International trade

Anna Maria Mayda, Christopher Parsons, Han Pham, Pierre-Louis Vézina, 20 January 2020

While resettled refugees in the US historically exhibit remarkable success, this column shows that refugees also foster development to their origin countries through the mechanism of foreign direct investment. A 10% increase in refugees in a given commuting zone causes outward FDI flows to increase to their countries of origin, 10 to 15 years after having taken refuge, by 0.54%. Decisions made primarily for humanitarian reasons in developed host nations thus yield economic benefits for some of the world's poorest nations in the medium run.

Peter Egger, Jiaqing Zhu, 09 January 2020

The US and China have been exchanging threats and imposing tariffs in a ‘trade war’ since early 2018. Sound statistical and holistic economic analysis of the trade dispute’s consequences is difficult due to data limitations. This column scrutinises global stock market responses to assess the effects of the trade war and finds that, on average, the US and Chinese tariffs have directly hurt targeted firms/sectors abroad as intended, but they have also hurt firms at home. It also reveals unintended effects on third parties, mediated by global value chain interdependencies.

Inga Heiland, Andreas Moxnes, Karen-Helene Ulltveit-Moe, Yuan Zi, 07 January 2020

Evidence on the structure of the global container shipping network, an essential determinant of the costs of trade, is scarce. This column uses satellite data to document salient features of the network, and the expansion of the Panama Canal as a natural experiment to examine the impact this improvement to one link of the network had on worldwide trade. The analysis suggests that the expansion of the canal increased world real income by $20 billion. 

Erhan Artuc, Guido Porto, Bob Rijkers, 06 January 2020

Questions about who benefits from free trade – and at what cost – have resurfaced as part of the backlash against globalisation. This column uses data from 54 low- and middle-income countries to show that in a majority of cases, trade liberalisation increases both incomes and inequality. Most of these trade-offs resolve in favour of liberalisation; despite exacerbating income disparities, trade liberalisation creates overall social welfare gains. 

Bernard Hoekman, Ben Shepherd, 03 January 2020

Data weaknesses hamper analysis of how policies towards imports and exports of services, foreign direct investment and, more generally, regulation affects the operation of services sectors. Based on recently released regulatory policy data for 2016, this column uses machine learning methods to recreate to a high degree of accuracy the OECD’s Services Trade Restrictiveness Index to generate new estimates of services trade barriers for 23 developing countries. The analysis confirms that services policies are typically much more restrictive than tariffs on imports of goods, in particular in professional services and telecommunications. Developing countries tend to have higher services trade restrictions, but less so than has been found in research using data for the late 2000s.

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