Holger Breinlich, Elsa Leromain, Dennis Novy, Thomas Sampson, 11 April 2022

Import liberalisation brings down import costs and increases competition. But with scale economies, import liberalisation can also reduce the productivity of domestic industry by shrinking its scale, leading to lower exports.  As this column shows, evidence from the permanent normalisation of US trade relations with China in the early 2000s reveals that increased Chinese import competition indeed reduced US exports through this channel, implying the presence of industry-level scale economies in the US. Nevertheless, aggregate US openness still increased and the liberalisation raised US welfare.

Michal Gradzewicz, Jakub Mućk, 17 September 2020

There has been a lively debate concerning the dynamics of markups. This column contributes to this debate by studying the relationship between globalisation and monopolistic markups in Poland. It highlights important non-linearities leading to an uneven  distribution of the effects of global value chains for participating firms, with lowest benefits found for firms in the middle of the production chain where goods are highly standardised and substitutable. It also documents a fall in markups for Poland which can be explained by rising dependence on imported intermediates in export-oriented production and fiercer competition of domestic firms on export markets.

Kym Anderson, 16 February 2020

Global alcoholic beverage markets have changed dramatically in recent years due to globalisation, income growth in emerging economies, changes in individual preferences, policy initiatives to curb socially harmful drinking, and, in particular, the dual trade policy shocks of Brexit and the US’s unilaterally imposed discriminatory tariffs. This column provides an overview of the major trends and projects the possible effects of Brexit and the US tariffs on the global alcohol market. It concludes that both shocks would reduce world trade in wine. Even countries not targeted by US tariffs can be worse off if those tariffs sufficiently reduce global consumption. 

Gábor Békés, Peter Harasztosi, 30 September 2019

In less developed countries, upgrading production technologies by importing machinery is an important source of growth. Using new firm-level data from Hungary for the period 1992-2003, this column finds that firms are more likely to import a particular piece of sector-specific machinery when other local firms previously imported the same machine. A similar pattern holds regarding the choice of the machine’s source country. These benefits are concentrated in large and foreign-owned companies, while small and domestically owned firms may actually be adversely affected.

Fariha Kamal, 07 July 2019

‘Factoryless’ goods producing entities outsource physical transformation activities while retaining ownership of the intellectual property and control of sales to customers. Using 2012 data from the US Census Bureau, this column provides a new conceptual definition of factoryless activity. It also compares factoryless goods producer firms to service providers outside the manufacturing sector, and hybrid manufacturers to traditional manufacturers within the manufacturing sector. The analysis reveals several meaningful correlations between factoryless status at the firm level and conceptual variables such as employment mix, innovation, and importing activities.

Wilko Bolt, Kostas Mavromatis, Sweder Van Wijnbergen, 25 April 2019

Increasing protectionism will slow down world trade and may dampen global economic growth. This column examines the global macroeconomic consequences of a major trade conflict between the US and China, and shows that the two countries would be the biggest losers from a 10% ‘tit-for-tat’ trade war between them. As long as it does not get involved in the conflict, the euro area may temporally gain from trade diversion, as competitiveness improves and imports from regions whose exports are blocked elsewhere become cheaper.

Bernhard Michel, Caroline Hambÿe, Bart Hertveldt, 21 January 2019

Domestic value creation is shaped by how and to what extent economies integrate into global value chains. This column argues that further insights can be gained by distinguishing export-oriented and domestic market firms in standard indicators of global value chain integration and participation. Using data for Belgium, it documents that export-oriented firms differ from domestic market firms in terms of input structure and import patterns. These two types of firms play different roles in determining the nature of a country’s global value chain participation.

Banu Demir, Beata Javorcik, 17 September 2018

Smuggling, along with other forms of border tax evasion, is a substantial problem around the world. This column uses Benford’s Law, which suggests that the leading digits in various types of numerical data are not uniformly distributed, to identify suspicious import flows. Results using Turkish data suggest that deviations from Benford’s Law are consistent with higher rates of tax evasion. The approach could be employed by authorities to identify shipments that merit greater scrutiny. 

Alessandra Bonfiglioli, Rosario Crinò, Gino Gancia, 10 June 2018

To date there has been little systematic evidence on the role of firms in explaining country performance. This column explores how the products of firms from all over the globe fare in competition in the US market. Results show that the countries that capture larger market shares have more exporters, producing higher-quality products, with a more dispersed distribution of firm attributes. Larger and richer markets are characterised by a more dispersed distribution of sales and quality, and a higher incidence of superstar firms.

Cevat Giray Aksoy, Sergei Guriev, Daniel Treisman, 08 May 2018

Attitudes toward globalisation have emerged as a new dimension of political alignment, alongside – or even instead of – the traditional left-right cleavage. This column uses data covering nearly 450,000 individuals in 118 countries over the last ten years to show that highly skilled individuals approve of their government more when high skill-intensive exports increase, but approve of it less when high skill-intensive imports rise. More generally – and contrary to the conventional wisdom – unskilled workers do not oppose imports and blame their leaders for failing to protect markets.

Stéphanie Brunelin, Jaime de Melo, Alberto Portugal-Perez, 27 April 2018

Rules of origin play a crucial role in preferential trade agreements, and they can also deny intended market access for preference receivers. This column examines a relaxation by the EU of the origin requirements for selected products from Jordan, which is intended to create 200,000 job opportunities for Syrian refugees. While the relaxation decision may have an effect on the refugee crisis in Jordan, further simplifications in RoO requirements are called for.

Emine Boz, Gita Gopinath, Mikkel Plagborg-Moller, 11 February 2018

In international macroeconomics, it is typically assumed that the exchange rate between two trading partners matters most for trade prices, quantities, and terms of trade. This column presents evidence supporting an alternate view – that a country’s exchange rate relative to the US dollar is most important. This is because invoicing in dollars is common, even when the US is not part of a transaction. The findings have important implications for the conduct of monetary and exchange rate policies.

Alan de Bromhead, Alan Fernihough, Markus Lampe, Kevin O'Rourke, 24 March 2017

With Brexit looming, and protectionist pressures mounting elsewhere in the developed world, the question of whether trade policy matters is taking on more significance. This column looks at the extent to which trade policy was responsible for the shift towards intra-imperial trade in the interwar period. Both tariffs and quotas increased the Empire’s share of British trade, suggesting that trade policy mattered more for interwar trade patterns than the cliometric literature has suggested.

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.

Friederike Niepmann, Tim Schmidt-Eisenlohr, 11 June 2016

To mitigate the risks of international trade for firms, banks offer trade finance products – specifically, letters of credit and documentary collections. This column exploits new data from the SWIFT Institute to establish key facts on the use of these instruments in world trade. Letters of credit (documentary collections) cover 12.5% (1.7%) of world trade, or $2.3 trillion ($310 billion). 

Emilie Anér, Anna Graneli, Magnus Lodefalk, 14 October 2015

A large body of research has established a positive link between immigrants and bilateral trade. However, the temporary movement of people across borders has received less attention. This column uses Swedish data to analyse the impact of temporary cross-border movement on trade. Recently arrived migrants are found to reduce the negative impact of distance on foreign trade, by assisting firms to overcome informal and informational barriers to trade with their origin country. Facilitating movement of people across borders can be a highly useful tool for engaging in and benefitting from specialised and internationalised production networks.

Maria Bas, Vanessa Strauss-Kahn, 14 July 2014

The rise of trade in intermediate inputs is well documented, but its role in shaping domestic economies is not yet completely understood. This column presents evidence from French firms on the effects of importing intermediate inputs. Firms importing more varieties of intermediate inputs increased their productivity and exported more varieties. Foreign inputs from the most advanced economies have the strongest effect on firm productivity, but imported inputs from all countries help raise the number of export varieties.

Mary Amiti, Oleg Itskhoki, Jozef Konings, 19 February 2013

Why is it that large movements in exchange rates have small effects on international prices? What does this mean for a crisis-stricken Eurozone? Using firm-level data, this column presents new research that investigates this exchange rate ‘disconnect’. Evidence suggests that the prices of the largest firms – with their disproportionately large share of trade – are insulated from exchange rate movements. The international competitiveness effects of a euro devaluation are therefore likely to be modest, given major exporters’ reliance on global supply chains.

Andreas Moxnes, Karen Helene Ulltveit-Moe, Esther Ann Bøler, 18 July 2012

With trade barriers rising, the time is right to refresh the evidence that openness to trade comes with substantial benefits. This column focuses on the complementarity between R&D and foreign sourcing. Looking at Norwegian firms from 1997 to 2005, it argues that one fifth of productivity growth came from sourcing more foreign products, while the remaining four fifths came from technical change.

Yasuyuki Todo, 07 June 2012

How do firms go international? This column reviews evidence from industrialised and emerging economies, including Japan and China, with some surprising findings.



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