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21. Containing Tariff Evasion*

Author:
Clément Anne, Cyril Chalendard, Ana Fernandes, Bob Rijkers, and Vincent Vicard
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
To identify transactions at risk of tariff evasion, this paper matches export transaction data from France with import transaction data from Madagascar using container identifiers. Reporting discrepancies between exporters and importers are prevalent but small, with over two-fifths of importers reporting in a way that increases their tariff liability. Yet, aggregate tariff revenues are 24 percent lower due to discrepancies. These revenue losses are highly concentrated: the top five evaders account for three-quarters of all tariff revenue losses and larger shipments are more at risk of evasion. Tariff enforcement in Madagascar is ineffective and only marginally mitigates revenue losses.
Topic:
Corruption, Tariffs, Exports, Trade, Imports, and Tax Evasion
Political Geography:
Africa, Madagascar, and Global Focus

22. Why Origin Matters in Trade Data*

Author:
Pierre Cotterlaz and Vincent Vicard
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Different reporting standards are applied to determine the country of origin of trade flows in existing international trade databases, altering the geography of trade. We illustrate this issue using two extensively used trade databases, UN-Comtrade and IMF-DoTS and show that it has important implications when evaluating the impact of trade policies using a gravity framework. We provide evidence that IMF-DoTs applies different reporting standards for intra- and extra-EU trade from 1999 onwards. Such discrepancies generate a (significant) upward bias in the estimated impact of RTA, the EU and the euro area on trade. Reporting standards also differ across declaring countries in UN-Comtrade. We show that it inflates the estimated impact of Brexit on trade.
Topic:
Treaties and Agreements, European Union, Brexit, Statistics, and Trade
Political Geography:
Global Focus

23. Retaliation through Temporary Trade Barriers

Author:
Davide Furceri, Jonathan Ostry, Chris Papageorgiou, and Pauline Wibaux
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Are Temporary Trade Barriers (TTBs) introduced for strategic reasons? To answer this question, we construct a novel sectoral measure of retaliation using daily bilateral data on TTB responses in 1220 subsectors across a panel of 25 advanced and emerging market economies during the period 1989-2019. Stylized facts and econometric analysis suggest that within-year responses are more important in terms of intensity and frequency than commonly understood from the existing literature, which has tended to ignore them. We find that retaliation often consists of responses across many sectors and that same-sector retaliation is far from being the norm. In addition, we find that larger countries tend to retaliate more, and that retaliation is larger during periods of higher unemployment and when the trading partner targeted a domestic comparative advantage sector.
Topic:
Trade, Protectionism, and Antidumping
Political Geography:
Global Focus

24. Populism and the Skill-Content of Globalization: Evidence from the Last 60 Years

Author:
Frédéric Docquier, Lucas Guichard, Stefano Iandolo, Hillel Rapoport, Riccardo Turati, and Gonzague Vannoorenberghe
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
We analyze the long-run evolution of populism and explore the role of globalization in shaping such evolution. We use an imbalanced panel of 628 national elections in 55 countries over 60 years. A rst novelty is our reliance on both standard (e.g., the "volume margin", or vote share of populist parties) and new (e.g., the "mean margin", a continuous vote-weighted average of populism scores of all parties) measures of the extent of populism. We show that levels of populism in the world have strongly fluctuated since the 1960s, peaking after each major economic crisis and reaching an all-time high – especially for right-wing populism in Europe – after the great recession of 2007-10. The second novelty is that when we investigate the "global" determinants of populism, we look at trade and immigration jointly and consider their size as well as their skill-structure. Using OLS, PPML and IV regressions, our results consistently suggest that populism responds to globalization shocks in a way which is closely linked to the skill structure of these shocks. Imports of low-skill labor intensive goods increase both total and right-wing populism at the volume and mean margins, and more so in times of de-industrialization and of internet expansion. Low-skill immigration, on the other hand, tends to induce a transfer of votes from left-wing to right-wing populist parties, apparently without aecting the total. Finally, imports of high-skill labor intensive goods, as well as high-skill immigration, tend to reduce the volume of populism.
Topic:
Globalization, Immigration, Elections, Populism, and Trade
Political Geography:
Global Focus

25. Cheaper and Faster: The Role of Air Services Agreements on Transportation

Author:
Charlotte Emlinger and Amélie Guillen
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
We assess the impact of bilateral air services agreements (ASAs) on air transportation using an unique dataset providing direct observations of bilateral air transport cost and time for a standardized good, for 1,190 country-pairs, between 2011 and 2015. Our results show that ASAs reduce transportation cost by 8% while they only impact transportation time for landlocked countries and RTA members. Our estimates also reveal that bilateral trade decreases cost of transport, which highlights the role of backhauling in air transportation.
Topic:
Trade, Transportation, and Air Services Agreement
Political Geography:
Global Focus

26. Voluntary Carbon Markets: A Review of Global Initiatives and Evolving Models

Author:
Allegra Dawes, Cy McGeady, and Joseph Majkut
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
The global voluntary carbon market, and its supporting industry ecosystem, has grown substantially from its origins in the early 1990s. Despite this growth, voluntary markets have been hampered by reputational and functional concerns about offset quality and the space remains fragmented. With no long-term regulatory obligations or pricing signals on carbon, firms are left to chart their net-zero paths with little guidance or policy vision. The question is whether organized voluntary carbon markets can help resolve these challenges by creating credible incentives for emissions reductions. This brief reviews recent initiatives aimed at creating more functional, transparent, and effective carbon marketplaces. In many cases, there is a growing intersection between government and private sector activity in voluntary markets. These novel initiatives demonstrate how market design choices imply different goals for voluntary markets. These models suggest new ways for governments to support the legitimacy and success of voluntary markets. This brief considers how these market approaches could be best suited to support U.S. policy and trade strategies.
Topic:
Climate Change, Business, Trade, Sustainability, and Carbon Markets
Political Geography:
Global Focus

27. Does Gravity Matter for Trade in Intermediate Services?

Author:
Anmol Kaur Grewal
Publication Date:
10-2023
Content Type:
Working Paper
Institution:
Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:
This paper makes a twofold contribution to the literature on trade in services. First, I construct a novel bilateral dataset of trade in services differentiating between final consumption and intermediate consumption following the most recent classification of UN’s Broad Economic Categories (BEC Rev. 5). Second, I use this dataset to estimate a gravity model of trade in intermediate and final services for a sample of 48 economies for the time period 2010-2019. Using a robust model specification consistent with the recent advancements in the gravity literature, I find that trade in services exhibits a sensitivity to bilateral distance between trading partners, similar to trade in goods. Intermediate services tend to be more sensitive to distance relative to final services due to the distinct nature of these services (B2B versus B2C). Common language and common borders are important determinants of both trade in intermediate and final services. I also find evidence of non-linear effects of time zone differences on trade in services.
Topic:
Economics, Services, Trade, Consumption, and Intermediate Services
Political Geography:
Global Focus

28. Foreign Linkages, Innovation & Productivity: Evidence from Enterprise Surveys

Author:
Anmol Kaur Grewal
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:
This paper estimates a three-stage structural model of how foreign linkages affect innovation which in turn affects firm productivity. Using harmonized firm-level data from the World Bank Enterprise Surveys, I construct a panel dataset for 47 developing countries spanning 2003 to 2019. I distinguish between four types of foreign linkages (exports, imports, inward foreign direct investment (FDI) and the use of foreign-licensed technology), and two types of innovation (product innovation and process innovation). To mitigate concerns regarding sample selection and endogeneity biases, I employ advanced panel data methods. In the first stage, I find that being an exporter, using foreign inputs, and using foreign-licensed technology makes firms more likely to invest in R&D, relative to other firms. I also find evidence of sample selection bias which is corrected by using a two-step Heckman selection model. In the second stage, I find that while increases in the R&D intensity increase the probability of product innovation, they have no statistically significant effect on the likelihood of process innovation. In the third stage, I find that product or process innovation is associated with increases in firm-level productivity. These results remain robust across alternative measures of innovation and firm productivity.
Topic:
Economics, Innovation, Trade, and Productivity
Political Geography:
Global Focus

29. Multilateralism Index: Pilot Report

Author:
International Peace Institute
Publication Date:
09-2022
Content Type:
Policy Brief
Institution:
International Peace Institute (IPI)
Abstract:
In the past several years, there has been a much-discussed rise in strain on multilateralism. However, there have been few efforts to quantifiably assess the state of the multilateral system. This Multilateralism Index (MI) report is the first known attempt to do so. It focuses on developments in the system over the past decade, providing a snapshot of its relative strength in 2020 compared to 2010. It seeks to answer questions including: What is the state of the multilateral system? What is working? What is not? And how has the multilateral system changed over time? The MI examines five domains of multilateral coordination: Peace and Security, Human Rights, Environment, Public Health, and Trade. Each domain is evaluated across three dimensions: Participation, Performance, and Inclusivity. Analysis of sixty-five indicators across these domains and dimensions reveals several trends in multilateral cooperation over the past decade: Participation scores for Human Rights, Public Health, and Trade have improved, while the scores for Peace and Security and Environment have deteriorated. Performance scores have deteriorated in four out of five domains. Inclusivity scores have improved across all five domains. These trends shed light on the nature of the crisis of multilateralism. Rather than decreased international cooperation and widespread exit from multilateral institutions, we are seeing a battle over the nature and purpose of the multilateral system—not decay, but transformation. The MI provides a basis for tracking this transformation and informing decision making on the future of multilateralism.
Topic:
Security, Environment, Human Rights, Multilateralism, Peace, Trade, and Public Health
Political Geography:
Global Focus

30. Deglobalisation and Protectionism

Author:
Uri Dadush
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Trade in goods has slowed markedly since the global financial crisis (GFC), but there is no deglobalisation: most countries have seen increased international integration across nearly all goods, services and factor markets. China has become more self-reliant and is a notable exception in goods trade. Despite some dramatic instances, protectionism has largely been kept at bay and trade in goods remains quite free, perhaps freer than it was before the GFC. The proliferation and deepening of free trade agreements have contributed to this outcome. There has been deglobalisation of capital markets, but not because of protectionism. Despite efforts to erect barriers in some sensitive sectors, technology flows quite freely across borders because of the internet. However, trade policy uncertainty increased after the election of President Trump, a trend that persists under President Biden, and the biggest challenge is to avoid backsliding. There are many missed opportunities in the globalisation of services and of capital flows – especially those to developing countries. Increased migration remains potentially the largest source of gain from globalisation, but it is also the most fraught politically.
Topic:
Economy, Trade, Trade Policy, and Competition
Political Geography:
Global Focus