Trade-induced productivity gains reduce incentives to impose strategic tariffs

Hübler, Michael; Pothen, Frank

doi:10.1016/j.econmod.2016.11.006

Cited by 6 publications

(3 citation statements)

References 52 publications

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“…Greater trade openness may positively influence economic complexity by supporting the diffusion of knowledge and transfer of technology through imported goods and services (of which the intermediate goods) at lower costs (e.g., Coe & Helpman, 1995;Grossman & Helpman, 1991;Grossman & Helpman, 2015;Navas, 2015). Moreover, through its positive impact on total factor productivity (e.g., Föllmi et al, 2018;Hübler & Pothen, 2017;Melitz 2003;Miller & Upadhyay, 2000), trade openness can induce greater economic sophistication. Sepehrdoust et al (2019) reported that trade policy liberalization is conducive to greater economic complexity.…”

Section: A Model Specificationmentioning

confidence: 99%

Effect of Productive Capacities on Economic Complexity: Do Aid for Trade Flows Matter?

Gnangnon

2021

Journal of Economic Integration

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This is the first study to examine the effect of productive capacities on economic complexity and understand whether the Aid for Trade (AfT) flows is important for this effect in recipient countries. The analysis uses a sample of 126 developed and developing countries for 2002-2018 and adopts the two-step system Generalized Method of Moments approach. Results show that strengthening productive capacities enhances economic complexity. Furthermore, productive capacities and total AfT flows are strongly complementary in positively affecting economic complexity, and the degree of complementarity is higher for poor countries than for other AfT-recipient countries. Similarly, productive capacities are strongly complementary with total Non-AfT flows, as well as for total development aid. These findings highlight the need for scaling-up development aid flows, notably AfT flows, in favor of developing countries and poor countries having the lowest levels of productive capacities.

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Section: A Model Specificationmentioning

confidence: 99%

Effect of Productive Capacities on Economic Complexity: Do Aid for Trade Flows Matter?

Gnangnon

2021

Journal of Economic Integration

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“…Greater trade openness is expected to in uence positively economic complexity by supporting the diffusion of knowledge and transfer of technology, including through the imported goods and services (of which the intermediate goods) at lower costs (e.g., Coe and Helpman 1995;Grossman and Helpman, 1991;Grossman and Helpman 2015;Navas, 2015). Moreover, by through its positive impact on total factor productivity (e.g., Föllmi et al, 2018;Hübler and Pothen, 2017;Melitz 2003;Miller and Upadhyay, 2000), trade openness can induce greater economic sophistication. Sepehrdoust et al (2019) have reported that trade policy liberalization is conducive to greater economic complexity.…”

Section: Model Speci Cationmentioning

confidence: 99%

Effect of Productive Capacities on Economic Complexity: Do Aid for Trade flows Matter?

Gnangnon

2021

Preprint

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The COVID-19 health pandemic has exposed the strong vulnerabilities of countries, including developing ones to shocks, and underlined the need for exploring ways to strengthen countries' resilience to future shocks. The current paper uses the dataset made recently available by the United Nations Conference on Trade and Development (UNCTAD) to examine (for the first time) the effect of productive capacities on economic complexity. The analysis further investigates whether Aid for Trade (AfT) flows matter for the influence of productive capacities on economic complexity in recipient-countries. The analysis uses a sample of 126 countries (including both developed and developing countries) over the period 2002-2018, and adopts the two-step system Generalized Methods of Moments (GMM) approach. Results have shown that productive capacities exert a positive effect on economic complexity over the full sample. However, the magnitude of this positive effect varies across different sub-samples, with Least developed countries (LDCs) enjoying the lowest magnitude of this positive effect. Furthermore, total AfT flows are positively associated with economic complexity, with LDCs enjoying a higher positive effect than other countries. Interestingly, total AfT flows exert a higher positive effect on economic complexity in countries that experience low levels of overall productive capacities. The latter finding highlights the need for donor-countries to scale-up AfT flows in favour of countries (such as LDCs) that are characterized by low levels of productive capacities. Finally, the empirical outcomes indicate that productive capacities enhance economic complexity in countries that receive higher amounts of total NonAfT flows.

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“…As noted by [1, 17,22], the use of improved technologies in the production of edible oilseeds, such as sunflower, results in yields increasing up to five times. Such an increase in production, which increases output and ultimately increases household income, can enable a sustainable reduction in poverty, reduce unemployment, and reduce other societal problems [28,29]. This raises a question-what are the multiplier effects in an economy when a sector experiences an increase in productivity?…”

Section: Scenario Descriptionmentioning

confidence: 99%

Reducing Edible Oil Import Dependency in Tanzania: A Computable General Equilibrium CGE Approach

2019

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Reducing food imports and promoting domestically produced food commodities are long-standing goals for policymakers and other stakeholders in sub-Saharan African countries. For instance, Tanzania, after a long period of dependency on imported food commodities, such as sugar and edible oils, intends to meet its demand for these commodities through domestic production by transforming its agriculture sector to achieve this goal. Applying a general computable equilibrium (CGE) model, this study determines the multiplier effects of technological progress that is assumed to foster domestic edible oilseed crop production, other crops, and Tanzania’s economy in general. Findings from the model establish an increase in domestic production not only for the edible oilseed crops but also for other commodities from other sectors of the economy. In addition, there is a decrease in prices on domestically produced commodities sold in the domestic market, and an increase in disposable income is predicted for all rural and urban households, as well as government revenues. Based on model results, we recommend that the Tanzanian government invests in technological progress and interventions that increase production in sectors such as agriculture, where it has a comparative advantage. Interventions that increase smallholder farmer’s production, such as the use of improved seed and other modern technologies that reduce costs of production, are critical for reducing food imports and improving food security.

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Trade-induced productivity gains reduce incentives to impose strategic tariffs

Cited by 6 publications

References 52 publications

Effect of Productive Capacities on Economic Complexity: Do Aid for Trade Flows Matter?

Effect of Productive Capacities on Economic Complexity: Do Aid for Trade Flows Matter?

Effect of Productive Capacities on Economic Complexity: Do Aid for Trade flows Matter?

Reducing Edible Oil Import Dependency in Tanzania: A Computable General Equilibrium CGE Approach

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