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The editors are pleased to announce that the winner of the best paper prize for 2023 is Addis Yimer for his paper titled, 'The effects of FDI on economic growth in Africa', published in volume 32, issue 1, pages 2–36. We congratulate Dr. Yımer, who will receive a prize of 500 pounds. [Extracted from the article]

Several econometric studies, some undertaken for industrialised countries and some for emerging economies, have found that export participation by industrial enterprises tends to lower their energy intensity and CO2 emissions intensity. Similar studies undertaken for Indian manufacturing firms using firm-level data have also reached the same conclusion. This paper uses plant-level data for 2008–2015 to examine the impact of export intensity on the energy intensity of Indian manufacturing. The use of plant-level data has the advantage of incorporating location-specific differences into the analysis, such as the contribution of renewable energy sources (solar, wind, etc.) to the power supply in the state in which the plant is located. The paper finds a significant negative effect of export intensity on energy intensity, confirming earlier findings. Also, on a relative scale, the energy-efficiency-enhancing effect of exporting is larger for relatively more energy-intensive industries. Further, increases in the share of renewable energy in the power supply make industries more energy efficient. [ABSTRACT FROM AUTHOR]

This paper assesses the genealogy of competitive indices in international trade and theoretically develops a measure of export threat which estimates direct competition in vertical market segments. We identify the assumption of homogeneity in these export threat measures as a weakness that undermines accuracy. Hence, we develop a new measure of export threat, the direct intra-market threat (DIMT), which incorporates relative vertical and market share changes over time to accurately estimate a country’s direct threat to other exporters in a third market. We argue that the market segmentation method applied in complement to the DIMT estimate provides an all-encompassing methodology in the estimation of export threat, which we argue is superior to the Dynamic Index of Competitive Threat (DICT) and Direct Threat methodologies. The paper uses the case of China and India (CHINDIA) and the Caribbean Community (CARICOM) to assess the empirical estimates of the DIMT relative to DICT and Direct Threat over the period 2000–2021. Our study is motivated by a research gap in the estimation of the competitive threat posed by a large, diversified exporter on Small Island Developing States (SIDS). [ABSTRACT FROM AUTHOR]

What determines Foreign Direct Investment (FDI) inflows remains a primary concern of economists and policy makers; yet the uncertainty surrounding FDI theories and empirical approaches has created ambiguity regarding the determinants of FDI. This paper applies Leamer's (1983, 1985) traditional Extreme Bounds Analysis (EBA) as well as the Sala-I-Martin modified form of EBA to identify the robust determinants of FDI using cross-sectional data (averaged for the period of 1985-2016) covering 103 emerging and developing countries. We consider 33 potential economic, political and institutional determinants. To address concerns about multicollinearity, the VIF restriction specifies that only estimates with VIF below five are reported. The results show that all variables of interest are fragile determinants of FDI when using traditional EBA. Yet, when applying the Sala-i-Martin EBA, nine robust variables are revealed. Some policy implications are discussed. Highlights What determines Foreign Direct Investment (FDI) inflows remains a primary concern of economists and policy makers; yet the uncertainty surrounding FDI theories and empirical approaches has created ambiguity regarding the determinants of FDI. It is a common practice in the fields of economics and finance to report the most 'appealing' or convenient regression or regressions after an extensive search and data mining, given that the 'true' model is unknown. This paper applies traditional Extreme Bounds Analysis (EBA) as well as the Sala-i-Martin modified form of EBA to identify the robust determinants of FDI. We demonstrate that what is important is not the significance or otherwise according to one regression equation but rather the robustness or fragility of the variables in the sense that the sign and significance do not change over a large number of regressions selected according to a predetermined procedure. Policy makers would be able to understand the importance of the major determinants of FDI mentioned in the paper and take steps to formulate policies that encourage and attract more FDI. Such determinants could include market size, making regulations more international trade friendly and investing in the nation's human capital. Further, research and development facilities could be developed to provide a basis for technological advancements which would attract more FDI inflows. [ABSTRACT FROM AUTHOR]

Human capital and trade liberalization are playing a central role in growth theories. However, the link between human capital, trade liberalization, and economic growth remains a challenging question due to the inconclusive results of the previous studies. Paper contributes to this debate through asymmetric links among human capital, trade liberalization, and economic growth by incorporating labor and capital for Pakistan's economy by applying the nonlinear autoregressive distributed lag model. Results suggest that the positive and negative asymmetric impact of trade liberalization and human capital on growth substantially vary in the short and long run. In the long run, the increased trade liberalization hurts economic growth, while increased human capital has a minimal positive impact on economic growth in the short and long run. The implications of this paper are for economists and policymakers to strengthen the role of human capital and trade liberalization for Pakistan. [ABSTRACT FROM AUTHOR]

Gravity variables such as distance, adjacency, colony, free trade agreements or language are used to capture the effects of trade costs in empirical studies. By using actual data on trade costs, this paper decomposes the overall effects of such variables on trade into those through three gravity channels: duties/tariffs (DC), transportation-costs (TC), and dyadic-preferences (PC). As opposed to the existing literature where gravity variables act like supply shifters (through DC and TC), this paper empirically shows that they act like demand shifters (through PC). Regarding policy, it is implied that welfare-improving globalization cannot be achieved only through reductions in direct costs such as duties/tariffs or transportation costs; it is rather the globalization itself that should be promoted in order to shift the preferences of destination countries toward international products and thus reduce indirect trade costs. The results are further connected to several existing discussions in the literature, such as welfare gains from trade and the distance puzzle. [ABSTRACT FROM AUTHOR]

In the last few decades, most of the emerging market economies (EMEs) have adopted financial liberalization. Evidence shows that the financial sectors/institutions in emerging economies were either underdeveloped or functioning with a lot of inefficiencies under inadequate regulation. The paper examines whether liberalization in the financial sector has led to financial development for a bunch of EMEs including BRICS. The paper differs from the existing literature in its approach of dealing with the measurements of financial development and considering financial liberalization as a gradual process. Panel regressions are estimated for 9 countries based on 22 years' data for four aspects of financial development, viz. depth, efficiency, stability and competition. Results indicate that financial liberalization in terms of freedom in capital markets has a positive effect on financial depth and competition, whereas liberalization from government interference in the banks and other financial institutions has a positive impact on the stability of the financial sector. Trade openness has a role in enhancing the efficiency of the financial sector. Also, evidence suggests that capital account openness leads to increased depth and does not destabilize the financial sector. GDP, political stability, regulatory quality and government effectiveness are also important factors in influencing more than one aspect of financial development in a country. [ABSTRACT FROM AUTHOR]

This paper empirically examines how exports respond to exchange rate movements (exchange rate and exchange rate volatility) at the micro and macro levels using Turkey’s bilateral export data with 65 partner countries. Panel data contaninig 65 cross-sectional dimensions and 60 monthly time series dimensions from 2018:01 to 2022:12 are used. The empirical results of the Poisson Pseudo Maximum Likelihood (PPML) technique show that the negative effect of exchange rate volatility on micro export flows is amplified. Moreover, the potential positive effect of the exchange rate on micro export flows is weaker. Our findings are robust against the alternative method of exchange rate volatility and nominal exchange rate volatility. Our results are also intact under alternative robustness tests. The paper provides notable policy implications. Policymakers should be aware of the potential structural differences between micro and macro exports. Therefore, policymakers should also consider other aspects such as cross-border e-commerce when formulating economic policies on microexports. [ABSTRACT FROM AUTHOR]

Based on the database of China Migrants Dynamic Survey from 2011 to 2018, this paper explores the impact of trade openness on migrants’ marriage, and reveals that trade openness increases migrants’ divorce rate significantly. The potential mechanism analysis finds that trade openness affects migrants’ divorce rate through the channel of their marriage value. Besides, the heterogeneity test indicates that the impacts of trade openness on migrants’ marriage are heterogeneous across different regions, social and cultural environments, gender groups, and migration circles. Furthermore, the moderating effect analysis reveals that Confucian culture can weaken the impact of trade openness on migrants’ divorce rate, which has a negative moderating effect on the relation between trade openness and migrants’ divorce rate. Finally, this paper provides supporting evidence for the fact that trade openness does affect migrants’ marriage and thus offers a possible explanation for the continuously increasing divorce rate in China from the perspective of trade openness. [ABSTRACT FROM AUTHOR]

Digital finance is reshaping trade credit. This study investigates the influence of digital finance on trade credit among A-share listed companies in China from 2011 to 2020. The paper matches this data with city-level digital finance index (DFI) data. Empirical results indicate that digital finance significantly benefits trade credit. This impact occurs through bank competition, regulatory penalties, and disclosure quality channels. Different levels of digital finance development and financing constraints of companies have a varying impact on trade credit. This paper provides a new perspective on trade credit in the firm's supply chain that enriches theoretical research on digital finance. The research results can help the country to implement digital finance development strategy better and offer relevant guidance and reference. [ABSTRACT FROM AUTHOR]

Much effort has been devoted to understanding how trade openness is linked to technological progress. Less documented is the effect on green technology, which is particularly important as it is green technological progress that alleviates environmental degradation while improving economic growth. To fill the void, this paper empirically examines whether trade openness drives green technology development and whether the effect depends on the extent of trade openness and environmental policy stringency. In a sample covering both advanced and developing countries, the paper finds that green technology first decreases and then rises with increased trade openness, meaning that a sufficient level of trade openness is required for green technological progress. Tighter environmental policy is also found to weaken the beneficial effect of trade openness on green technological progress, implying that lax environmental policy creates a better environment for more open countries to develop green technology. However, these effects vary across countries, depending on the origin and destination of trade. [ABSTRACT FROM AUTHOR]

Research on the relationship between globalisation and the environment tends to focus on the direct effect of globalisation, rarely considering the role of institutions. This paper introduces insights from political economy, which suggests that environmental sustainability models would be greatly improved if institutions are considered. We test this hypothesis by estimating the relationship between economic globalisation, bureaucratic quality, and ecological footprint in Ghana for the period 1984–2016. The long-run analysis is based on the autoregressive distributive lag (ARDL) bound testing approach to cointegration. The result supports the hypothesis that expansion in economic globalisation has a reducing effect on environmental quality. Bureaucratic quality appears to exert a significant positive effect on ecological footprint. Furthermore, the estimation shows that the quality of institutions is critical for environmental quality. Based on the results the paper presents some policy recommendations. [ABSTRACT FROM AUTHOR]

The relationship between digital economy and signal information on firms‘ markup has been overlooked and not well explained, especially in the emerging economies. When there is information asymmetry or too much information, the export decisions of firms are not completed independently, but the result of the comprehensive trade-off of the export signals issued by the 'neighbors'. This paper discusses the impact of the development of digital economy on the markup of export firms by distinguishing two perspectives of export signal, namely herd behavior and peer effect. We find that the digital economy has a positive impact on firm markup. There is substitution effect in digital economy and export signals, and digital economy acts price bonus by influencing export signals. The growing popularity of market signals could offset some of the advantages of the digital economy on export markup for companies. In addition, our paper finds that foreign-owned firms, large-scale firms, highly competitive industries and non-digital economy industries adjust their markups more significantly when they were affected by export signals. [ABSTRACT FROM AUTHOR]

This paper examines the role that trade liberalisation policies play in attracting FDI flows to African economies from 2000 to 2017. This study contributes to the extant literature on the relevance of trade liberalisation policies in developing economies and in particular, African Countries. By employing new measures for trade liberalisation policies, the study estimated a System Generalized Method of Moment model to examine the relationship between trade liberalisation policies and FDI inflows to Africa. The findings suggest that the institutionalisation of policies to enhance trade liberalisation would be germane in attracting higher levels of FDI flows to African economies. [ABSTRACT FROM AUTHOR]

This paper has investigated the shocks effects of inflation, money supply, and exchange rate on the economies of the West African Monetary Zone (WAMZ) from 1987 to 2019 using the Kapetanios-Shin-Snell nonlinear cointegration test, Kilian-Vigfusson asymmetric tests, and Hatemi technique that allows the estimation of Asymmetric Structural Vector Autoregressive (ASVAR) model. The findings revealed that in all the countries, the shocks effects of inflation, money supply, and exchange rate are asymmetric except in Guinea and inflation in Liberia. Furthermore, for Gambia and Nigeria, only money supply is impacting the economies, while for Ghana, Guinea, and Liberia, none of the variables is impacting the economies but for Serra Leone, money supply and exchange rate are impacting its economy. Moreover, all the countries have common sources of shocks emanating from monetary and exchange rate policies except Gambia, which is monetary policy only. Therefore, the paper recommends the members, especially Ghana, Guinea, and Liberia, a solemn effort on appropriate monetary and exchange rate policies to boost their economies. Also, since almost all the countries have common sources of shocks emanating from monetary and exchange rate policies, they can embark into the monetary integration. [ABSTRACT FROM AUTHOR]

This paper proposes an innovative approach to modelling trade specialisation of Slovakia and Czechia. These countries have a limited export structure concentrated mainly on machinery and transport equipment that require recent technologies and are subject to continuous automation. We aimed to identify factors that impact Slovakia's and Czechia's performance in the automobile industry on the EU-28 market using the Auto Regressive Distributed Lag Approach. The Vollrath indicator of the revealed competitiveness (Vollrath 1987) demonstrates specialisation, representing a modification of the Balassa index of revealed comparative advantages (Balassa 1965). The paper shows compelling evidence of long-and-short-run asymmetry between trade specialisation and the real effective exchange rate in Slovakia. The results suggest that the Czech competitiveness in the automobile industry does not fall with a higher effective exchange rate. Other factors such as human capital and country size bolster the theoretical assumptions and show the over specialisation of both countries and chances to be less specialised with higher population growth. This paper's findings have a broader context and application for countries focusing primarily on manufacturing road vehicles. [ABSTRACT FROM AUTHOR]

This paper introduces political competition into a vertical model with successive duopolies. The upstream consists of a home state-owned enterprise (SOE) and foreign private intermediate-input producer while the downstream consists of home and foreign private final-good producers. The SOE manager lobbies for a better weight configuration comprised of profits and sales, the downstream domestic firm lobbies for more subsidies to enhance its profits and industrial policy, and the policymaker, as one agency, maximizes a weighted sum of the lobbyists' contributions and social welfare, sets policies for the two firms. The paper shows that it is in the interest of the SOE's manager to promote sales at the expense of profits. The upshot on the effects of lobbying is that the government will set too high a weight on sales for the SOE and will confer excessive subsidy to the downstream firm beyond the respective social optimal levels. Lobbying is therefore socially harmful. This paper further shows that if only one lobbyist contributes, which results in lower social welfare than when only its rival contributes, it must be that the lobbyist contributes more than its rival. [ABSTRACT FROM AUTHOR]

Globalisation, human capital, and institutions have been widely recognised in the literature to be causally important for economic development. Most of the available studies, however, treat measures of these determinants either separately or as substitutes. In this paper, we study the income effects of border openness to migration, education, and the rule of law (our proxies for globalisation, human capital, and institutions, respectively). Using cross-country data covering all regions of the world, and employing instrumental variables for all three factors, we establish that they each have a robust, positive, and strong association with economic development. We then consider whether there are any useful interrelations between the three factors in explaining income. On the interaction effects, the results show that the impact on income of: (i) migration can be materially affected by cultivating good institutions but this effect is not dependent on the education level; (ii) education is important irrespective of the levels of migration and institutions; and (iii) institutions is significantly improved by raising the level of education but is not influenced by migration level. Our paper makes a significant contribution as the first investigation into the effects of migration, education, and institutions jointly and as complements. [ABSTRACT FROM AUTHOR]

Heterogeneous enterprise agglomeration is an important perspective in understanding urban exports and reshaping the new advantages of urban openness. This paper considers data from China's industrial enterprises and municipality-level panel data from 192 cities to systematically examine enterprises' heterogeneity, agglomeration patterns, and urban exports. The results reveal that: (1) the heterogeneity in enterprise productivity exhibits a significant promotional effect on urban exports in China's central and northeastern regions, but not on its western regions; (2) specialized agglomeration positively affects exports in the central and western regions and in small and medium-sized cities, while diversified agglomeration significantly and positively impacts the eastern and northeastern regions and small and large cities; and (3) thresholds exist in determining the effects of agglomeration and sequencing on urban exports and their sequence by considering heterogeneity in enterprises' productivity. This work provides important policy implications for the development of export trade in cities and countries by suggesting a focus on rational planning and adjustments to regional industrial policies, improvements to talent flow mechanisms, and construction of social infrastructures. HIGHLIGHTS Heterogeneous enterprise agglomeration can shape exports from city-based businesses A new simultaneous model determines how to increase urban exports Heterogeneity can have various impacts in different Chinese regions and cities Increasing productivity and exports requires strategic planning for optimization [ABSTRACT FROM AUTHOR]

This paper constructs a theoretical model matching empirically observed relationships between average labor productivity and the number of operating firms. The models in the related literature which utilize CES utility function find no relationship between average labor productivity and the number of operating firms in the economy (Melitz, Marc J. [2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity." Econometrica 71 (6): 1695–1725] and many versions of this model). Moreover, the models which utilize non-homothetic preferences with a numeraire good find a positive relationship between average labor productivity and the number of operating firms (Melitz, Marc, and Gianmarco I. P. Ottaviano [2008. "Market Size, Trade, and Productivity." Review of Economic Studies 75: 295–316] and many versions of this model). However, the model developed in this paper provides a single theoretical framework that depending on the source, a rise in the average labor productivity may lead to an increase or a decrease in the number of operating firms. In line with our results, we provide empirical evidence from ten European countries for the 2008–2016 period, which shows that the correlation between these two variables is positive for some of the countries, while negative for the others. [ABSTRACT FROM AUTHOR]

This paper examines the relationship between financial development and FDI and between financial development and trade openness in boosting domestic investment. Initially, this paper examined this issue for panel data sample of 161 countries over 1995–2018. Considering the issue of aggregation bias due to heterogeneous nature of countries in the sample, this complementarity or substitutability effect between financial development and FDI as well as financial development and trade openness have further been re-examined by using 129 developing country samples. Using panel fixed effects (FE) and two-step system GMM estimation technique, the empirical results demonstrate the substitutability between financial development and FDI as well as a substitutability relationship between financial development and trade openness in driving domestic investment. The results hold for both the samples and also in alternative measures of financial development and extended specifications. [ABSTRACT FROM AUTHOR]

The rise of market power has sparked off increasing public debate over the past decade. Using a novel large-scale firm-level dataset, this paper examines the effect of trade liberalization on corporate market power in emerging and developing economies. We find that opening up to trade significantly reduces market power by promoting competition and improving resource allocation. The cumulative impact is estimated at 4 percent reduction in average markups over a 5-year horizon post each trade liberalization episode. We also draw on machine learning algorithms to account for nonlinearities in the relationship and show that trade reform is complementary to other structural reforms. [ABSTRACT FROM AUTHOR]

Using the micro-level data on China's export enterprises from 2005 to 2013, this paper discusses the impact of industrial robots on the quality upgrading of export products from two aspects: the change of enterprises' costs and the structural effect of labor allocation. We find that there is a U-shaped relationship between the use of industrial robots and export products' quality upgrading, but the enterprises whose robot applications exceed the U-shaped inflection point only account for 22.68%; in other words, most enterprises have not yet realized export products quality upgrading, and there exists a mismatched effect in the initial development stage. The results of mechanism analysis showed that industrial robots have significant effects on the costs and the structure of labor for export enterprises. [ABSTRACT FROM AUTHOR]

The impact of exchange rate (ER) movements on the trade balance has been extensively debated in the literature, with conflicting views on the nature and magnitude of this effect. This paper investigates the relationship between ER movements and trade balance in developing economies, with a specific focus on bilateral analysis involving Pakistan. Employing the Nonlinear Autoregressive Distributed Lag (NARDL) model, our results reveal a symmetric relationship between positive and negative ER changes and the trade balance, showing significant long-term and short-term effects across the panel of developing economies. However, country-specific asymmetries are observed, especially in the cases of India and China, and are more pronounced in each bilateral analysis, whether in the short run or long run. The study findings highlight the critical importance of maintaining a stable exchange rate policy, which can provide policymakers with precise insights into the money market and the broader economy while preventing high volatility and continuous depreciation of domestic currencies. Such measures can mitigate the long-term adverse effects of ER movements on trade agreements. The study offers valuable insights for policymakers and investors in developing economies, aiding them in making informed decisions about exchange rate policies. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of capital flight on economic growth in Africa using 54 African countries from 2000 to 2021. The study employed the GMM and the dynamic panel threshold regression estimation techniques. GMM results revealed that capital flight negatively and significantly affects economic growth in Africa. The study also revealed that external debt repayment and outward foreign direct investment, proxies of capital flight, have a negative and significant effect on economic growth in Africa, except foreign portfolio investment outflow, which positively and insignificantly influences economic growth. Again, the dynamic panel threshold estimation results also revealed that capital flight negatively affects economic growth at all levels of capital flight in Africa. The study also revealed that all the proxies of capital flight, external debt repayments, foreign portfolio investment outflows, and outward foreign direct investment negatively and significantly affect economic growth above a certain threshold. However, external debt repayment has an insignificant negative effect on economic growth below the threshold in Africa. Based on the findings, African countries should implement stringent policies to curb capital flight and regulate external debt repayments and outward foreign direct investment to enhance economic growth. [ABSTRACT FROM AUTHOR]

This paper presents a new way to estimate the constant elasticity of substitution $ (\sigma ). $ (σ). We show that the link between $ \sigma $ σ and Divisia index numbers gives rise to a revealing way to obtain preliminary estimates of $ \sigma $ σ. This approach, which is related to stochastic index numbers, is illustrated with time-series and cross-country data. Using consumption data for 12 commodities over time from 23 European countries, we obtain 400 + estimates of $ \sigma $ σ, which mostly lie between 0 and 1. The cross-country estimates are broadly similar. Extensions of the approach to deal with endogenous prices and non-homothetic demand are also considered. [ABSTRACT FROM AUTHOR]

The World Migration Report 2020 shows that the number of international migrants increased from 84 million in 1970–272 million in 2019, accounting for 3.5% of the world’s population. This paper investigates the aggregated effect of emigration on the tax revenue of sending countries with a focus on developing nations. Using a gravity approach, we construct a time-varying exogenous instrument out of measures of changes in transportation technology from geographic time-invariant dyadic characteristics. Then, we follow an instrumental variable approach where we use our predicted emigration rate as an instrument of the observed migration rate. The results show that the predicted emigration rate is a good instrument of the current emigration rate for developing countries, and that there is a positive aggregated effect of emigration on tax revenue of sending countries. The results vary depending on the type of tax: emigration increases goods and services tax revenue, but it decreases income, profit, and capital gains tax revenue. [ABSTRACT FROM AUTHOR]

The spatial spillover of R&D activities in transitional economies depends not only on distorted institutional gains caused by government policies, but also, to a large extent, on market-oriented corrections. This paper estimates the effect of policy-induced distortions and market-oriented corrections on R&D spatial spillovers using dynamic panel data from Chinese industry between 2000 and 2019. It is found that policy-induced distortion hinders the diffusion of elements of innovation into efficient R&D spaces and it reduces the spatial correlation between innovation elements. In addition, it does not have a significant effect on the improvement of R&D spatial spillover. Market-oriented correction optimizes the regional spatial distribution of factors involved in innovation and has a significant positive effect on R&D spatial spillover. The potential policy implications of the above conclusions lie in the improvement of the amount of R&D spatial spillover. This also includes the elimination of the fetters of policy-induced distortions and it depends to a great extent on the coordination of the development of regional innovation through the improvement of market-oriented innovation mechanisms. [ABSTRACT FROM AUTHOR]

This paper asks two main research questions. First, what is the relationship between firm-level innovation and export performance? Second, what is the direct effect of innovation on employment, while accounting for the indirect innovation-export link? I use a novel longitudinal administrative dataset of all firms registered to pay tax in South Africa, over 2010–2016. The first main result suggests a positive and significant relationship between innovation and export performance. Second, the fixed effects results show that direct innovation positively impacts employment growth in manufacturing firms, however, R&D-induced exports – the indirect channel – negatively impacts employment growth. This points to the notion that productivity enhancements necessary for South African manufacturing exporters to compete internationally might promote labor-saving innovations. Nonetheless, the overall innovation effect on firm employment growth is positive. [ABSTRACT FROM AUTHOR]

This paper looks at the transition of workers in the MENA region between formal and informal jobs during the COVID-19 pandemic, and investigates whether trade policy could be adopted as a measure to enhance the transition of workers from the informal to the formal sector. We use the combined COVID-19 MENA Monitor Household Survey constructed by the Economic Research Forum for 5 MENA countries and 11 sectors. This topic is timely and critical for the MENA region where informal employment is widespread, applied tariffs are still high, and female labor participation is low. Our results show that: first, fewer trade restrictions are associated with an increased probability for the worker to become formal and this effect is more pronounced post-pandemic. Second, fewer trade restrictions are linked to an increase in the probability of becoming formal for blue collars only, with an insignificant effect on white collars. Third, fewer trade restrictions are associated with an increase in the probability of men to become formal, with an insignificant effect on women. Finally, the effect of trade policy on job formality depends on the sectoral occupation of the individual with this effect being more pronounced in agriculture and manufacturing relatively to services sectors. [ABSTRACT FROM AUTHOR]

We take the establishment of cross-border e-commerce comprehensive pilot zones as the quasi-natural experiment, based on China’s General Administration of Customs Database, China Customs Online Inquiry Platform, ‘Cross-Border E-Commerce Retail Import Commodity List’ and other data. By employing the staggered DID method, this paper systematically investigates the potential of cross-border e-commerce to enhance the quality of imported products. The research findings reveal the following: Since the introduction of the cross-border e-commerce comprehensive pilot zones, there has been a significant improvement in the quality of imported products in China. These effects, however, vary across different product types and regions, suggesting heterogeneous impacts. The cross-border e-commerce comprehensive pilot zones have facilitated the development of import trade in China through three main avenues: reducing search costs, resolving financing challenges, and lowering tariffs. These measures have collectively contributed to the reduction of trade costs. [ABSTRACT FROM AUTHOR]

Developing countries have more than 1300 investment treaties with developed countries. Investment treaties are often alleged to constrain developing countries' climate policies. This paper examines four treaty reforms that are often suggested as remedies to such regulatory chill. It considers an investment treaty that protects a stranded developed country investment in a developing country. The reforms are compared with regard to whether they can induce the developing country to regulate the investment, and their political attractiveness. The reforms are shown to have features that seem to have gone unnoticed in the debate. Exclusion of investor-state dispute settlement (ISDS) may be ineffective due to a hold-up problem, and if effective requires unlawful regulation by the host country. A shortening of a sunset period applicable to unilateral withdrawal can postpone regulation. A reduction in the amount of stipulated compensation can induce the developing country to phase out the stranded investment, but will require a compensation payment from the developing country to the developed country investor. The reform with best potential to address stranded investment problems appears to be an increase in a carve-out from the compensation requirement for measures with sufficiently positive climate effect. [ABSTRACT FROM AUTHOR]

The production and consumption activities are cross-border and therefore, it is important to understand the role of Global Value Chains (GVCs) in fulfilling a country’s specific climate commitments. This study examines the causal relationship between selected GVC indices and CO2 emissions. We use the GVC position index, considered robust in comparison to the frequently used GVC participation index, for determining the impact on emissions. The forward and backward participation indices are considered in the analysis. The paper presents an analysis of 62 developing and developed economies from 1995 to –2018 using the Juodis A., Y. Karavias, and V. Sarafidis [2021. “A Homogeneous Approach to Testing for Granger non-Causality in Heterogeneous Panels.” Empirical Economics 60 (1): 93–112] approach, which is an improvement over the traditional approaches to analysing causality. The results show that the overall position in GVCs positively affects CO2 emissions for developing countries but a causal relationship does not exist for the developed countries. The developed countries attain a higher participation index but a lower position index. On the other hand, developing countries with fewer stringent environmental regulations may opt for an upstream position (more export-oriented) and by design specialize in more pollution-intensive industries. Noteworthy, production-based emissions in developed countries are reduced because of an increase in imports of emission-intensive products from developing countries. [ABSTRACT FROM AUTHOR]

This paper focuses on analysing the effects of sector orientation and the origin of FDI on the types of corruption. The GMM technique and the IV-2SLS on a panel of Sub-Saharan African countries were used. Globally, we find that FDI increases political corruption in SSA. Moreover, the study shows that sector orientation and the origin of FDI have significant effects on each type of corruption. Primary sector FDI enhances public sector corruption and reduces judicial corruption. Secondary sector FDI increases executive, public, and judicial corruption. In the tertiary sector, executive and public corruption are enhanced while judiciary corruption is reduced. Regarding the origin, FDI from France increases public sector corruption whereas FDI from China and the USA reduces it. Executive corruption is reduced by FDI, regardless of its origin. FDI from France and the USA discourages judiciary corruption while FDI from China increases it. FDI from China reduces legislative corruption, while FDI from the USA tends to increase it. Furthermore, the analysis of the transmission channels shows education and development levels as important channels through which FDI could reduce corruption in SSA. Relevant policy implications derived from this study include the necessity for policy-makers to combat all types of corruption and mostly public corruption. [ABSTRACT FROM AUTHOR]

This paper explores the way that intellectual property rights (IPRs) protection as a moderator variable affects firm-level productivity gains through innovation (filing patents) and diffusion (importing goods). Applying the estimation method of conditional average treatment effect by Lee, Okui, and Whang (2017) to Chinese firm data, I show the graphic representation of the non-linearity that characterizes the heterogeneous average treatment effects of patenting and importing activities on firm productivity. The graphic results suggest that the productivity effect of patenting is positively influenced by local IPRs protection, while that of importing is initially negatively and subsequently positively affected by IPRs protection. I also find that overstrict protection of IPRs may diminish the productivity impact of both channels, and private-owned firms rely more on IPRs protection to enhance productivity through filing patents. [ABSTRACT FROM AUTHOR]

This paper analyses the effect of export diversification on income inequality in Central Africa through the employment channel. The sample consists of 9 countries over the period 2000–2019. A quadratic regression is applied to a panel data model using the random effect and the two stages least squares methods. The results show that export diversification increases income inequality in Central Africa. However, this effect is non-linear with the form of an inverted U. Increasing the number of wage workers reduces the marginal effect of export diversification on income inequality while increasing the number of unpaid workers increases this effect. Moreover, diversification is less likely to reduce income inequality when it increases male employment than when it increases female employment. The effect of diversification on income inequality remains non-linear in an inverted U-shape for CEMAC countries' members (CEMAC: Economic and Monetary Community of Central African States) and oil-producing countries, while it is non-linear in a U-shape for non-CEMAC countries and non-oil-producing countries. We recommend that Central African countries promote the diversification of exports while encouraging new productive activities to generate more paid jobs and to favor female employment. [ABSTRACT FROM AUTHOR]

This paper examines how firm heterogeneity plays a role in trade deflection effects when exporters exit trading partners' markets with trade-restrictive measures and deflect exports toward third markets with less stringent ones. We develop a Cournot-type three-country theoretical framework that highlights the role of firm productivity in trade deflection effects of trade-restrictive measures and empirically examine research hypotheses using a firm–product–destination level panel data of Korean exporting firms during the 1996–2010 period. We find that highly productive firms facing higher tariffs are more likely to deflect export to new third-country markets with lower tariffs as alternatives. However, once they enter the third destination, the positive effect of tariffs on the deflection of trade volume is less prominent for highly productive firms due to a lower trade destruction effect for them. Our results imply that the magnitude of trade deflection at both the intensive and extensive margins can be heterogeneous across firm productivity and multi-destination status. [ABSTRACT FROM AUTHOR]

In 2012, sales tax was replaced in China with value-added tax (VAT). This study evaluates the effect of this change on service exports. VAT reform was introduced across provinces and service sectors at different times. Hence, our paper identifies the impacts of VAT reform on firms' export behavior by utilizing a difference-in-difference (DID) estimation methodology and finds that VAT reform significantly increases service exports in intensive and extensive margins. The export-enhancing effects are larger for non-state-owned enterprises and firms of larger scale and higher productivity levels. VAT reform alleviates tax magnification and double taxation and effectively promotes the competitiveness of China's service exports. With the complete implementation of VAT reform, alongside the full refund of VAT on exported products, China's service exports would increase by approximately two-and-a-half times. [ABSTRACT FROM AUTHOR]

In the digital age, digital services not only provide important intermediate inputs for manufacturing but they also affect the availability of other potentially ICT-enabled high-quality services as intermediate inputs. Therefore, it is particularly important and meaningful to explore the relationship between the liberalization of trade in digital services and manufacturing exports. This paper uses a panel dataset of bilateral exports of 15 manufacturing sectors in 54 countries, from 2014 to 2018, to examine the impact of digital services trade policy restrictions on exports of manufactured goods. The main results suggest that the impact of trade policy restrictions on manufacturing exports is mixed but mainly negative. Moreover, regulatory differences in digital services industries between bilateral country pairs also have a significant negative impact on the export performance of manufacturing industries. In addition, we further examine the heterogeneity of this impact mechanism across different policy areas, manufacturing sectors, and bilateral country-pair groups. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of trade facilitation on comparative advantage in logistics-intensive manufacturing industries. To capture the industry-level heterogeneity, we introduce logistics input intensity (LII) to measure the degree of logistics service used by different manufacturing sectors. The results show that country-level trade facilitation measured by Logistics Performance Index (LPI) can promote the comparative advantage more in manufacturing sectors with higher usage intensity of logistics, especially in developing countries. Furthermore, after dividing the logistics input intensity into two parts of foreign and domestic, we find that foreign logistics input can enhance manufacturing comparative advantage in countries with low LPI. It is suggested that policymakers in developing countries should formulate specific policies to guide logistics resources toward manufacturing sectors that are more dependent on logistics and open up the logistics services market to take full advantage of foreign logistics services. [ABSTRACT FROM AUTHOR]

Several theoretical hypotheses predict conflicting effects of financialization on income inequality, and the lack of consensus is reinforced by the mixed findings of related empirical studies. In this paper we address the model uncertainty issue by applying extreme bounds analysis (EBA) to examine the robustness of financialization variables as determinants of income inequality. The results suggest that financialization is a leading driver of income inequality and that the effects are larger when transmitted through financial markets. In addition, the results show that law and order, labour union density, population, globalization, remittances, education, and the agriculture sector share are also robust determinants of income inequality. Policy recommendations are put forward to reduce the power of the financial sector. [ABSTRACT FROM AUTHOR]

Empirical analyses that rely on micro-level panel data have found that exporters are generally less pollutant than non-exporters. While alternative explanations have been proposed, firm-level data has not been used to examine the role of destination markets behind the relationship between exports and pollution. In this paper, we argue that because consumers in high-income countries have higher valuations for clean environments than consumers in developing countries, exporters targeting high-income countries are more likely to improve their environmental outcomes than exporters targeting destinations where valuations for the environment are not high. Using a panel of firm-level data from Chile we find support to this hypothesis. A 10 percentage point increase in the share of exports to high-income countries is associated with a reduction in CO2 pollution intensity of about 16%. The results have important implications for firms in developing countries aiming to target high-income markets. [ABSTRACT FROM AUTHOR]

This paper estimates the effects of decolonization on bilateral trade by exploiting the end of colonial linkages between the United Kingdom and Hong Kong in 1997 and between Portugal and Macau in 1999. The two-year gap between these two historical events creates an exogenous time variation in colonial separations across colonial pairs to implement the differences-in-differences strategy. The results show that if a colonial relationship breaks up, then the imports from the former colonial counterpart increases by 42 percent and the post-colonial trade share increases by 0.29 percentage points. Further investigations suggest that the large and positive effects of decolonization on the post-colonial imports are largely operated through mechanisms of income and exchange rate. [ABSTRACT FROM AUTHOR]

This paper analyses the effect of foreign-firm work experience on entrepreneurial choice in China. We propose a theoretical framework to explore the possible positive and negative effects of foreign-firm work experience on the decision to become an entrepreneur. Based on a large-scale individual-level database from China, this paper finds a significant and robust negative relationship between prior foreign-firm work experience and entrepreneurial choice, which can be explained by the characteristics of jobs in foreign firms in China. Our results indicate that FDI crowds out Chinese entrepreneurship at the individual level. [ABSTRACT FROM AUTHOR]

This paper investigates the role of technology adoption and quality of institutions on the export performance of African countries. Data on 49 African countries for the period 1995–2019 is used while the two-step system generalized method of moment estimation technique is employed for analyses. The results reveal that, in both the short run and long run, technology adoption and quality of institutions are crucial in driving export performance in Africa. More importantly, our results clearly show that, in both periods, quality of institutions serve as important channel through which technology adoption has its largest positive impact on export performance in Africa. Based on these outcomes, policies designed to improve the technology adoption and quality of institutions would be beneficial to the performance of exports in African countries. [ABSTRACT FROM AUTHOR]

This study examines the effect of ICT progress on economic growth by constructing an ICT diffusion index. Along with ICT, this study further investigates the role of financial development and the combined impact of ICT and financial development on growth in 10 Asian developing economies covering the period 2001–2017. To analyze the panel data, this study employed the ARDL model and estimated the Pooled Mean Group estimator. The estimated results reveal a significant positive long-run relationship between financial expansion and economic progress. While ICT hurts economic growth on its own, it has a significant positive impact when combined with financial development. The robustness of the results has been verified by Fully-Modified OLS (FMOLS) and Dynamic OLS (DOLS) estimations. To promote enduring economic growth in Asian developing countries, the paper recommends ensuring inclusive financial development combined with modern ICT. [ABSTRACT FROM AUTHOR]

This paper examines the demographic, economic, and social antecedents of international migrations of skilled laborers to Vietnam. We defined skilled immigrants as individuals who are working in professional positions, such as managers, CEO, specialist, and technical laborers. Using various econometric techniques for the sample of 63 provinces in Vietnam during the 2019–2020 period, our study highlights the importance of global network and institutional quality in promoting the international inflows of skilled workers to each province in Vietnam. The income of the host city and the lack of skilled labors in these cities captured by the level of young employment and skilled worker also play a critical role in skilled immigrants' decisions. [ABSTRACT FROM AUTHOR]

This paper examines whether linking into Global Value Chains (GVCs) can facilitate product upgrading in developing country firms, enabling them to climb up the value-chain ladder. The analysis is conducted using an unbalanced panel of Indian manufacturing firms in the period 2001–2015. Extensive data at the product-firm level is used to construct a sales-weighted average product sophistication level of Indian firms. To account for econometric issues of endogeneity and self-selection, the study employs the System GMM estimator and Propensity Score Matching (PSM). Findings indicate that linking into GVCs boosts the average product sophistication level of Indian firms by roughly 2 percent. Younger, more innovative, and more embedded GVC firms capture higher product sophistication gains from GVCs, while no significant impact is found for foreign investment. Results are robust to the use of different measurement techniques, model and lag specifications and methodologies. Findings suggest that designing trade policies in developing countries to increase GVC integration can enable product upgrading but there is a need to boost internal innovative capabilities to maximise gains from linking into GVCs. Further, the study raises important concerns regarding the future of export sophistication in India, demonstrating a shift in India's GVC trade towards the Global South and its tendency to export less sophisticated goods to Southern partners. [ABSTRACT FROM AUTHOR]