We develop a multi-country, multi-sector trade model with labor market frictions and equilibrium unemployment. Trade opening leads to a reduction in unemployment if it raises real wages and reallocates labor towards sectors with lower-than-average labor market frictions. We estimate sector-specific labor market frictions and trade elasticities using employment data from 25 OECD countries and worldwide trade data. We then quantify the potential unemployment and real wage effects of implementing the Transatlantic Trade and Investment Partnership (TTIP) or the Trans-Pacific Partnership (TPP), and of eliminating trade imbalances worldwide. The unemployment and real wage effects work in conflicting directions for some countries under some trade regimes, such as the US under TTIP. We introduce a welfare criterion that accounts for both effects and splits such ties. Accordingly, US welfare is predicted to decrease under TTIP and increase under TPP.
This chapter surveys recent developments in agglomeration theory within a unifying framework. We highlight how locational fundamentals, agglomeration economies, the spatial sorting of heterogeneous agents, and selection effects affect the size, productivity, composition, and inequality of cities, as well as their size distribution in the urban system.
Contrary to expectations, evidence of a death of distance has eluded numerous estimations in the popular gravity model of trade: estimates of the coefficient of distance are markedly higher in studies with recent data. This column shows that this is only so for the poorer countries who are trading with geographically closer partners. This regionalization of trade for low-income countries could reflect the dramatic decrease in a host of costs independent of distance (MFN tariffs, border-related costs, administrative costs, communication costs or increasing containerization), all of which would enhance the relative importance of transport costs that depend on distance.
This paper focuses on developing countries exports to the OECD and obtains several important results on export dynamic, linking exports experience and exports survival. It also provides insights on the role of preferential trade agreements (PTAs) in facilitating export experience and thus survival. Using product level data at the SITC 5 digit level for the 1962-2009 period, we show that prior exports experience obtained in non-OCDE markets increases survival in OECD markets. The effect of experience depreciates however rapidly with time: gaining experience for more than two years is worthless. Moreover, a break in export experience prior to entering the OECD reduces the benefit on survival. Geographic export dynamic reveals that experience is acquired in neighbor, easy to access markets before reaching more distant, richer partners and ultimately serving the OECD. PTAs among developing countries thus help exporters finding partners where to learn about their export potential. Finally, exporters may acquire experience directly within the OECD market through a process of trial and error. By facilitating this process, PTAs between developing countries and the OECD help boosting survival in the long run.
How export patterns vary across time and countries has become a subject of intense descriptive analysis in recent years. The originality of our work is to compute usual diversification indices using a very large and disaggregated dataset on exports. Export data is from UNCTAD’s COMTRADE database at the HS6 level (4’991 lines).
Un nombre croissant d’études explore les différentes dimensions de la proximité linguistique favorisant les échanges commerciaux. Néanmoins, peu d’analyses se sont concentrées sur des aires linguistiques en particulier et aucune sur le cas de la langue française. Quelle est aujourd’hui l’importance de la langue française dans le commerce international ? Dans quelle mesure l’existence d’un espace francophone favorise l’ouverture aux échanges internationaux et, par conséquent, engendre de la richesse et de l’emploi pour ses pays membres ? Ces questions font l’objet d’une étude menée par la FERDI à la demande du MAE. L’enjeu est donc de distinguer, une fois l’espace francophone (EF) défini, l’importance de la proximité linguistique par rapport aux autres dimensions de la proximité (géographique, historique, économique) influençant les flux de commerce internationaux.
L’objectif général de cette étude s’inscrit dans une analyse des rapports entre langue et économie pour les espaces linguistiques non francophones, à savoir les espaces anglophone, hispanophone, arabe et lusophone. Cette étude s’articulera autour de deux volets : 1 / apprécier la part que représente chacun de ces espaces dans la richesse mondiale et dans les échanges internationaux ; 2 / établir la part des échanges internationaux, de la richesse (produit intérieur brut par tête) et des emplois, générée par l’existence de chacun de ces espaces pour ses pays membres. Cette étude fait suite au rapport intitulé « Le poids économique de la langue française dans le monde » (2013) et offrira un point de comparaison en étendant ses estimations, fondées sur des critères et des indicateurs similaires, aux autres principaux espaces linguistiques.
This paper complements the cross-country approach by examining the correlates of GDP per capita growth acceleration around “significant” public expenditure episodes by reorganizing the data around turning points, or “events”. Here we define (i) a growth event as an increase in average per capita growth of at least 2 percentage points (pp) sustained for 5 years, (ii) fiscal event as an increase in the primary fiscal expenditure annual growth rate of approximately 1 pp sustained for 5 years and not accompanied by an aggravation of the fiscal deficit beyond 2% of GDP. These definitions of events are applied to database of 140 countries (118 developing countries) over 1972-2005, providing a summary but encompassing description of “what is in the data”. For this sample, the probability of occurrence of a fiscal event is about 10%, and, for a large range of parameter values for the selection of a “significant” event, the probability of a growth event once a fiscal event had occurred is in the 22%- 28% range. The probability of occurrence of a fiscal event is higher for the bottom half of the income distribution of countries, but the probability that this fiscal event is followed by a growth event is higher for the third quartile, corresponding to middle income countries (which are largely in Latin America). The probability of a fiscal event not followed by a growth event is significantly higher for the Middle East and Africa region. The description of the changes in expenditures components during fiscal events shows that, for developing countries, there are notable differences underlying fiscal events followed by growth events: they occur under situations of (i) significant lesser deficit, (ii) fewer resources devoted to non-interest General Public Services and (iii) shift in discretionary expenditures towards Transport & Communication. After controlling for the growth-inducing effects of positive terms-of-trade shocks and of trade liberalization reform, probit estimates indicate that a growth event is more likely to occur in a developing country when surrounded by a fiscal event. Moreover, the probability of occurrence of a growth event in the years following a fiscal event is greater the lower is the associated fiscal deficit, confirming that success of a growth-oriented fiscal expenditure reform hinges on a stabilized macroeconomic environment (through limited primary fiscal deficit).
