Eastern Partnership states benefit from free trade agreements with the EU, but gain little from similar agreements with Russia

The Ukraine crisis illustrated the extent to which Eastern Partnership states can be torn between pursuing closer integration with the EU or with Russia. Outlining results from a recent study, Inmaculada Martinez-Zarzoso writes that when the effects of free trade agreements are compared, Eastern Partnership states stand to benefit substantially from agreements with the EU, but gain little from similar agreements with Russia. Nevertheless, she argues that the best policy for Eastern Partnership countries is to pursue free trade with both East and West, and that the EU should conduct a dialogue with Russia to create a free-trade zone from ‘Lisbon to Vladivostok’

The log of gravity revisited

This paper evaluates the performance of alternative estimation methods for gravity models with heteroskedasticity and zero trade values. Both problematic issues, recently addressed by Santos Silva and Tenreyro in an influential paper, are re-examined here. We use Monte Carlo simulations to compare the Pseudo Poisson Maximum Likelihood (PPML) estimator recommended by Santos Silva and Tenreyro, a Gamma pseudo-maximum-likelihood (GPML), a Non-Linear Least Squares (NLS) estimator and a Feasible Generalized Least Squares (FGLS) estimator with more traditional techniques. Additionally, estimates of the gravity equation are obtained for three different data sets with the abovementioned methods. The results of the simulation study indicate that, although the PPML estimator is less affected by heteroskedasticity than others are, its performance is similar, in terms of bias and standard errors, to the FGLS estimator performance, in particular for small samples. GPML presents however the lowest bias and standard errors in the simulations without zero values. The results of the empirical estimations, using three different samples containing real data, indicate that the choice of estimator has to be made for each specific dataset. There is not a general “best” estimator and it is highly recommended to follow a model selection approach using a number of tests to select the more appropriate estimator for any application

The Euro and the CFA Franc: Evidence of Sectoral Trade Effects

This paper estimates a gravity model of trade to evaluate the trade effects of the Euro on sectoral trade within the Eurozone (EZ), the CFA Franc Zone (CFA) and between the EZ and the CFA, when CFA countries acquired fixed rates against the nonfrancophone EZ members. The formation of the EZ provides a quasi-natural experiment to estimate the effects on trade of fixed exchange rates, since the change in exchange rate regime for CFA countries with all EZ countries but France was not trade related. This is tested using sectoral trade data for 175 countries over the period 1995-2016 and validated using a longer time period starting in the seventies. The main departure from Frankel (2008), is the estimation of a structural gravity model using sectoral trade and bilateral-sectoral fixed effects as well as controls for multilateral resistance, namely time varying countrysector fixed-effects for exporters and importers, in a PPML framework. The main results indicate that the introduction of the Euro does show positive and significant effects for export flows from the CFA to other EZ countries different from France, whereas exports in the opposite direction are negatively affected. Moreover, the results differ by sector and we find that agricultural and homogeneous goods exports from CFA countries to Euro adopters increased by around forty and hundred twenty percent, respectively after the euro adoption

Exporting and productivity: evidence for Egypt and Morocco

This paper investigates the link between exporting and importing activities and firm performance using a rich dataset on Egyptian and Moroccan firms. We test the export premium, self-selection and learning-by-exporting hypotheses using a number of firm characteristics. Our analysis also includes importing activities as a source of learning and considers their effects on productivity changes. A differences-in-differences matching estimator is used to address the endogeneity bias of target variables. The main results for Egyptian firms echo those reported for other countries using firm-level data, namely exporters are larger and more productive than non-exporters. In contrast, Moroccan exporters and non-exporters are strikingly similar. More specifically, no evidence is found of pre or post-entry differences in labour productivity for Moroccan firms

Introduction to migration and refugee flows: New insights

Population movements between countries and continents are not recent phenomena. What is new today is that migration flows are increasingly linked to the globalization process and to environmental degradation. Most of the migrants leave their homes for economic reasons, but also due to the higher frequency of natural disasters. Of the total migrant population, those who escape from conflicts or persecution still represent a smaller fraction and are entitled to obtain refugee status. This thematic issue includes eight articles that analyse migration flows and migration governance from different analytical perspectives. Five of the eight contributions examine the role that several factors play in explaining international migration flows and its effects, namely cultural diversity, information technology tools, governance, terrorism, and attitudes towards immigration. The remaining three articles are country studies that analyse the socioeconomic causes/effects of migration flows to Portugal, Spain, and Germany, devoting special attention to forced migration and refugees

Female top managers and firm performance

This paper uses firm-level data worldwide to investigate productivity gaps between female and male-managed companies in developing and developed countries and compare the outcomes obtained for different regions in the world. The main aim is to shed some light on the debate around the existence of performance differences when females participate in managerial activities. The main results indicate that it is crucial to distinguish between female management and female ownership and the confluence between both. We find that when the firms have a top female manager and ownership is exclusively male, firms show higher average labor productivity. We argue that firms owned by males belong to male-dominated corporate culture and would only select a female manager if she is more competent than potential male candidates. These results are very heterogeneous among regions, of which South Saharan Africa, East Asia, and South Asia are driving the main results

What Explains Indirect Exports of Goods and Services in Eastern Europe and Central Asia?

This paper investigates the determinants of indirect exporting, using firm- level data for 27 countries in Eastern Europe and Central Asia. Indirect exporting depends on a combination of fixed and variable trade cost factors. We first hypothesize that firms that perceive customs, transportation, crime and legal sys- tems as severe obstacles anticipate higher fixed costs and are more likely to export indirectly. The second hypothesis is that indirect exporting tends to be a temporary strategy. Econometric models are used to test the first hypothesis and transition matrices to test the second. In particular, probit, Heckman-probit and fractional response models are estimated to analyse the determinants of the export mode and the share of indirect exports. The results indicate that the factors that account for the fixed cost of exporting, mainly affect the decision to export indirectly (extensive margin), but some of them also affect, to a lesser extent, the amount exported indirectly (intensive margin). More specifically, factors such as customs and trade restrictions and transportation obstacles affect the extensive margin only, whereas crime affects both margins. Secondly, trade agreement membership mainly affects trade in manufactured goods, while exchange rate volatility affects positively the extensive and intensive margin of indirect exports of services. The results also indicate that firms are more likely to change their status as an indirect exporter than they are to change their status as a direct exporter or a non-exporter, which provides support to the second hypothesis

The price of modern maritime piracy

A growing body of literature has recently focused on the economic origins and consequences of modern maritime piracy and on the perception that the international community has failed to control it. This paper aims to investigate maritime transport costs as one of the channels through which modern maritime piracy could have a major impact on the global economy. A transport-cost equation is estimated using a newly released data-set on maritime transport costs from the Organization for Economic Cooperation and Development together with data on maritime piracy from the International Maritime Bureau. Our results show that maritime piracy significantly increases trade costs between Europe and Asia

Did the Kyoto Protocol fail? An evaluation of the effect of the Kyoto Protocol on CO2 emissions

In this paper, we empirically investigate the impact of the Kyoto Protocol on CO2 emissions using a sample of 170 countries over the period 1992-2009. We propose the use of a difference-in-differences estimator with matching to address the endogeneity of the policy variable, namely Kyoto commitments. Countries are matched according to observable characteristics to create a suitable counterfactual. We correspondingly estimate a panel data model for the whole sample and the matched sample and compare the results to those obtained using an instrumental variable approach. The main results indicate that Kyoto Protocol commitments have a measurable reducing effect on CO2 emissions, indicating that a treaty often deemed a 'failure' may in fact be producing some non-negligible effects for those who signed it

Do Transfer Costs Matter for Foreign Remittances? A Gravity Model Approach

Using bilateral data on remittance flows to Pakistan for 23 major host countries, this is the first study that examines the effect of transaction costs on foreign remittances. The authors find that the effect of transaction costs on remittance flows is negative and significant; suggesting that a high cost will either refrain migrants from sending money back home or make them remit through informal channels. They also find that remittances are facilitated by the existence of migrant networks and improvements in home and host country financial services. Distance, which has been used in previous studies as an indicator of the cost of remitting, is found to be a poor proxy.The authors gratefully acknowledge the comments and suggestions made by Prof. Stephan Klasen. We also would like to thank the participants at the IS Academy: Migration and Development, the 16th Göttingen Workshop on International Economics, 12th Arnoldshain Seminar as well as the 2015 Annual Conference of the Research Group on Development Economics for their valuable inputs. I. Martinez-Zarzoso also acknowledges the support and collaboration of Project ECO2014-58991-C3-2-R funded by the Spanish MINECO and of Project “Production Networks and Economic Integration” funded by the University Jaume I (P1.B2013–06)