International trade

Timon Bohn, Steven Brakman, Erik Dietzenbacher, 15 June 2021

Global value chain analyses to examine the income gains from trade are particularly complicated by ownership relations between headquarters and subsidiaries. The consequence is that the value added generated within one country may well result in income in another country. This column presents the income perspective as a framework to deal with this complication. Trade deficits become smaller for wealthy countries and larger for developing countries. Discussions on ‘unfair’ trade should take the income perspective on board.

Xuepeng Liu, Emanuel Ornelas, Huimin Shi, 09 June 2021

Worldwide merchandise trade flows decreased significantly in 2020, as Covid-19 disrupted economic activity across the globe. This column analyses how various pandemic-related factors shaped international trade flows. Specifically, it estimates how Covid-19 incidence and lockdown restrictions affected the monthly year-over-year growth of imports from China for all destinations to which China exported goods in 2019–2020. It finds that government measures to curb economic activities had a larger impact on a country’s imports than the direct health and behavioural effects of the pandemic itself.

Simon Evenett, Johannes Fritz, 03 June 2021

Properly guided, foreign direct investment has transformed the prospects of certain firms, sectors, regions, and even economies. This column introduces the 27th Global Trade Alert report, which looks back over the past quarter of a century to put current FDI dynamics in perspective, assesses the degree to which governments continue to favour FDI, and points the spotlight on the limited contribution of FDI to advancing sustainable development in emerging markets.

Rebecca Freeman, John Lewis, 02 June 2021

Better communications, enhanced transport links, integration agreements between governments, and other factors have all helped increase global economic interconnectedness over the past few decades. This column compares a state-of-the-art gravity model for trade versus migration to reveal that there are in fact important differences in the evolution of globalisation over time on flows of goods versus people. For trade, the boost from free trade agreements declines the farther apart signatories are, but for migration the boost increases with distance between signatories. Further, while both border and distance frictions have declined for trade over time, this is not the case for migration flows.

Martina F. Ferracane, Erik van der Marel, 30 May 2021

The global economy relies on trade in digital services and cross-border data flows. However, digital trade rules across most countries have not been measured or classified. This column categorises the approach to data regulation in 116 countries and examines the implications of data regulation for trade in digital services. It suggests that proximity in data regulation frameworks may affect the cost and volume of digital trade between countries.

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