Offshoring: What Pushes Workers Out of the Game? Evidence from Global Value Chains

Over the past decades, two developments critically influenced the reputation of offshoring. Encouraged by declining transportation and coordination costs, entrepreneurs increasingly unbundled production processes and relocated different activities across countries. At the same time, high income countries experienced a profound decline in the employment of low skilled manufacturing workers. With…

The Percolation of Knowledge across Space

Despite considerable improvements in communication technologies in the last couple of decades, patent citation flows still decrease with distance. We provide evidence that this spatial decay of knowledge flows can be attributed to the spatial clustering of innovators' networks, through which knowledge percolates. Our contribution is twofold. Firstly, we provide…

Complementarity between FDI and trade policies: Evidence from India

During liberalization episodes, oftentimes economies undergo a bunch of simultaneous reforms and changes in policies. Looking back at some of the most recent liberalization episodes such as Chile (1974), Brazil (1968-1973), China (1993-2005) and India (1991), two major reforms were consistently concurrent: tariff reductions and FDI openness. And although there…

Trade and Currency weapons compared

After decades of continuous progress towards global trade integration, the issue of protectionism has come back at the top of the policy agenda since the early 2010s. On the one hand, the large exchange rate movements recorded in the wake of the global financial crisis have raised concerns about looming…

Trade Margins, Price, and Product Quality Adjustments to Non-Tariff Measures: Evidence from French Firms

Globalization has increased interdependencies between countries and therefore the need for effective regulation. The enforcement of minimum quality standards such as sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBTs) allows governments to guarantee the absence of negative externalities. For instance, SPS measures have been adopted in response…

A European disease? Non-tradable inflation and real interest rate divergence

When the euro was introduced, conditions for economic convergence –the process of narrowing income gaps between lower and higher income countries– seemed to be present. Nominal interest rates between higher and lower income countries had converged rapidly and capital was flowing from the richer (the "core") to the poorer (the…