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1. Exporting out of China or out of Africa? Automation versus Relocation in the Global Clothing Industry

Author:
Tilman Altenburg, Xiao Chen, Wilfried Lütkenhorst, Cornelia Staritz, and Lindsay Whitfield
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
The Discussion Paper examines the opportunities that the rising industrial wages in China will bring for Africa. China has been the industrial workbench of the global economy for decades. However, its competitive advantages are waning, particularly for labour-intensive assembly activities in the clothing, shoe, electronics and toy industries. The Chinese government estimates that up to 81 million low-cost industrial jobs are at risk of relocation to other countries - unless China can keep the companies in the country through automation. Against this background, three complementary studies were carried out. The first examines where the automation technology for clothing and footwear production stands today; the second, how clothing companies in China deal with the cost pressure: to what extent they automate, relocate within China or abroad and how great is the interest in Africa as a production location. The third part is devoted to Africa’s competitiveness in clothing assemly, with empirical findings from Ethiopia and Madagascar. The Discussion Paper shows that the manufacture of clothing can already be robotized today, but that for sewing, robotization will probably remain more expensive than manual labor in the next 15-20 years. China’s companies are investing heavily in the automation of all other production processes and at the same time shifting production to neighbouring Asian countries. In Africa, only Ethiopia is currently competitive in the manufacture of clothing, and here too there are significant institutional difficulties in absorbing large amounts of direct investment.
Topic:
Industrial Policy, Labor Issues, Foreign Direct Investment, Exports, and Automation
Political Geography:
Africa, Europe, Germany, Ethiopia, and Madagascar

2. African Jobs in the Digital Era: Export Options with a Focus on Online Labour

Author:
Elvis Melia
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
This study asks what impact the Fourth Industrial Revolution will have on job creation and catchup development in Sub-Saharan Africa over the coming decade. Can light manufacturing export sectors still serve African development the way they served East Asian development in the past? If factory floor automation reduces the need for low-cost labour in global value chains, can IT-enabled services exports become an alternative driver of African catch-up development? I present case study evidence from Kenya to show that online freelancing has become an interesting sector, both in terms of its growth trajectory, and in terms of worker upward mobility in the global knowledge economy. As life everywhere moves further into the digital realm, and global internet connectivity between Africa and the rest of the world grows, more and more young Africans who stream onto the labour market may find work in the world of global online freelancing. I discuss the building blocks needed to make online work a sustainable vehicle for African catch-up development in the years ahead.
Topic:
Development, Science and Technology, Labor Issues, Internet, Exports, Manufacturing, and Industry
Political Geography:
Kenya and Africa

3. Export controls: America’s other national security threat

Author:
Chad P. Bown
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
While the public was transfixed by the Trump administration’s policies alleging that imports were a threat to America’s national security during 2017–20, there was a concomitant and more quiet US policy shift on the export side. Addressing the national security threat presented by exports posed different economic and institutional challenges from those associated with import policy, including the acknowledgment that export controls for legitimate national security reasons can be the first-best policy to confront the problem at its source. Yet, export controls could also be misused as a beggar-thy-neighbor policy to redistribute economic well-being across countries, even from one ally to another. This paper describes how US export control policy evolved over 2017–20, as well as the international institutions—first the Coordinating Committee for Multilateral Export Controls (COCOM), then the Wassenaar Arrangement—historically tasked with multilateralizing US export restrictions used to protect national security. With the potential for US export control policy to brush up more frequently against WTO rules designed to limit the use of export restrictions, the paper also highlights new challenges for the WTO’s system of resolving trade disputes. Overall, a US failure to strike the right balance for its export control policy would result in it being ineffective at addressing national security risks, costly for the economy, and problematic for trade and diplomatic relations.
Topic:
Economics, Government, National Security, Exports, and Trade
Political Geography:
North America and United States of America

4. The Impact of the EAEU-Iran Preferential Trade Agreement

Author:
Amat Adarov and Mahdi Ghodsi
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
The preferential trade agreement between the Eurasian Economic Union (EAEU) and Iran on mutual trade entered into force in October 2019. In this report we estimate its expected impact at aggregate and sectoral levels using the gravity model of trade based on the global sample of bilateral trade flows at the HS 6-digit level. The analysis suggests that the implementation of the agreement will boost mutual trade for both trading partners, with relatively greater gains expected for the EAEU’s exports to Iran. On aggregate, the total gains in mutual trade are estimated to reach almost USD 46 million, with exports from the EAEU to Iran expected to increase by 9.7%, compared with a rise in exports from Iran to the EAEU of up to 4%. The difference in the impact will also be significant across the five EAEU countries as well as across sectors, with the major export gains expected to accrue in the chemicals and agri-food sectors, especially trade in miscellaneous fruits and vegetables, as well as in the textile, polymer production and metals sectors.
Topic:
Economics, Treaties and Agreements, Global Political Economy, Exports, and Trade
Political Geography:
Iran, Kazakhstan, Armenia, and Belarus

5. Eastern Mediterranean: Testing Egypt’s Geopolitical Ambitions?

Author:
Alessia Melcangi
Publication Date:
07-2020
Content Type:
Commentary and Analysis
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
After an uncertain political transition following the 2011 revolts, Egypt seems ready to reshape its geopolitical role in the Mediterranean area and fulfil its geostrategic goals, always maintaining their national security principle to be an essential objective of its domestic and foreign policy. The two main closely and interconnected scenarios, where the country’s strategic ambitions are projected, move from Libya to the contested waters of the Eastern Mediterranean. In particular the latter represents an area that, in recent years, has become a hotspot for the global energy market due to huge gas-field discoveries. It is enough to imagine how the fight for the control of these resources are shaping the region, elevating it to a potential geostrategic game-changer for the coastal countries such as Egypt.
Topic:
Economics, Natural Resources, Geopolitics, and Exports
Political Geography:
Middle East, Egypt, and Mediterranean

6. China’s Monopoly on Rare Earth Elements—and Why We Should Care

Author:
June Teufel Dreyer
Publication Date:
10-2020
Content Type:
Commentary and Analysis
Institution:
Foreign Policy Research Institute
Abstract:
According to geologists, rare earths are not rare, but they are precious. The answer to what appears to be a riddle lies in accessibility. Comprising 17 elements that are used extensively in both consumer electronics and national defense equipment, rare earth elements (REEs) were first discovered and put into use in the United States. However, production gradually shifted to China, where lower labor costs, less concern for environmental impacts, and generous state subsidies enabled the People’s Republic of China (PRC) to account for 97 percent of global production. In 1997, Magniquench, then-America’s leading rare earths company, was sold to an investment consortium headed by Archibald Cox, Jr., son of the same-named Watergate prosecutor, with two Chinese state-owned metals firms, San Huan New Materials and China National Nonferrous Metals Import and Export Company. The chairman of San Huan, son-in-law of paramount leader Deng Xiaoping, became chairman of the company. Magniquench was shut down in the United States, moved to China, and reopened in 2003, where it fit in well with Deng’s Super 863 Program to acquire cutting-edge technologies for military applications, including “exotic materials.” This left Molycorp as the last remaining major rare earths producer in the United States until its collapse in 2015.
Topic:
International Trade and Finance, Natural Resources, Exports, and Supply Chains
Political Geography:
China and Asia

7. How Washington Learned to Stop Worrying and Love the UAE

Author:
Albadr AbuBaker Alshateri
Publication Date:
02-2020
Content Type:
Commentary and Analysis
Institution:
American Diplomacy
Abstract:
When Dubai World Ports (DWP), a Dubai Government-owned entity, sought to purchase the British company Peninsular and Oriental Steam Navigation (P&O) in 2006, it faced huge opposition from the US Congress, local authority, and national security experts, despite the Bush Administration’s approval of the deal. The acquisition of P&O would have given the Dubai company the concession to run six major ports in the USA.
Topic:
Foreign Policy, Diplomacy, Exports, Trade, and Imports
Political Geography:
North America, United Arab Emirates, United States of America, and Gulf Nations

8. Transparency and Reporting on Arms Exports within and from the EU

Author:
Ian Stewart
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
James Martin Center for Nonproliferation Studies
Abstract:
The EU’s annual report on arms export control presently lags behind the national reports of many countries. The introduction of a searchable online database will be a substantial step in increasing the user-friendliness of the report. This paper makes recommendations with regard to readability, comprehensiveness and comparability. Perhaps the principal recommendation is that steps be taken to harmonise the data provided under the categories ‘licensed value’ and ‘actual exports’, which are presently not consistently interpreted across the EU. The main argument of this paper is that the EU should move towards using data visualisation to complement the lengthy statistical tables in the annual report and thus make it more readable. The EU and its Member States should also explore opportunities to enhance the data contained in the report to include additional identified data fields, narrative sections to complement the statistical data, and disaggregated data on licence denials. In identifying additional data fields that could be included, the paper also examines the challenges associated with the provision of the data in each case.
Topic:
Arms Control and Proliferation, Regional Cooperation, European Union, Exports, and Illegal Trade
Political Geography:
Europe

9. East Asia's Decoupling

Author:
Roland Rajah
Publication Date:
01-2019
Content Type:
Commentary and Analysis
Institution:
Lowy Institute for International Policy
Abstract:
East Asia is no longer reliant on US or Western markets to fuel its growth, giving it more room to manage amid global trade tensions. Heightened global trade tensions and the US desire to ‘decouple’ from the Chinese economy for national security reasons pose significant risks to East Asia’s export-driven growth model. However, the latest data suggests East Asia is no longer so dependent on exporting to the West, with China in particular eclipsing the United States as the leading source of ‘final demand’ for the rest of the region’s exports. This gives East Asia much greater room to manoeuvre, as regional integration is now a more viable platform for growth while US decoupling efforts will likely struggle to find traction in the region.
Topic:
Economics, International Trade and Finance, Global Markets, and Exports
Political Geography:
China, East Asia, Asia, North America, and United States of America

10. The Effect of Export Insurance and Guarantees on Export Performance: An Empirical Analysis for Korea

Author:
Kyunghun Kim and Hyelin Choi
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
There is a series of empirical papers (Kim and Lee 2004; Egger and Url, 2006; Moser, Nestmann, and Wedow, 2008; Baltensperger and Herger, 2009; Auboin and Engemann, 2014; Van der Veer. 2015) which show that trade finance is positively associated with export. Despite its positive impact on export, trade finance has been a contentious issue in international organizations such as the WTO and OECD in terms of implementing related policy measures. This is based on the argument that trade finance hurts fair international trade because it ultimately plays a role just like a subsidy. Regarding this contentious issue, in this paper we examine whether there is evidence supporting that trade finance is associated with an increase in export. We also investigate the channel through which the effect of the trade finance on export is working. To this end, we focus on a specific part of trade finance: short-term export insurance and export credit guarantee. This is because noble and ample data on these types of trade insurance are available. This confidential data is provided by the Korea Insurance Trade Corporation (henceforth K-SURE) exclusively. We conduct a panel regression using Korean sector-level export data covering from 2010Q1 to 2017Q4. This dataset enables us to control for destination country-, sector-, and time-fixed effects. Our empirical results show that the short-term export insurance and export credit guarantee have a positive impact on exports, and the main channel behind this is related to mitigating financial constraints of exporting firms. The trade finance effectively eliminates the risk of importers' payment, which helps export firms reduce the financial frictions. This ultimately leads to an increase in export. Since the main mechanism in which the trade insurance affects export is related to alleviating financial frictions, it becomes more definite that the way how trade insurance contributes to an increase in export is somewhat different from that of a subsidy. When we consider the fact that financial friction is an important factor for restraining international trade, which can partly explain the great collapse in international trade during the global financial crisis, the trade insurance policies would rather be a useful policy measure which can dampen negative impact on export during recession.
Topic:
Finance, Economic Policy, Exports, and Trade Policy
Political Geography:
Asia and South Korea