that the radical right gets its biggest electoral boost in regions most exposed to Chinese exports. Within these regions communities vote homogenously, whether individuals work in affected industries or not.
Alexander Wagner, Richard Zeckhauser, Alexandre Ziegler, 24 February 2017
The election of Donald Trump as president of the United States will profoundly affect the US and world economies. This column argues that the stock market has already identified winners and losers among companies and industries. It finds, for example, that investors expect US firms paying high taxes to be relative winners from the Trump presidency, and firms with substantial foreign involvement to be relative losers.
Yasuyuki Todo, 16 February 2017
From the US withdrawal from the TPP to the Brexit negotiations, the tide of trade policy is turning towards protectionism. This column outlines how this could create a vicious cycle of lower productivity and closed economies, and what Japan, as the world’s third largest economy, can do to prevent it. A combination of trade and investment liberalisation and inclusive policies will enable all citizens to enjoy the fruits of growth under globalisation.
Aqib Aslam, Emine Boz, Eugenio Cerutti, Marcos Poplawski-Ribeiro, Petia Topalova, 13 February 2017
A growing literature aims to understand the remarkable slowdown in global trade growth in recent years. This column discusses a chapter in the IMF’s October 2016 World Economic Outlook on the drivers of the trade slowdown, and compares the findings to those of other recent studies. It argues that a variety of factors have contributed to weak trade growth, with widespread anaemic economic activity and the change in its composition being among the key drivers.
Stelios Michalopoulos, Elias Papaioannou, 23 January 2017
Over the past decades, economists working on growth have ‘rediscovered’ the importance of history, leading to the emergence of a vibrant, far-reaching inter-disciplinary stream of work. This column introduces a new eBook in three volumes which examines key themes in this emergent literature and discusses the impact they have on our understanding of the long-run influence of historical events on current economics.
Kristin Forbes, Dennis Reinhardt, Tomasz Wieladek, 23 December 2016
Globalisation is in retreat, but while the slowdown in trade is widely recognised, what is more striking is the collapse of global capital flows. This column shows how banking deglobalisation is a substantial contributor to the sharp slowdown in global capital flows. It finds that certain types of unconventional monetary policy, and their interactions with regulatory policy, can have important global spillovers. Policies designed to support domestic lending may have had the unintended consequence of amplifying the impact of microprudential capital requirements on external lending.
João Amador, Sónia Cabral, 23 December 2016
Global Value Chains have become the paradigm for the international organisation of production in almost all sectors. Bilateral gross trade flows no longer accurately represent interconnections among countries, so new methods of analysis are needed. Using tools of network analysis, this column assesses the roles of goods and services as both inputs and outputs in GVCs between 1995 and 2011 and examines the profile of Germany, the US, China and Russia as suppliers of value added.
Lionel Fontagné, Gianluca Orefice, 18 December 2016
Regulation is a barrier to trade. This column uses French firm-level panel data to assess how technical barriers to trade impact firms’ exports. In the presence of stringent barriers, exporters balance the cost of complying with this regulation against the fixed cost of entering a new market. Barriers reduce the number of exporting firms in each sector-destination, especially in sectors with many multi-destination firms.
Yoshio Higuchi, Kozo Kiyota, Toshiyuki Matsuura, 04 December 2016
There is a belief among the general public that employment volatility tends to be greater for firms with higher foreign exposure, but the relationship between the two is ambiguous in theory. This column uses firm-level data for Japan to compare the impact of foreign exposure on employment volatility for multinational, trading, and non-trading firms; for manufacturing and wholesale and retail trade; and for intra-firm and inter-firm trade. In manufacturing, the effect of exports on the volatility of employment varies, depending on the share of intrafirm exports to total sales. In wholesale retail, the effect of exports is generally insignificant.
Christian Dippel, Robert Gold, Stephan Heblich, 07 October 2016
The increasing polarisation of politics in the US in particular has spurred scholarly research on the potential links to increasing globalisation. This column focuses instead on Germany to investigate whether the rise of right-wing populism is associated with increased international trade. Regions most threatened by exposure to imports saw increases in support for far-right parties, while regions that benefited from export opportunities saw decreases. To counter this globalisation backlash, policy should aim to cushion the effects of trade exposure on the losers from globalisation.
Hylke Vandenbussche, Christian Viegelahn, 02 October 2016
In a world where production is increasingly fragmented across borders, a large number of firms import their raw material inputs from abroad. This column investigates how firms’ input and output choices are affected by import tariffs on inputs that domestic firms use in production. Based on firm-product level data for India, it finds that firms decrease their use of inputs subject to the tariff, relative to other inputs. Firms also decrease their sales of outputs made of these inputs, relative to other outputs.
Richard Pomfret, Patricia Sourdin, 23 September 2016
Joining a customs union is supposed to reduce trade with third countries. But after 2004, the largest EU accession countries actually increased their trade with Australia, especially their exports. This column argues that new regional value chains made accession country industries more competitive, especially in the auto industry. Trade with Australia has also been facilitated by a drop in the costs of bilateral international trade.
Wolfgang Keller, Javier Andres Santiago, Carol Shiue, 23 August 2016
In international trade theory, countries are often treated as homogenous regions, with no account taken of their internal geography. This column uses evidence from China’s Treaty Port Era to show how domestic trade frictions shape welfare gains from trade. Gains from new technologies that lower trade costs are shared, but the gains are not evenly distributed. Lower trade costs can also mean lower welfare for productivity leaders, who may be replaced by low-cost suppliers from less productive regions as the costs of transport decline.
Angus Armstrong, 03 August 2016
There are three trade policy challenges facing the UK outside the EU: it must negotiate a new relationship with the EU, disentangle itself from WTO Agreements it entered into as an EU member, and restore preferential trade with the many dozens of trade partners that are now covered by EU trade agreements. As difficult trade-offs are inevitable in all of these, politicians should decide how the preferences of UK citizens might best map onto these alternative arrangements. This column argues that the optimal solution is to combine future trade arrangements with domestic policies that compensate UK citizens who face the costs of trade agreements.
Angus Armstrong, 02 August 2016
The EU is the UK’s biggest trade partner; in this video Angus Armstrong discusses the impact of Brexit on the UK’s trade patterns. This video is part of the “Econ after Brexit” series organised by CEPR and was recorded on 14 July 2016.
Masayuki Morikawa, 23 June 2016
The shifting balance between manufacturing and service industries in developed economies has significant implications for long-term growth and international trade. This column uses Japanese firm-level data to analyse the impact of ‘factoryless goods producers’ on overall productivity. As these producers specialise in tasks in which advanced economies have a comparative advantage, it is anticipated that when combined with falling production costs and trade liberalisation, they will contribute to economic growth.
Francisco Buera, Ezra Oberfield, 12 June 2016
Free trade often comes hand in hand with economic growth. The opportunity for gain is relatively small, according to quantitative models that rely on standard static mechanisms. This column introduces a model to study the diffusion of ideas across countries as a means of increasing productivity, and a quantitative assessment of the role of trade in the transmission of knowledge. How much the transmission of knowledge will impact productivity depends on the openness of the trading countries, current stock of knowledge, and a diffusion parameter.
Brian Varian, 29 May 2016
Modern discussions about a country’s ‘decline in manufacturing’ are seldom meaningful. Such talk of industrialisation and deindustrialisation across the entire sector tends to ignore important variation across individual industries. This column draws lessons from the revealed comparative advantage of late-Victorian Britain – the ‘workshop of the world’. Advantage lay mainly in industries that were relatively capital-intensive and that didn’t rely on large pools of unskilled labour. Despite its resource wealth, even Britain in the first era of globalisation was at a measurable comparative disadvantage in a number of industries.
Jean-Marc Fournier, 26 May 2016
The limits of the European Single Market have often been highlighted. This column argues that although implicit barriers remain, the Single Market has delivered substantial benefits to member countries. New empirical evidence is presented of the trade and FDI gains that Central and Eastern European countries have enjoyed since joining the Single Market. On top of making regulations more competition-friendly, regulatory harmonisation can boost the economic links between countries.