Trade-creation and trade-diversion effects of regional trade arrangements: low-income countries

Although the number of regional trade arrangements (RTAs) among the lowest-income developing countries is surging, the literature on their welfare effects is still scarce, and the few that exist fail to provide conclusive results. Furthermore, these RTAs are dominated by countries with a small share of total exports destined for intraregional trade flows. Our study focuses on the welfare effects of RTAs (pertaining to trade creation and trade diversion) among this group of countries. We use a theoretically justified gravity model to estimate welfare effects, focusing on trade creation and trade diversion and deviating from the norm in related studies, accounting for heterogeneity in third countries. Using ECOWAS as a sample, we estimate welfare effects on 1992–2012 annual bilateral imports for 14 countries from 169 countries. Contrary to conventional expectations in the literature, we find that economic integration among small and relatively low-income countries that have a small share of total trade with each other is welfare-improving for the members as a group, for the majority of the individual member countries, and for some third countries. Accounting for heterogeneity in third countries reveals that an RTA among low-income countries has a particularly robust trade-creation effect.     

区域经济一体化对多边自由贸易体制的影响——一个简单的制度经济学解释

区域经济一体化组织的出现是否有利于推动多边自由贸易的实现,这一问题已经引起了学者们的广泛关注.从制度经济学的角度看,先走区域经济一体化的道路,然后再进行区域经济组织的自由贸易合作,从而最终实现全球贸易的自由化,能够比"一味地"等待世界所有国家同时实现贸易的自由化给各利益主体带来更大的现期净收益.因此,相比WTO所推行的多边贸易自由化而言,区域经济一体化具有更多的现实性和可行性,它将为世界自由贸易的实现做阶段性准备.当然在此过程中,还应该注意加强WTO对区域经济一体化组织的监督和协调,以引导它向更有利于提高世界福利和贸易自由化的方向发展.     

Does a Regional Trade Agreement Lessen or Worsen Growth Volatility? An Empirical Investigation

This paper assesses how regional trade agreements (RTAs) impact on growth volatility for a sample of 170 countries over the period 1978–2012. Notwithstanding concerns that trade openness through RTAs might heighten exposure to shocks, RTAs through enhanced policy credibility, improved policy coordination and reduced risk of conflicts can also ease growth volatility. Empirical estimations suggest the benefits outweigh the costs as RTAs are consistently associated with lower growth volatility. In addition, smaller economies benefit more from the reduced growth volatility associated with RTAs than larger ones. The nature of the RTA also matters as shallow agreements such as partial‐scope preferential trade agreements do not appear to have a significant effect on growth volatility, whereas free trade areas and customs unions do. Finally, in investigating the drivers of RTAs, the regression results confirm that countries that are more prone to shocks are more likely to join an RTA, in particular with countries with relatively less volatile growth.     

The effect of foreign aid on corruption: A quantile regression approach

This paper investigates the effect of foreign aid on corruption using a quantile regression method. We show that foreign aid generally reduces corruption, and its reduction effect is greater in less corrupt countries. Moreover, this effect is different by different donor countries.     

Moving to autarky,trade creation and home market effect: an exhaustive analysis of regional trade agreements in Africa

This article analyses the effects of Regional Trade Agreements (RTAs) on bilateral trade in Africa. A structural gravity equation is estimated over the period 1955–2014. The overall effect of RTAs on African trade is strong, but depending on the nature of the RTAs, there is a decreasing impact over time. While Economic Integration Agreements (EIAs) still favour trade in Africa, there was no trade creation coming from Free Trade Agreements between 1990 and 2014. However, the provisions of RTAs do not have a negative impact on trade: agreements that include behind-the-border policies do not significantly deter bilateral trade. To explain the declining impact of RTAs, we look at their redistributive impact between members states. There is no evidence that large countries disproportionally export diversified goods due to RTAs (no ‘home effect’). Countries with a good international network (‘hub effect’) benefited more than other countries of RTAs between 1955 and 1990 but this is however less true on the most recent period (1990–2014).     

The road to innovation vs. the role of globalization: A dynamic quantile investigation

This paper investigates the distributional effects of globalization on innovation using 86 countries data from 1986 to 2016. Our results derived from the dynamic panel quantile regression technique show that overall globalization has a positive influence on national innovation in the least innovative countries. Similar evidences are found when utilizing globalization (de jure) and social globalization indices. Subsample analysis shows that globalization leads to better innovation performance in the medium innovative countries among OECD countries. Therefore, our findings contribute to the existing literature in identifying the changing effect of globalization on innovation.     

Sign here,please! On developing countries’ market access conditions in regional trade agreements

Have regional trade agreements (RTAs) improved market access conditions for developing countries? Employing a measure expressing effective tariff margins and using disaggregated panel data for a sample of 45 developing country exporters, 60 export destinations, and the period between 1991 and 2015, it is shown that this question can generally be answered in the affirmative. Although the effect is estimated to be moderate, RTAs might thus be an important long‐run building block in the United Nations 2030 Agenda for Sustainable Development in order to increase developing countries’ participation in world trade. On closer inspection, however, for the countries included in the sample, there is considerable variation depending on the choice of integration partners and economic sectors. More specifically, market access improvements cannot be found for African economies in South–South agreements and developing countries engaging formally with the European Free Trade Association (EFTA) or the Republic of Korea, while leading industrialized nations are reluctant to grant improved market access to developing countries in RTAs especially in capital‐intensive (high‐productivity) manufacturing sectors.     

Trade,conflict, and political integration: Explaining the heterogeneity of regional trade agreements

Many historians argue that the main goal of European trade integration was the preservation of peace. This paper investigates whether this reasoning is relevant for the EU and other regional trade agreements (RTAs). I provide empirical evidence that customs unions and common markets (deep RTAs) do reduce the probability of war between members. Partial scope and free trade agreements (shallow RTAs) however have no effect on war probabilities. Accordingly, international insecurity has a differential impact on incentives to create RTAs. Deep RTAs are signed between countries that are involved in many interstate disputes and that have low trade costs with the rest of the world, whereas the opposite is true for shallow RTAs.     

The Japanese Taylor rule estimated using censored quantile regressions

This paper conducts quantile regressions and obtains detailed estimates of monetary policy rules in Japan using a sample that includes recent periods of zero interest rates. Taking into account censoring and endogeneity, we compute censored quantile instrumental variable estimators and compare them with estimates from uncensored quantile regressions. The estimation results indicate that not accounting for censoring of interest rates tends to result in downwardly biased estimates. Moreover, our censored quantile regressions lead to relatively flat coefficients of inflation and insignificant coefficients of the output gap over the conditional interest rate distribution, suggesting that monetary policy in Japan may be well described by a linear rule.     

EU Enlargement, Migration, and Lessons from German Unification

The paper studies the role of international implications after EU enlargement. Based on a formal model with migration costs for both capital and labor, it predicts a two-sided migration from the new to the old EU countries which is later reversed. As the migration pattern chosen by market forces turns out to be efficient, migration should not be artificially reduced by means of legal constraints or subsidies to the new member countries. The paper draws the parallel with German unification and points out the lessons to be learned by Europe. The analysis concludes with a brief discussion of the second-best problem posed by the existence of welfare states in the old member countries.     

Health care expenditure and economic growth: Quantile panel-type analysis

This study uses international total health care expenditure data of 31 countries from 1986 to 2007 for exploring the causality between an increase in health care expenditure and economic growth. The empirical procedure is divided into two parts. The first is the panel regression analysis and the second is the quantile regression analysis. The estimation of the panel regression reveals that, expenditure growth will stimulate economic growth; however, economic growth will reduce expenditure growth. With regard to the estimation of quantile regression, when economic growth is quantile, in countries with low level of growth, the influence of expenditure growth on economic growth is different. In countries with medium and high levels of economic growth, the influence of expenditure growth on economic growth is positive; when health care expenditure growth is quantile, the influence of economic growth on expenditure growth is more different.     

Under Performers and Over Achievers: A Quantile Regression Analysis of Growth

Numerous papers have searched for empirical linkages between long run economic growth and a myriad of economic, socio-political and environmental factors. Most of these studies use ordinary least-squares regression or panel regression analysis on a sample of countries and therefore consider the behaviour of growth around the mean of the conditional distribution. We extend the literature by using quantile regression to analyse long-term growth at a variety of points in the conditional distribution. By using this approach, we identify the determinants of growth for under performing countries relative to those for over achieving countries.     

Aggregation bias-correcting approach to the health–income relationship: Life expectancy and GDP per capita in 148 countries, 1970–2010

A large amount of data consisting of 148 countries for the years 1970 to 2010 is analysed in the context of the health–income relationship. The literature suggests that the biased income–health effect obtained with macro data can be a result of the aggregation of individual concave income functions on average health. This aggregation problem is analysed in detail, and a bias-correcting method is proposed to overcome it. The results with new model alternatives show that they correct the income effects on average health in the right direction; that is, they produce smaller parameter estimates than biased models. Augmenting the results with the quantile regression approach, which is sensitive to health differences between countries, indicates that the poorest countries’ income gradient is still much larger than that of rich countries. However, the median life expectancy effect of the log of GDP per capita across the countries decreased during the sample decennials. The results for income inequality measured with the Gini coefficient indicate that the effects of inequality on health are still significant in the poorest countries but non-significant among rich countries after the year 2000. We argue that the proposed bias-correcting method retains the interest in macro health modelling and offers new model alternatives in other contexts.     

Modelling the effect of the geographical environment on Islamic banking performance: A panel quantile regression analysis

While studies have focused on Islamic banking, research on the effect of the geographical environment on Islamic banks is scarce. We investigate this issue by using daily data on 12 Islamic banks in four regions (Africa, Asia, Europe, and the United States) from July 2007 to April 2016. We apply different methodological approaches (principal component analysis, panel data tests, and quantile regression). First, the principal component analysis shows that the performance of Islamic banks varies among regions. Second, the linear panel regression highlights that the geographical environment positively and significantly affects Islamic banking, suggesting the importance of externality effects. Finally, the environmental effect seems to vary with quantiles (positive effect for the lowest quantile versus negative effect for the highest quantile). This quantile specification points to nonlinearity in the environment–Islamic bank performance relationship, reflecting a time-varying discipline imposed by the Sharia board (Islamic Law). This finding helps better explain the main difference between Islamic banks in the East (Africa and Asia) and those in the West (Europe and the United States) and also enables investors to adjust their portfolio choices when considering the products of Islamic banks according to regional specificities.     

亚太区域贸易协定的经济增长效应*——基于RTAs数量与质量的对比研究

21世纪以来，亚太地区区域贸易协定（RTA）签署的数量激增，学术界理论与现实出现悖论，引发学者思考各国热衷于建立RTAs背后的原因并探索新的研究方法。本文首次从RTAs数量和质量的影响效应哪个更为重要的视角，将发达国家和发展中国家进行对比分析，深入探究发达国家在新时期推进新一代贸易协定规则的原因。通过比对RTA协议的每一条条款，测算出涉及传统WTO+和新一代WTO-X领域的条款覆盖率和法定承诺率指标来衡量RTA的质量，实证分析得出，签署高质量的区域贸易协定能更有效地推动亚太地区的经济增长和人民福利水平的提高，该影响效应在发达国家中更为明显，而发展中国家受限于执行能力在新一代规则下签订RTA对经济增长的作用不显著。     

The effects of international remittances on expenditure patterns of the left‐behind households in Sub‐Saharan Africa

This article explores the effects of international remittances on the expenditure patterns of households in Sub‐Saharan Africa (SSA). This article focuses on five countries in SSA, which are some of the destinations that account for the highest receipt of international remittances. We analyze both aggregate and distributional effects of international remittances on expenditure patterns of households. To investigate the distributional effect of international remittances, we adopt the instrumental variable quantile (IV‐quantile) regression framework that allows us to simultaneously address the endogeneity of international remittances and possible heterogeneity in the impact of international remittances on households’ expenditure patterns. We instrument for international remittances by using the economic conditions in migrants’ countries as an instrument for international remittances. Our results show that the receipt of international remittances increases expenditures on food, durables, education, and health. Using the IV‐quantile regression, we find the effects of international remittances on household expenditure on food, durables, education, and health increase across the different expenditure quantiles.     

The impact of piped water provision on infant mortality in Brazil: A quantile panel data approach

We examine the impact of piped water on the under-1 infant mortality rate (IMR) in Brazil using a recently developed econometric procedure for the estimation of quantile treatment effects with panel data. The provision of piped water in Brazil is highly correlated with other observable and unobservable determinants of IMR — the latter leading to an important source of bias. Instruments for piped water provision are not readily available, and fixed effects to control for time-invariant correlated unobservables are invalid in the simple quantile regression framework. Using the quantile panel data procedure in Chen and Khan [Chen, S., Khan, S., Semiparametric estimation of non-stationary censored panel model data models with time-varying factor. Econometric Theory 2007; forthcoming], our estimates indicate that the provision of piped water reduces infant mortality by significantly more at the higher conditional quantiles of the IMR distribution than at the lower conditional quantiles (except for cases of extreme underdevelopment). These results imply that targeting piped water intervention toward areas in the upper quantiles of the conditional IMR distribution, when accompanied by other basic public health inputs, can achieve significantly greater reductions in infant mortality.     

Structural Operations and Net Migration Across European Union Member Countries

This paper analyzes the effects of international transfers to finance infrastructure on net migration flows among countries within the EU. A new economic geography model is employed with common pool financed infrastructure investments to derive a set of empirically testable hypotheses about the effects of transfer payments to finance infrastructure investments on migration. A significant effect of structural fund expenditures is identified on the bilateral net migration of workers among the EU member countries. On average, a one percentage point increase in the expenditures on structural funds (in per cent of gross domestic product (GDP)) leads to a reduction in the measure of bilateral net migration by about 0.4–0.8%.     

Trade Creation Effects of Regional Trade Agreements: Tariff Reduction versus Non‐tariff Barrier Removal

This study uses the most disaggregated tariff line‐level trade data in a large number of countries in the world to empirically decompose the trade creation effects of regional trade agreements (RTAs) into those owing to tariff reduction and those owing to non‐tariff barrier (NTB) removal. Specifically, utilizing our detailed dataset, we employ the standard gravity equation and identify those effects by estimating the trade creation effects of RTAs for ineligible and eligible products for RTA preferential schemes separately. Our major findings are as follows. First, for the whole sample, there are significantly positive trade creation effects owing to tariff reduction while the effects for NTB removal are weak. Second, the trade creation effects of tariff reduction and NTB removal are substantially large in the case of trade among low‐income countries but weak among high‐income countries.     

Regional Integration Agreements,Trade Flows and Economic Crisis: A Static and Dynamic Gravity Model

Regional trade agreements (RTA) strengthening is a crucial component of the contemporary global economy. These agreements are considered beneficial in many senses (economics: trade, FDI, growth, etc.) and are a stabilizing factor in international relations (politics). In this paper, I study the effects of RTAs on exports between members and non-members taking into account the Viner specification. I also try to estimate the effect of the recent economic crisis on the export flows and achievement of RTAs. I use a static and dynamic gravity model to 40 countries belonging to 6 heterogeneous RTAs for the period 1980–2011. This model is estimated taking into account the latest estimation techniques that treats endogeneity effects of integration and the existence of dynamic effect.