Completed Projects

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. 

Paper Slides Data

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

Book WP version Data