Publications

With Bernard Hoekman, Marco Sanfilippo and Rohit Ticku

Abstract: Using rich administrative microdata on Ugandan firms, we investigate the response of productivity to trade participation for firms in all sectors of the economy, and the moderating role of services input intensity. We find that companies that participate in trade, especially through importing, display a productivity premium. Firms that export are more productive only for a sub-sample spanning the manufacturing sector. We do not find evidence that using service inputs more intensively enhances the relationship between trade participation and firm productivity. Rather, we find some evidence that a higher share of spending on services inputs attenuates the positive relationship between trade status and productivity. This suggests that the quality of available services may not be up to the standard required to be internationally competitive.

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With Giorgia Giovannetti and Margherita Velucchi

Abstract: The interrelations between trade, FDI and migrations have an important impact on the global economy that resulted in the golden age of globalization at first and in a process of slowbalization in the last decade. Against this background, this paper focuses on migrations and FDI and shows that migrant networks encourage cross-border investments. The presence of immigrants is likely to attract new FDI from their country of origin. FDI abroad, furthermore, are positively related to the presence of migrants, thanks to their knowledge of the two markets. We apply a multilevel mixed model to disentangle the hierarchical structure of the data in order to test the relations between FDI and (directional) migration flows. More specifically we test how and to what extent the structure of the international migrants’ network contributes to bilateral FDI flows, besides standard models. Results show that migrants’ networks exploit the information migrants have on both source and destination markets, and that a more diverse migrants’ community in investing countries lowers bilateral FDI.

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With Bernard Hoekman and Anirudh Shingal

Abstract: Government policy responses to the COVID-19 pandemic often included changes to trade policies. This paper uses detailed data on trade policy measures targeting medical products during the first 18 months of the pandemic (January 2020-June 2021) compiled by the Global Trade Alert to analyze the relationship between national trade policy activism and pre-pandemic trade patterns, import protection and international integration. The focus is on both potential country-specific drivers of unilateral trade policies and the duration of implemented measures. We find significant heterogeneity in the relationships between trade policy actions and country characteristics. The likelihood of import liberalization was more prevalent among net exporters of medical products, whereas net importers were more inclined to impose export restrictions. The results suggest trade policy responses to the challenges raised by the Covid-19 pandemic are only partially explained by extant theory.

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With Bernard Hoekman and Anirudh Shingal

Abstract: We assess the relationship between non-trade provisions (NTPs) pertaining to labor standards and the environment in preferential trade agreements (PTAs) and bilateral exports of environment and labor-intensive products between PTA partners, controlling for aid-for-trade, development assistance for labor and environment-related projects, and the enforceability of NTPs. NTPs are associated with greater exports of environment- and labor-intensive goods from high-income PTA members, while there is a negative relationship between NTPs and labor-intensive exports from developing countries. Bilateral exports of donors granting aid for trade are strongly associated with a higher propensity of recipients to participate in deep PTAs. Results are consistent with arguments that NTPs may increase trade costs for developing countries and that NTPs in part reflect commercial interests of high-income countries.

Paper Slides Data

With Mauro Lanati and Marco Sanfilippo

Abstract: This paper uses geographically disaggregated data to investigate the role of foreign aid as a pull factor for internal migration in Malawi over the period 1998–2008. Employing a standard gravity model of migration, we show a positive relationship between the volume of foreign assistance a district receives and the number of immigrants. While aid makes districts more attractive as migrant destinations, there is no evidence of a counterbalancing push factor effect on internal mobility. We also dig deeper into the mechanisms through which foreign aid can shape internal migration decisions. According to our results, the positive welfare effects of foreign assistance manifest themselves not only through a rise in economic opportunities, but also in improved access to public services in recipient districts. 

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With Simon Evenett, Matteo Fiorini, Johannes Fritz, Bernard Hoekman, Piotr Lukaszuk, Nadia Rocha, Michele Ruta and Anirudh Shingal

Abstract: This paper presents new high-frequency data on trade policy changes targeting medical and food products since the beginning of the COVID-19 pandemic, documenting how countries used trade policy instruments in response to the health crisis on a week-by-week basis. The data set reveals a rapid increase in trade policy activism in February and March 2020 in tandem with the rise in COVID-19 cases but also uncovers extensive heterogeneity across countries in both their use of trade policy and the types of measures used. Some countries acted to restrict exports and facilitate imports, others targeted only one of these margins, and many did not use trade policy at all. The observed heterogeneity suggests numerous research questions on the drivers of trade policy responses to COVID-19, on the effects of these measures on trade and prices of critical products, and on the role of trade agreements in influencing the use of trade policy.

Paper Data

With Mauro Lanati, Matteo Fiorini, and Giorgia Giovannetti

Abstract: This paper studies bilateral cultural preferences as an asymmetric dimension of cultural proximity and estimates their effect on greenfield foreign direct investment (FDI). We derive a gravity equation of FDI and test simultaneously the impact of both (a) the preferences of investing countries for recipients' culture and (b) recipients' preferences for the culture in the investing economies. While the role of investors' preferences can be rationalised with existing supply-side gravity theories of FDI, we propose new mechanisms to explain why recipients' preferences might matter as well. We use exports and imports of cultural goods to proxy for the two directions of cultural preferences. Our results reveal a stronger investment effect of the recipients' preferences, a channel so far understudied.

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With Alessandro Ferrari, Matteo Fiorini, Joseph Francois, Bernar Hoekman, Lisa M. Lechner, and Miriam Manchin

Abstract: The EU’s common commercial policy is used as an instrument to realize its values in EU trading partners, reflected in the inclusion of sustainable trade and development chapters in EU preferential trade agreements (PTAs). In this paper we ask if including non-trade provisions (NTPs) in EU PTAs has a systematic positive effect on non-trade outcomes in partner countries. We analyze the relationship between bilateral trade flows, the coverage of NTPs in EU PTAs and the performance of EU partner countries on several non-trade outcome variables using synthetic control methods. We find no robust evidence of a causal effect of including NTPs in EU TAs on indicators of non-trade outcomes.

Book WP version Slides Data

With Giorgia Giovannetti and Enrico Marvasi

Abstract: We analyze current and potential trade between the UK and Sub-Saharan Africa (SSA) and estimate the possible effects of UK’s exit from the European Union (Brexit) on bilateral trade. Our results suggest that, despite the UK’s interest and need for new markets and the recent positive economic performance of many SSA countries, Brexit is unlikely to have major effects on bilateral UK-SSA trade. It is difficult for the existing trade potential between the UK and SSA countries to fully materialize. This holds true even in the best-case scenario of full trade liberalization. On the contrary, trade with important partners as South Africa might decline in the scenario where the UK, which will be out of all the Free Trade Agreements signed as part of EU, fails to sign new agreements in a very short period. We conclude that Brexit will probably imply small changes in the trade patterns, which remain largely determined by structural variables including geographical distance, political stability and sectoral specialization. For SSA, the main gains in terms of trade creation are likely to come from deeper regional integration and from linkages with other major players at the world level, such as China and India.

Notes: The chapter was submitted in January 2020

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