“This One Is 400 Libyan Dinars,This One Is 500”: Insights from Cognitive Human Capital and Slave Trade

One of the most disturbing contemporary episodes in human history that has been decried globally is the recent Libyan experience of slave trade, where migrants captured end-up being sold as slaves. We contribute to the understanding of this phenomenon by investigating the role of cognitive human capital on slave trade. To this end, we use the historic intelligence and slave trade variables, respectively, as the independent and outcome variables of interest. Our findings show a negative relationship between slave trade and cognitive human capital. Hence, the slave trade is more apparent when cognitive human capital is low. The Ordinary Least Squares findings are robust to the control for outliers, uncertainty about the model and Tobit regressions. We substantiate why from the perspective of massive sensitization and education, the non-contemporary relationship between cognitive ability and slave trade established in this study has contemporary practical policy relevance in efforts to stem the tide of clandestine travel to Europe through countries in which clandestine migrants are captured and sold as slaves.     

Biology, Diseases, and Economics: An Epidemiological History of Slavery in the American South

The economic history of antebellum southern slavery has been and is the subject of ongoing debates among scholars. The literature includes assessments about the efficiency of slavery as well as about the adequacy of slave living standards and diets. Yet this literature under appreciates the important biologic and historical role that parasitic diseases played in the history of slavery. Recognizing the role of parasitic diseases calls into question some prevailing interpretations of slavery. Lacking direct evidence on slave diets, scholars turned to anthropometric evidence as proxies for the living standards of slaves, leading to the prevailing view that adult slaves were given adequate sustenance, but slave infants and children were severely malnourished. We argue it was not slave diets, but the combination of the plantation system and diseases that caused abnormally small slave children. The diseases that concern us, primarily hookworm and malaria, affected slaves ('blacks') and free labor ('whites') differently. Many slaves were concentrated on large plantations with infants and younger children crowded into 'nurseries.' This system allowed the maintenance and spread of diseases that adversely affected younger slaves. Southern white children however were less likely to be raised in conditions so conductive to parasitic diseases. The disease ecology of the antebellum South has implications for the prevailing view that slavery was more efficient than free labor. Biologic evidence indicates that people of tropical West African ancestry are more resilient to the effects of hookworm and malaria than European descendents. Thus when whites did contract these diseases, they were more afflicted than blacks. When slaves entered the adult work force they were taken from disease breeding grounds (slave nurseries) and sent into relatively (for blacks) healthy fields, while whites that went into the fields found a disease environment that was typically worse than that of their childhood. If black adults were more productive than were white adults because of a greater resilience to parasitic diseases, then part of any measured difference in productivity between slave and free farms should be attributed to the disease resistance of African descendents, rather than to any inherent efficiencies of slavery.     

The legacy of slavery on hate crime in the United States

Does slavery play a role in explaining why some areas are more prone to hate crimes? Using county-level data on slavery in 1860, I find evidence that U.S. counties with a higher share of slaves in the population more than 150 years ago are more likely to observe hate crime incidents today. One percentage point increase in the share of slaves in the population in 1860 is associated with 0.018 more hate crime incidents per 100,000 population directed at blacks today. Additionally, there is evidence that slavery is associated with more hate crime incidents directed towards Jews and LGBT population. This result supports previous studies which find persistence in cultural norms and racial attitudes.     

The relative efficiency of slave agriculture: a comment

In their book Time on the Cross, Fogel and Engerman (FE) present evidence that average factor productivity was greater for larger Southern slave farms in 1860 than for both free farms and smaller slave farms. In a recent article, Field (1988) lends support to the FE theory by finding that an upward shift in the production function occurs for slave farms at 15 slaves, the size at which FE propose that gang labour became feasible. In a more recent article, Grabowski and Pasurka (GP) contradict both FE and Field by finding that there was no relationship between the size of slave farms and their efficiency. The present paper extends both GP's and Field's work and refines a point made by FE. We distinguish between a technological advantage due to the gang labour system and revenue inefficiency due both to the incentive structure of slavery and the repugnance of gang labour, two factors which foster rational shirking and resistance by slaves. That is, we propose that relative to small slave farms, large slave farms may have enjoyed a higher revenue frontier but that actual output and revenue fell farther below their frontier. Our construction is consistent with the historical view that emphasizes the harshness of slavery, the repugnance of the gang labour system, and the rational resisting behaviour of the slaves. We test this hypothesis with the stochastic frontier function approach as did GP. However, our findings contradict them. We find, consistent with both FE and Field, that large slave farms exhibited superior technology over small farms. More importantly, we find empirical confirmation of our theory that large slave farms suffered greater revenue inefficiency than smaller slave farms.     

Temperature,rainfall and economic growth in Africa

Following a recent line of research, this paper investigates the aggregated effects of temperature and rainfall on economic growth in Africa. Our econometric approach is based on a reduced-form model and takes account explicitly of parameter heterogeneity and cross section dependence, relying on ARDL modelling and panel estimators with multifactor structures. We find clear supportive evidence of short- and long-run relations between temperature and per-capita GDP growth, while the role played by rainfall appears to be less important and the evidence on its statistical significance is less clear-cut. Very similar results are reported when the analysis is carried out by focusing solely on Sub-Saharan African countries or considering GDP growth per worker. This evidence is in sharp contrast to the results obtained via standard MG estimation and this confirms that, by not controlling for cross section dependence, traditional panel estimators are likely to provide misleading inference. The empirical results suggest that, far from adapting quickly to weather shocks, African economies appear to be significantly damaged by them. In the absence of corrective measures, the current trends in climate change may impose a progressively heavier burden on African countries.     

PRICES OF SLAVES IN WEST AND WEST-CENTRAL AFRICA: TOWARD AN ANNUAL SERIES, 1698–1807

Currently available price series for slaves during the eighteenth century need to be treated with much caution, and it seems unlikely that large quantities of new evidence will be unearthed. Further progress toward the creation of more reliable price series will thus require new methods of estimation. In this paper, a new price series for slaves at the African coast is calculated using data relating to the number of slaves shipped from the coast by British traders and the value of trade goods bartered for them.     

China’s rise,asymmetric trade shocks and exchange rate regimes

China’s rapid growth provides a natural experiment to study the effects of asymmetric trade shocks on the competitiveness of OECD countries. The different levels of exposure to Chinese trade competition, as measured using an index of export similarity, triggered asymmetric shocks as China’s trade surged. Motivated by a Ricardian framework, this paper finds that countries with exports similar to those of China experience a loss in competitiveness compared with countries with a different trade structure. Once an additional layer of distinction is introduced between fixed and flexible exchange rate regimes, I find that countries with a fixed exchange rate and with relatively high similarity to China experience a real appreciation.     

The long-term effects of the slave trade on political violence in Sub-Saharan Africa

This study investigates the long-term legacy of the slave trade on contemporary violence in sub-Saharan Africa. Using a geo-coded disaggregated dataset and exploiting within-country variation in slave trade intensity, we document a robust positive relationship between slave exports and contemporary conflict; the slave trade has long-lasting impacts on ethnic conflict and riots in particular. We examine the mechanisms underlying this persistence and find that the slave trade has weakened national identity, leading to a higher risk of ethnic conflict, and has also undermined economic development, which partly explains the relationship between the slave trade and riots. Furthermore, using the individual attitudes from the Afrobarometer survey, we show that the impact of the slave trade on national identity is mostly attributed to the inherited beliefs and norms rather than the external environment.     

Did rainfall shocks cause civil conflict in Sub-Saharan Africa? The implications of data revisions

In their seminal paper, Miguel et al. (2004) found that negative rainfall shocks (measured as negative year-on-year rainfall growth) had caused civil conflict in sub-Saharan Africa over the 1981–1999 period. Since then, the rainfall and conflict data they used had undergone multiple revisions. We show that rainfall shocks are no longer statistically significant for civil conflict when the revised data are used. This is true whether we employ a different functional form for rainfall, extend the sample to include more recent observations, use longer lags for rainfall shocks, employ dynamic panel regression, or panel regressions that take into account of cross-sectional dependence. Using rainfall shocks as instruments for growth, we also find that growth is insignificant for civil conflict if the revised data are used. Upon further investigation, we find that updates in the rainfall and conflict data for one or a few countries may alone cause rainfall shocks to lose statistical significance.     

Flexible exchange rates as shock absorbers

In this paper we analyze empirically the effect of terms of trade shocks on economic performance under alternative exchange rate regimes. We are particularly interested in investigating whether terms of trade disturbances have a smaller effect on growth in countries with a flexible exchange rate arrangement. We also analyze whether negative and positive terms of trade shocks have asymmetric effects on growth, and whether the magnitude of these asymmetries depends on the exchange rate regime. We find evidence suggesting that terms of trade shocks get amplified in countries that have more rigid exchange rate regimes. We also find evidence of an asymmetric response to terms of trade shocks: the output response is larger for negative than for positive shocks. Finally, we find evidence supporting the view that, after controlling for other factors, countries with more flexible exchange rate regimes grow faster than countries with fixed exchange rates.     

Output volatility,composition of trade,and transmission of economic shocks across countries

In this paper we investigate how supply and demand shocks in one country affect output volatility in other countries. While the evidence for cross‐country transmission of demand shocks is mixed, we find that volatile supply in one country leads to larger imports and output volatility in other countries. As a result, the effect of trade openness on output volatility is highly heterogeneous across countries and depends on the composition of their trade. Those countries whose imports originate in economies with volatile supply experience a greater impact of trade on output volatility.     

Baltic Dry Index and the democratic window of opportunity

In their seminal paper, Brückner and Ciccone (2011) document that a significant effect of democratic change may be triggered by negative transitory economic shocks, and that rainfall can open a democratic window of opportunity in sub-Saharan Africa (SSA). As a complement, this paper uses within-country variation in the Baltic Dry Index (BDI) as a source of transitory negative income shocks to SSA countries. The BDI reflects the cost of utilizing dry bulk carriers, which are specially designed vessels for transporting primary goods internationally, where these goods dominate the output and export sectors of the SSA economies. We find that positive BDI cost shocks are followed by significant contraction in income through trade channel and significant improvement in democratic institutions, where BDI can open a window of opportunity for democratic improvement. Instrumental variables estimates indicate that following a negative income shock of one percentage point, democracy scores improve by around 4–5 percentage points on average.     

Global trade flows and economic policy uncertainty

ABSTRACT

This article investigates the impacts of economic policy uncertainty (EPU) on global trade flows in gauging international trade developments. We employ a global vector autoregressive (GVAR) trade model, augmented with value-added bilateral trade linkages, that allows for quantifying the effects of economy-specific uncertainty shocks on exports and imports of individual economies. We find substantial spatial propagation in the temporal dynamics of international transmission of shocks amidst the manifestations of cross-border global value chains (GVCs) with China’s accession into the WTO. We provide evidence for the significance of EPU of China and the United States, particularly the latter, in influencing global trade flows. Our results show that while the US impacts can largely be attributed to its indirect trade linkages with other economies, the impacts of China can be relegated more to its direct GVC linkages. The findings have implications on trade protectionist inclinations of the current-term US government and the ongoing efforts of China’s policymakers in steering macroeconomic rebalancing for sustainable growth.     

HOW IMPORTANT ARE TERMS‐OF‐TRADE SHOCKS?

According to conventional wisdom, terms‐of‐trade shocks represent a major source of business cycles in emerging and poor countries. This view is largely based on the analysis of calibrated business‐cycle models. We argue that the view that emerges from empirical structural vector autoregression (SVAR) models is strikingly different. We estimate country‐specific SVARs using data from 38 countries and find that terms‐of‐trade shocks explain less than 10% of movements in aggregate activity. We then estimate key structural parameters of a three‐sector business‐cycle model country by country and find a disconnect between the importance assigned to terms‐of‐trade shocks by theoretical and SVAR models.     

Employment,job turnover,and trade in producer services: UK firm‐level evidence

Abstract We provide the first firm‐level evidence of the impact of the trade in producer services (‘offshoring’) on the labour market. Using a new data set from the UK that measures trade in services at the firm level, we find no evidence that importing intermediate services is associated with job losses or greater worker turnover. Using regression to control for observable differences between firms that import service inputs and those that do not, we show that firms that start importing intermediate services experience faster employment growth than equivalent firms that do not. This seems likely to be the result of positive demand shocks, which cause a simultaneous increase in employment, output, and use of imported service inputs.     

Trade,poverty, and social protection in developing countries

How do shifts in trade affect social protections for the poor? Although the fraction of the world's population considered the “extreme” poor has fallen by over one-half over the past quarter century, many of those lifted above the global poverty line remain vulnerable to shocks that could place them back into poverty. These are the groups that require social protection to stabilize their incomes. Among the shocks to which the absolute poor have been exposed are those created by trade liberalization, particularly of the agricultural sector. The resulting risks, uncertainties, and threats to social stability from this type of trade require that the poor be provided with some forms of adjustment assistance. We examine the effects of trade components on several dimensions of social protection in developing countries, including spending, coverage, and adequacy over the past two decades. We find that, contrary to previous studies, disaggregating trade may be a key to determining which international market variables drive expansion of social protection. Disaggregating trade balances in agricultural vs. manufactured goods reveals that net food and agricultural exporters provide better social protection than countries that report agricultural trade deficits. Meanwhile, countries with manufacturing trade surpluses tend to experience reduced social protection coverage. We reason that governments of net agricultural exporters face incentives to invest in social programs that extend eligibility to the rural poor. Manufacturing export-driven economies, on the other hand, are likely participants in global production chains that limit the capacity of the public sector to extend social protection.     

Trade integration and risk sharing

What are the effects of increased trade in goods and services on the trade balance? We study the effects of reducing transport costs in a Ricardian model with complete asset markets and find that this increases the volatility of the trade balance. This result applies regardless of whether supply or demand shocks are the main source of economic fluctuations. Both type of shocks generate fluctuations in the trade balance that are in part moderated by stabilizing movements in the terms of trade. Trade integration dampens these terms of trade movements and, for a given distribution of shocks, amplifies fluctuations in the trade balance. To overturn this result, one must assume that either trade integration is sufficiently biased towards goods with strong comparative advantage and/or risk aversion is sufficiently extreme. We calibrate the model to U.S. data and find that, for reasonable parameter values, increased trade in services could double the volatility of the trade balance.     

Asymmetric Information and Adverse Selection in Mauritian Slave Auctions

Information asymmetry is a necessary prerequisite for testing adverse selection. This paper applies this sequence of tests to Mauritian slave auctions. The theory of dynamic auctions with private and common values suggests that when an informed participant is known to be active, uninformed bidders will be more aggressive and the selling price will be higher. We conjecture that observable family links between buyer and seller entailed superior information and find a strong price premium when a related buyer purchased a slave, indicative of information asymmetry. We then test for adverse selection using sale motivation. Our results indicate large discounts on voluntary as compared to involuntary sales. Consistent with adverse selection, the market anticipated that predominantly low-productivity slaves would be brought to the market in voluntary sales.     

Asset prices, exchange rates and the current account

This paper analyses the role of asset prices in comparison to other factors, in particular exchange rates, as a driver of the US trade balance. It employs a Bayesian structural VAR model that requires imposing only a minimum of economically meaningful sign restrictions. We find that equity market shocks and housing price shocks have been major determinants of the US current account in the past, accounting for up to 30% of the movements of the US trade balance at a horizon of 20 quarters. By contrast, shocks to the real exchange rate have been less relevant, explaining about 9% and exerting a more temporary effect on the US trade balance. Our findings suggest that large exchange rate movements may not necessarily be the key element of an adjustment of today's large current account imbalances, and that in particular relative global asset price changes could be a potent source of adjustment.     

Current Account, Capital Formation and Terms of Trade Shocks: a Revisit of the Harberger-Laursen-Metzler Effect

This paper extends the Blanchard model of a closed-economy to a three-good (exportable, importable and non-tradable goods) open-economy model with capital accumulation and uncertain lifetimes to study the impacts of terms of trade shocks on the current account. The simulation results show that a model with uncertain lifetimes is more appropriate to describe a small open economy like Taiwan at the steady-state equilibrium than a model with infinite lifetimes. We find that the Harberger-Laursen-Metzler effect is discernible for temporary or permanent terms of trade shocks. Furthermore, the steady state is a saddle point and the speed of convergence of capital and consumption is quite low.