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We introduce a new dataset on British exports at the bilateral, commodity-level from 1700 to 1899. We then pit two primary determinants of bilateral trade against one another: the trade-diminishing effects of distance versus the trade-enhancing effects of the British Empire. We find that gravity exerted its pull as early as 1700, but the distance effect then attenuated and had almost vanished by 1800. Meanwhile the empire effect peaked sometime in the late 18th century before significantly declining in magnitude. It was only after 1950 that distance would once again exert the same influence that it has today.
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CO2 concentrations continue to rise significantly, and it is responsible for about two-thirds of the total energy imbalance that is causing Earth’s temperature to rise. Fortunately, CO2 emission certificates, as implemented under EU ETS, help internalise effects of fossil fuel consumption on global climate. But in a world with uneven climate policies, risk of carbon leakage and competitive disadvantage prevent us from reaching optimal allocation of resources. This explains the decision of the Commission to adopt a Carbon Border Adjustment Mechanism (CBAM). However, this unilateral measure that sets a carbon price for imports coming into the EU is highly controversial from an international trade perspective. Therefore, this paper aimed to verify if ETS competitiveness effects on European economy can be an argument for the introduction of CBAM, when considering the complete three first ETS phases (2005 – 2020). The gravity model approach has been applied to trade flow data, from EU-15 to 216 NON-EU countries, collected mainly from the CEPII’s Gravity database. Our findings indicate that when the EU ETS is in place, exports from EU-15 countries are 24.4% higher. Thus, EU ETS had a positive impact on export and the estimates are statistically significant even at 1% level, no matter how the model is specified. Consequently, competitive disadvantage cannot be an argument for CBAM in this case. In fact, looking further ahead, we may conclude that CBAM is more motivated by anticipation of forthcoming changes due to increased climate ambition and current EU ETS directives for revision. Hence, some recommendations for the design and implementation of CBAM are provided, as such mechanism should be handled with care to achieve desired environmental and economic objectives.
carbone --- trade --- competitiveness --- ETS --- CBAM --- global warming --- gravity model --- environment --- Sciences économiques & de gestion > Economie internationale
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This paper tests the migration transition hypothesis that emigration flows first increase and later decrease with a country's economic development. Using a migration version of the gravity model, this hypothesis is tested on a global panel data set comprising 180 origin and destination countries and a 50-year timeframe (1970-2020). This is the most extensive panel data set used so far to test the migration transition hypothesis. The results confirm the existence of an inverted U-shaped relationship between development and emigration within a cross-country panel setting. Nevertheless, the migration hump cannot be interpreted as a causal relationship: for a given low-income country, an increase in economic development is not found to lead to higher emigration. For a subsample of 44 countries that have transitioned from low-income to middle-income status, emigration has rather declined with economic development. The migration transition hypothesis is therefore unfounded. Instead, the migration hump appears to be driven by an underlying cross-sectional pattern that cannot be fully controlled: middle-income countries tend to exhibit higher emigration rates than low- or high-income countries. The findings of this paper have important policy implications: development programs can simultaneously promote economic development and reduce emigration.
Economic Development --- Gravity Model --- International Migration --- Labor Market --- Migration Flow --- Migration Hump --- Poverty Reduction --- Trade and Investment
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The gravity model is now widely used for policy analysis and hypothesis testing, but different estimators give sharply different parameter estimates and popular estimators are likely biased because dependent variables are limited-dependent, error variances are nonconstant and missing data frequently reported as zeros. Monte Carlo analysis based on real-world parameters for aggregate trade shows that the traditional Ordinary Least Squares estimator in logarithms is strongly biased downwards. The popular Poisson Pseudo Maximum Likelihood model also suffers from downward bias. An Eaton-Kortum maximum-likelihood approach dealing with the identified sources of bias provides unbiased parameter estimates.
Eaton-Kortum Maximum-Likelihood --- Economic Theory and Research --- Gravity Model --- Macroeconomics and Economic Growth --- Missing Data --- Trade Statistics
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The Belt and Road Initiative is a new globalization initiative to strengthen economic integration, which provides new opportunities for China's trade cooperation with countries along the Belt and Road. The research on the influencing factors of trade and the great potential of trade cooperation is of great practical significance for promoting the regional economic cooperation of the countries along the Belt and Road. Specifically, what is the potential for trade between China and the Belt and Road Initiative participating countries? What are the current influencing factors to the realization of trade potential? How significant is the impact? To this aim, this paper takes 80 countries which have signed the One Belt And One Road memorandum with China as the research object, collects the trade panel data of the decade from 2009 to 2018. Then empirically analyzes the trade influencing factors of the import and export trade between China and these countries by augmented gravity model. After that, the trade potential is further estimated. The results show that the GDP of the two countries, the size of their populations, telephone infrastructure, trade freedom, the quality of railroad infrastructure, and whether it borders China have an impact on both import and export. Level of government governance, investment freedom, air transportation and port infrastructure, whether it signs RTA with China has an impact on China's exports. RMB exchange rate, Internet communication infrastructure and geographical distance between the two countries only affect China's imports. Among the 80 markets along the route, 31 countries have great trade potential to be developed. More than half of these are Europe and Central Asia, sub-Saharan Africa and South Asia countries. Finally, based on the research results of this paper, policy enlightenment is obtained.
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Amid the ever‐growing number of preferential trade agreements (PTAs), more and more environmental provisions (EPs) are included. This raises the question of their ecological relevance in such agreements, as well as their would‐be negative effect on trade. There also exists an increasing fear from the developing world that these EPs could be used as some form of green protectionism from richer countries. Using a novel mix of databases, this study aims at addressing these topics. Our results point towards a positive effect of EPs on trade without suggesting any evidence for potential green protectionism. This opens doors for future research to shed light on the effects of other non‐trade provisions included in PTAs on trade flows.
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A model of Covid-19 transmission among locations within a country has been developed that is (1) implementable anywhere spatially-disaggregated Covid-19 infection data are available; (2) scalable for locations of different sizes, from individual regions to countries of continental scale; (3) reliant solely on data that are free and open to public access; (4) grounded in a rigorous, proven methodology; and (5) capable of forecasting future hotspots with enough accuracy to provide useful alerts. Applications to the United States, the Philippines, and South Africa's Western Cape province demonstrate the model's usefulness. The model variables include indicators of interactions among infected residents, locally and at a greater distance, with infection dynamics captured by a Gompertz growth model. The model results for all three countries suggest that local infection growth is affected by the scale of infections in relatively distant places. Forecasts of hotspots 14 and 28 days in advance, using only information available on the first day of the forecast, indicate an imperfect but nonetheless informative identification of actual hotspots.
Coronavirus --- COVID-19 --- Disease Control and Prevention --- Epidemic Prediction --- Epidemic Spread --- Gompertz Growth Model --- Gravity Model --- Hotspots --- Infection Data --- Pandemic --- Population Sciences --- Public Health Promotion
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Africa's linkages in manufacturing global value chains are reasonably high compared with other developing regions. Still, linkage rates have declined steeply in recent years in non-resource rich countries in the region although they have increased sharply in countries that are rich in natural resources. Moreover, the level and dynamics of linkages to manufacturing global value chains vary significantly between countries within each group of natural resource endowments. The current levels, activity structure, and geographic configuration of linkage rates evolved over the past 20 years. In addition, these linkages cut across broad activity categories, including manufacturing textiles and apparel, metal products, transport equipment, and electrical goods. This paper analyzes the sources of the variation in linkage rates in the framework of an estimated gravity and linear probability model. It is shown that the domestic actors in these linkages are typically relatively large establishments (100 or more employees) and have been in operation for five years or longer. These manufacturers are also more likely to have foreign equity holders or foreign technology licenses. These findings should be seen in the light of policies that promote industrialization by facilitating integration into manufacturing global value chains at links that maximize job and productivity gains.
Export Competitiveness --- General Manufacturing --- Global Value Chain --- Global Value Chains and Business Clustering --- Gravity Model --- Industrial Economics --- Linkages --- Manufacturing --- Natural Resources --- Technology Licenses --- Value-Added
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This paper examines the concept of trade facilitation in services from the perspective of the recent literature on the determinants of services trade. The aim is to conceptualize trade facilitation in this area as a dimension of international integration beyond the baseline restrictiveness of policy, as captured by indicators of discriminatory market access. The analysis focuses on the role of governance structures, institutions, and transparency in shaping the environment for trading in services internationally. In addition to examining these factors, the paper provides some novel empirical estimates. Using a gravity model, the analysis finds that the ad valorem equivalents of common measures of institutional quality, governance, and transparency are larger relative to measures of sheer policy restrictiveness, frequently a significant multiple. The paper also shows that the ad valorem equivalents of data restrictions are of similar magnitude to policy restrictions in services. The conclusion is that framing discussions of trade facilitation in services around the concept of reducing trade costs - specifically those stemming from areas where improvement is needed in governance, institutions, and transparency - could potentially bring significant benefits in increased integration of the global services economy.
Gravity Model --- International Trade and Trade Rules --- Market Access --- Restrictiveness --- Services Trade --- Trade and Services --- Trade Facilitation --- Trade in Services --- Trade Policy --- Trade Restrictions
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The authors construct a new measure of connectivity in the global air transport network, covering 211 countries and territories for the year 2007. It is grounded in network analysis methods, and is based on a gravity-like model that is familiar from the international trade and regional science literatures. It is a global measure of connectivity, in the sense that it captures the full range of interactions among all network nodes, even when there is no direct flight connection between them. The best connected countries are the United States, Canada, and Germany; the United States' score is more than two-thirds higher than the next placed country's, and connectivity overall follows a power law distribution that is fully consistent with the hub-and-spoke nature of the global air transport network. The measure of connectivity is closely correlated with important economic variables, such as the degree of liberalization of air transport markets, and the extent of participation in international production networks. It provides a strong basis for future research in areas such as air and maritime transport, as well as international trade.
Air Transport --- Airports and Air Services --- Connectivity --- E-Business --- Geographical Information Systems --- Gravity Model --- International Economics & Trade --- International Trade --- Macroeconomics and Economic Growth --- Network Industries --- Poverty Reduction --- Spatial Interaction Models --- Technology Industry --- Transport Economics Policy & Planning
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