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531. The Impact of Intranational Trade Barriers on Exports: Evidence from a Nationwide VAT Rebate Reform in China

Author:
Jie Bai and Jiahua Liu
Publication Date:
12-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
It is well known that various forms of non-tariff trade barriers exist within a country. Empirically, it is difficult to measure these barriers as they can take many forms. We take advantage of a nationwide VAT rebate policy reform in China as a natural experiment to identify the existence of these intranational barriers due to local protectionism and study the impact on exports and exporting firms. As a result of shifting tax rebate burden, the reform leads to a greater incentive of the provincial governments to block the domestic flow of non-local goods to local export intermediaries. We develop an open-economy heterogenous firm model that incorporates multiple domestic regions and multiple exporting technologies, including the intermediary sector. Consistent with the model’s predictions, we find that rising local protectionism leads to a reduction in interprovincial trade, more “inward-looking” sourcing behavior of local intermediaries, and a reduction in manufacturing exports. Analysis using micro firm-level data further shows that private companies with greater baseline reliance on export intermediaries are more adversely affected.
Topic:
International Trade and Finance, Political Economy, Reform, and Tariffs
Political Geography:
China and Asia

532. Quid Pro Quo, Knowledge Spillover and Industrial Upgrading

Author:
Jie Bai, Panle Barwick, Shengmao Cao, and Shanjun Li
Publication Date:
11-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Are quid pro quo (technology for market access) policies effective in facilitating knowledge spillover to developing countries? We study this question in the context of the Chinese automobile industry where foreign firms are required to set up joint ventures with domestic firms in return for market access. Using a unique dataset of detailed quality measures along multiple dimensions of vehicle performance, we document empirical patterns consistent with knowledge spillovers through both ownership affiliation and geographical proximity: joint ventures and Chinese domestic firms with ownership or location linkage tend to specialize in similar quality dimensions. The identification primarily relies on within-product variation across quality dimensions and the results are robust to a variety of specifications. The pattern is not driven by endogenous joint-venture network formation, overlapping customer base, or learning by doing considerations. Leveraging additional micro datasets on part suppliers and worker flow, we document that supplier network and labor mobility are important channels in mediating knowledge spillovers. However, these channels are not tied to ownership affiliations. Finally, we calibrate a simple learning model and conduct policy counterfactuals to examine the role of quid pro quo. Our findings show that ownership affiliation facilitates learning but quality improvement is primarily driven by the other mechanisms.
Topic:
International Trade and Finance, Science and Technology, and Developing World
Political Geography:
China and Asia

533. Collective Reputation in Trade: Evidence from the Chinese Dairy Industry

Author:
Jie Bai, Ludovica Gazze, and Yukun Wang
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Collective reputation implies an important externality. Among firms trading internationally, quality shocks about one firm’s products could affect the demand of other firms from the same origin country. We study this issue in the context of a large-scale scandal that affected the Chinese dairy industry in 2008. Leveraging rich firm-product level administrative data and official quality inspection reports, we find that the export revenue of contaminated firms dropped by 84% after the scandal, relative to the national industrial trend, and the spillover effect on non-contaminated firms is measured at 64% of the direct effect. Notably, firms deemed innocent by government inspections did not fare any better than noninspected firms. These findings highlight the importance of collective reputation in international trade and the challenges governments might face in signaling quality and restoring trust. Finally, we investigate potential mechanisms that could mediate the strength of the reputation spillover. We find that the spillover effects are smaller in destinations where people have better information about parties involved in the scandal. New firms are more vulnerable to the collective reputation damage than established firms. Supply chain structure matters especially in settings where firms are less vertically integrated and exhibit fragmented upstream-downstream relationships.
Topic:
International Trade and Finance, Markets, Business, Global Political Economy, and Accountability
Political Geography:
China and Asia

534. Can the European Union Save Multilateralism?

Author:
Mikael Barfod
Publication Date:
05-2019
Content Type:
Journal Article
Journal:
American Diplomacy
Institution:
American Diplomacy
Abstract:
Controversies have abounded, including Palestine and Israel within the UN's Human Rights Council, lack of US support for the International Law of the Sea (since 1994), and the International Criminal Court (since 2002). Collectively, the European Union and its Member States remain by far the largest financial contributor to the UN, providing 30% of all contributions to the budget and 31% of peace-keeping activities in addition to substantial contributions towards project-based funding. 4. Some may object that the European Union has been hampered by the lack of a common position among EU Member States on the future of the UN Security Council (UNSC), where two member-states, UK and France, currently have permanent seats and one, Germany, is desperate to get one.
Topic:
International Relations, Cold War, Human Rights, European Union, and Multilateralism
Political Geography:
Africa, China, United Kingdom, Europe, Iran, Israel, Asia, France, Germany, and United States of America

535. Hong Kong — Yesterday, Today and Tomorrow

Author:
Dick Virden
Publication Date:
11-2019
Content Type:
Journal Article
Journal:
American Diplomacy
Institution:
American Diplomacy
Abstract:
Watching the unfolding drama in the streets of Hong Kong, as police and protestors clash daily over the city-state’s future, brings back vivid memories of another, distant era when, for visitors like me, the then-Crown Colony was a tantalizing, intoxicating, mixture of East and West. It was more than half a century ago, in January of 1967, when I first stopped in Hong Kong en route to Bangkok for my initial assignment in the Foreign Service. I’d never ventured outside the United States before and was bowled over by the sights, sounds, and smells of this teeming island group off the tip of mainland China.
Topic:
Diplomacy, History, Democracy, Protests, and Memoir
Political Geography:
China, Asia, North America, Hong Kong, and United States of America

536. The 1978 Revolution in Afghanistan

Author:
Larry Clinton Thompson
Publication Date:
02-2019
Content Type:
Journal Article
Journal:
American Diplomacy
Institution:
American Diplomacy
Abstract:
April 27, 1978 was a pleasant, sunny day in Kabul. It was Thursday. I worked at the American embassy and, in harmony with Islamic custom, our “weekends” were Thursday and Friday. I went horseback riding that morning. It was spring. The valleys were emerald green and dotted with orange-blooming pomegranate trees. Driving home at noon, I noticed nothing amiss.
Topic:
Cold War, Diplomacy, Peace Studies, Coup, and Memoir
Political Geography:
Afghanistan, Asia, Soviet Union, North America, Kabul, and United States of America

537. Vice President Nixon and Cold War Public Diplomacy

Author:
Hans Tuch
Publication Date:
09-2019
Content Type:
Journal Article
Journal:
American Diplomacy
Institution:
American Diplomacy
Abstract:
Between 1959-1991, the U.S. Information Agency mounted a series of exhibitions in the Soviet Union featuring various aspects of American life and culture. The 1959 American National Exhibition in Moscow, best known for the famous “kitchen debate” between Vice President Richard Nixon and Soviet Premier Nikita Krushchev, was visited by 2.7 million Soviets. USIA officer Hans Tuch recounts some of the interaction between Nixon and Krushchev.
Topic:
Cold War, Diplomacy, Culture, and Memoir
Political Geography:
Asia, Soviet Union, North America, and United States of America

538. A Rare Bloom in Beijing

Author:
May Johnston
Publication Date:
05-2019
Content Type:
Journal Article
Journal:
American Diplomacy
Institution:
American Diplomacy
Abstract:
Chinese universities first reopened after the Cultural Revolution in 1977. Since 1949, no academic degrees had been awarded in China. The professors agreed with us that the time had come to invite specialists in American history and American literature to teach about our cultural patrimony rather than just teach English. Were we interested to learn about traditional Chinese opera, recently resurrected from the dead after the Gang of Four's departure? How did he, alone of all the officials I met in my two and a half years in Beijing, remain warm, curious, cheerful, open, enthusiastic, ever flashing a thousand watt smile and above all, so alive? I have photos of Ma grinning as he tried out my colleague's American motorcycle, Ma helping my two-year-old daughter with her chopsticks, Ma joking with the newly arrived Fulbright professors, who ended up relying on Ma as their interlocutor for every request or misunderstanding with the BeiDa authorities.
Topic:
Diplomacy, Education, History, Culture, and Memoir
Political Geography:
China, Asia, North Africa, Hong Kong, and United States of America

539. America’s Response to China: A History of Sino-American Relations, 6th Edition

Author:
Warren Cohen
Publication Date:
09-2019
Content Type:
Book
Institution:
Columbia University Press
Abstract:
America’s Response to China has long been the standard resource for a succinct, historically grounded assessment of an increasingly complicated relationship. Written by one of America’s leading diplomatic historians, this book analyzes the concerns and conceptions that have shaped U.S.–China policy and examines their far-reaching outcomes. Warren I. Cohen begins with the mercantile interests of the newly independent American colonies and discusses subsequent events up to 2018. For this sixth edition, Cohen adds an analysis of the policies of Barack Obama and extends his discussion of the Chinese–American relationship in the age of potential Chinese ascendance and the shrinking global influence of the United States, including the complications of the presidency of Donald Trump. Trenchant and insightful, America’s Response to China is critically important for understanding U.S.–China relations in the twenty-first century.
Topic:
History and Asia
Political Geography:
China and Asia
Publication Identifier:
9780231549615
Publication Identifier Type:
ISBN

540. From the EMS to the EMU and...to China

Author:
Joseph Halevi
Publication Date:
11-2019
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The paper highlights the position of German authorities, showing that they were quite lucid about the fundamental weaknesses inherent in a process that separated monetary from fiscal policies by giving priority to the centralization of the former. Instead of repeating the well known critiques levelled against the EMU – for which readers are referred to the unsurpassed treatment by Stiglitz, the essay highlights the splintering of Europe in the way in which it has unfolded during the 1990s and in the first decade of the present millennium. In particular the early economic and political origins of the terminal crisis of Italy are located between the late 1980s and the 1990s. France is shown to belong increasingly to the so-called European periphery by virtue of a weakening industrial structure and persistent balance of payments deficits. The paper argues that France regains its central role by political means and through its weight as an active nuclear military power centered on maintaining its imperial interests and posture especially in Africa. The first decade of the present millennium is portrayed as the period in which a distinct German economic area had been formed in the midst of Europe with a strong drive to the east with an increasingly powerful gravitational pull towards the People’s Republic of China.
Topic:
Economics, International Political Economy, Political Economy, History, and Macroeconomics
Political Geography:
Africa, China, Europe, Asia, Germany, and Global Focus