Trade in
Hidden Protectionism? Evidence from Non-tariff Barriers to Trade in the United States
Robert Grundke & Christoph Moser
Journal of International Economics, forthcoming
Abstract:
Can the enforcement of product standards be protectionism in disguise? This paper estimates the costs of non-compliance with U.S. product standards, using a new database on U.S. import refusals from 2002 to 2014. We find that import refusals decrease exports to the United States. This trade reducing effect is driven by developing countries and by refusals without any product sample analysis, in particular during the Subprime Crisis and its aftermath. We also provide evidence that given product standards were enforced more strictly during the crisis while the quality of imported products did not deteriorate. These results are consistent with the existence of counter-cyclical, hidden protectionism due to non-tariff barriers to trade in the United States.
World Citizens on the Periphery: Threat and Identification with Global Society
Brandon Gorman & Charles Seguin
American Journal of Sociology, November 2018, Pages 705-761
Abstract:
Who identifies as a world citizen? Many scholars argue that transnational connections are the primary conduits for global cultural diffusion and, therefore, that affluent residents of the densely connected global core should be the most likely to identify with global society. However, empirical studies have shown that global identification is common on the global periphery. The authors build on theories suggesting that individuals may emphasize expansive identities when particularistic identities fail to provide a sense of security in the face of threat. They argue that members of peripheral and marginalized groups express greater global identification because of the threat inherent in their precarious social positions. The authors show that (1) global identification is more common among residents of weaker and more repressive states, (2) members of repressed minority groups are more likely to identify with global society than conationals with collective access to state power, and (3) many residents of one weak state — Lebanon — expressed greater enthusiasm for global connection immediately following a terrorist attack.
The More We Die, the More We Sell? A Simple Test of the Home-Market Effect
Arnaud Costinot et al.
Quarterly Journal of Economics, forthcoming
Abstract:
The home-market effect, first hypothesized by Linder (1961) and later formalized by Krugman (1980), is the idea that countries with larger demand for some products at home tend to have larger sales of the same products abroad. In this paper, we develop a simple test of the home-market effect using detailed drug sales data from the global pharmaceutical industry. The core of our empirical strategy is the observation that a country’s exogenous demographic composition can be used as a predictor of the diseases that its inhabitants are most likely to die from and, in turn, the drugs that they are most likely to demand. We find that the correlation between predicted home demand and sales abroad is positive and greater than the correlation between predicted home demand and purchases from abroad. In short, countries tend to be net sellers of the drugs that they demand the most, as predicted by Linder (1961) and Krugman (1980).
Agent Orange: Trump, Soft Power, and Exports
Andrew Rose
NBER Working Paper, January 2019
Abstract:
A country’s exports rise when its leadership is approved by other countries. I show this using a standard gravity model of bilateral exports, a panel of data from 2006 through 2017, and an annual Gallup survey which asks people in up to 157 countries whether they approve of the job performance of the leadership of China, Germany, Russia, the United Kingdom and the United States. Holding other things constant, a country’s exports are higher if its leadership is approved by the importer; ‘soft power’ promotes exports. The soft power effect is statistically and economically significant; a one percent increase in leadership approval raises exports by around two-thirds of a percent. This effect is reasonably robust, and different measures of soft power deliver similar results. I conservatively estimate that the >20 percentage point decline in foreign approval of American leadership between 2016 (the final year of Obama’s presidency) and 2017 (Trump’s first year) lowered American exports by at least $3 billion.
The dollar and the demand for protection
Thomas Oatley & Robert Galantucci
International Interactions, forthcoming
Abstract:
Postwar trade politics in the USA have exhibited intermittent periods of rising industry demands for protection from imports. At present, however, we do not fully understand why industry demands for protection rise and fall overtime. We argue that intermittent protectionism in postwar USA has been driven by changes in the real exchange rate. To do so, we incorporate the real exchange rate into a basic model of sectoral trade policy preferences to show how the number of sectors that expect to benefit from protection grows as the real exchange rate appreciates. We test two hypotheses generated from this model: first that the number of antidumping and escape clause petitions rises as the dollar strengthens and falls as the dollar weakens. Second that competitive sectors are more sensitive to exchange rate movements than comparatively disadvantaged and comparatively advantaged sectors. We evaluate these expectations with a Bayesian statistical analysis of data on antidumping and escape clause petitions in the USA between 1974 and 2012. The empirical models provide robust support for the study’s principal hypotheses.
Social and Political Drivers of the Reorientation of U.S. Trade Policy: The Case of U.S. Withdrawal from the Trans-Pacific Partnership
Jesse Liss
Social Currents, forthcoming
Abstract:
Previous sociological studies demonstrated that U.S. multinational corporations (MNCs) had durable political power to motivate U.S. trade policy. However, why did the United States switch from a “free trade” to an “America First” trade agenda? Economists and political scientists argue that protectionist voters elected the protectionist candidate — Trump. An alternative sociological explanation is that U.S. MNCs lost political power to competing stakeholder groups. The article uses qualitative and quantitative methods to test these competing theories using the case study of the U.S. withdrawal from the Trans-Pacific Partnership (TPP). The article argues that both theories are necessary, and neither are sufficient. The United States withdrew from the TPP because increasing negative effects of trade and investment in the United States reshaped trade politics, especially on the Republican side; however, power relations between stakeholder groups had to shift as well. U.S. MNCs lost political influence over trade policy to new domestic manufacturing organizations and their networks with labor and fair trade coalitions.
Join to Prosper? An Empirical Analysis of EU Membership and Economic Growth
Thomas Barnebeck Andersen, Mikkel Barslund & Pieter Vanhuysse
Kyklos, forthcoming
Abstract:
We explore whether EU membership has led to faster economic growth. Using different estimation strategies, different time periods, different country samples, and different datasets, we are unable to demonstrate the presence of a membership growth premium. This may reflect that GDP data are too noisy and/or causal identification too complicated, in which case we should remain agnostic about the EU's growth impact. Alternatively, it may reflect that EU membership simply has no effect on economic growth. Either way, these findings urge strong caution about one of EU membership's key alleged benefits: greater economic prosperity.
Who Got the Brexit Blues? The Effect of Brexit on Subjective Wellbeing in the UK
Nattavudh Powdthavee et al.
Economica, forthcoming
Abstract:
We use the 2015–16 waves of the UK Household Longitudinal Study (Understanding Society) to look at subjective wellbeing around the time of the June 2016 EU membership Referendum in the UK (Brexit). We employ measures of both evaluative and affective wellbeing, namely life satisfaction and mental distress, respectively. We find that those reporting lower life satisfaction in 2015 were more likely to express a preference for leaving the EU in 2016, while mental distress was less predictive of pro‐Brexit attitudes. Post‐Referendum, those with Leave preferences enjoyed an increase in life satisfaction but there was no change in average life satisfaction in the overall sample. In contrast, the average level of mental distress increased in the sample post‐ Referendum, with no significant difference between those preferring to remain in or to leave the EU. We test the robustness of our results by considering a number of potential caveats, such as sample selection, unobserved individual fixed effects and the interval between interviews. Overall, our results suggest that levels of subjective wellbeing may be both a cause and a result of the 2016 Brexit vote.
Exchange Arrangements Entering the 21st Century: Which Anchor Will Hold?
Ethan Ilzetzki, Carmen Reinhart & Kenneth Rogoff
Quarterly Journal of Economics, forthcoming
Abstract:
This paper provides a comprehensive history of anchor or reference currencies, exchange rate arrangements, and a new measure of foreign exchange restrictions for 194 countries and territories over 1946–2016. We find that the often-cited post-Bretton Woods transition from fixed to flexible arrangements is overstated; regimes with limited flexibility remain in the majority. Even if central bankers’ communications jargon has evolved considerably in recent decades, it is apparent that many still place a large implicit weight on the exchange rate. The US dollar scores as the world's dominant anchor currency, and by a very large margin. By some metrics, its use is far wider today than 70 years ago. In contrast, the global role of the euro appears to have stalled. We argue that in addition to the usual safe assets story, the record accumulation of reserves since 2002 may also have to do with many countries’ desire to stabilize exchange rates in an environment of markedly reduced exchange rate restrictions or, more broadly, capital controls: an important amendment to the conventional portrayal of the macroeconomic trilemma.
Financial Integration and Growth in a Risky World
Nicolas Coeurdacier, Héléne Rey & Pablo Winant
Journal of Monetary Economics, forthcoming
Abstract:
We revisit the debate on the benefits of financial integration in a two-country neoclassical growth model with aggregate uncertainty. The framework accounts simultaneously for gains from a more efficient capital allocation and gains from risk sharing — together with their interaction. Global numerical methods allow for meaningful welfare comparisons. Gains from integration are quantitatively small, even for riskier and capital scarce emerging economies. These countries import capital for efficiency reasons before exporting it for self-insurance, leading to capital flows and growth reversals along the transition. This opens the door to richer empirical implications than previously considered in the literature.
The Absence of Consumer Interests in Trade Policy
Timm Betz & Amy Pond
Journal of Politics, forthcoming
Abstract:
Why are some countries more open to trade than others? Prominent explanations emphasize differences in the influence of voters as consumers. Consumers benefit from lower prices. Because governments in democracies are more responsive to voters, they should implement lower tariffs. We develop and evaluate an implication of this line of argument. If lower tariffs are a response to consumer interests, lower tariffs should be concentrated on products most relevant to consumers. Using data on consumption shares across product categories, we report evidence that consumer interests do not account for lower tariffs. Governments place higher tariffs on goods with higher consumption shares, and we find no evidence that this relationship attenuates under more democratic institutions. There may be a variety of reasons why more democratic states are engaged in higher levels of international trade. A larger concern for consumer interests, however, is likely not among them.
Universal Intellectual Property Rights: Too Much of a Good Thing?
Emmanuelle Auriol, Sara Biancini & Rodrigo Paillacar
International Journal of Industrial Organization, forthcoming
Abstract:
Developing countries’ incentives to protect intellectual property rights (IPR) are studied in a model of vertical innovation. Enforcing IPR boosts export opportunities to advanced economies but slows down technological transfers and incentives to invest in R&D. Asymmetric protection of IPR, strict in the North and lax in the South, leads in many cases to a higher world level of innovation than universal enforcement. IPR enforcement is U-shaped in the relative size of the export market compared to the domestic one: rich countries and small/poor countries enforce IPR, the former to protect their innovations, the latter to access foreign markets, while large emerging countries free-ride on rich countries’ technology to serve their internal demand.