The purpose of the seminar is to provide a platform for presenting and discussing ongoing research on determinants and consequences of globalisation in general and global value chains in particular. The seminar will take place on an irregular basis at the Kiel Institute for the World Economy or at the Christian-Albrechts University of Kiel. Both are scientific partners of KCG. Information about upcoming presentations will be provided here in advance.

If you have any questions about the KCG Research Seminar, please contact Dr. Wan-Hsin Liu (KCG Coordinator).

KCG Lunch-Time Seminar 2019-14:

Subsidies, Spillovers and Exporting: Evidence from China

Prof. Holger Görg, Ph.D. (IfW, KCG & Kiel University)

Abstract: We ask whether production related subsidies have a role to play in explaining Chinese firms’ export performance. We, firstly, implement an estimation approach that allows for both direct and indirect (“spillover”) effects of the subsidy on the probability to export. Secondly, our approach enables us to allow these two effects to differ depending on the share of firms that already receive subsidies in a well-specified cluster. These two issues have, to the best of our knowledge, not been considered in evaluations of subsidies on export performance. Our estimation results provide a sobering assessment of the usefulness of production related subsidies to stimulate export performance.

Date: Tuesday, December 10, 2019, 12.30 – 13.30

Venue: Lecture Hall (A032), Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)

KCG Research Seminar 2019-13:

Quantifying the Effects of International Tax Reforms

Prof. Dr. Farid Toubal (ENS Paris-Saclay, CREST and CEPII)

Abstract: We examine data on sales and profits of multinational corporations across a large number of countries. The data shed light on the location of activities of multinationals and the size of profit shifted to tax haven. A number of reforms have been proposed to ensure that firms pay their taxes where they carry on their activities.

Predicting the impact of a reform of existing corporate taxation regimes requires counterfactual analysis that takes into account the level of corporate taxation and the set of factors influencing the location of sales, productions and profits of multinational firms. We build and calibrate a quantitative general equilibrium model with trade and multinational activities. We propose a new methodology to quantify the amount of profits that are shifted by multinational corporations. The model predicts the change in relative attractiveness of countries, the variation of tax revenues and the adjustment of real wages of workers and entrepreneurs and the world-level efficiency induced by the implementation of a broad range of different reforms which either reallocate taxing rights across countries and/or address profit shifting to entities subject to no or very low taxation.

Date: Monday, December 9, 2019, 16.15 – 17.30

Venue: Lecture Hall (A032), Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)

*It is also an Erich-Schneider Seminar at the Kiel University.

KCG Lunch-Time Seminar 2019-12:

Can Xi Jinping Succeed?

William H. Overholt, Ph.D. (Harvard Kennedy School)

China’s success has made its economy and polity so complex that continued success requires transformation. China is struggling with the needed transition. The Chinese social system has great strengths. For instance, through 2015 the number of Chinese families who owned homes was double the number of Indian families with access to a toilet. But Xi Jinping’s emphasis on political control has overwhelmed economic reform. That same emphasis on political control has turned the Communist Party from a vanguard party into an interest group, with serious long-term consequences.

Date: Friday, November 15, 2019, 12.00 – 13.00

Venue: Medienraum (A211), Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)

KCG Lunch-Time Seminar 2019-11:

Quantifying the Short-Run Productivity and Expenditure Effects of Natural Disasters

Prof. Gabriel Felbermayr, Ph.D. (IfW, KCG & Kiel University)

Abstract: We estimate the short-run effects of natural disasters on international trade using a panel of monthly trade data and information on the physical intensity of two major types of short-lived disasters: Earthquakes and storms. Results show a strong heterogeneity across disaster types and country groups. While least developed and indebted poor countries see their trade reduced, we find small effects for developed countries. To trace heterogeneous trade effects, we investigate particularly devastating disaster events both in developed and developing economies. We then use these estimates to inform a dynamic quantitative trade model. We disentangle the monthly effects of recent natural disasters on a country’s productivity and expenditure. We also quantify the importance of trade costs and country size in determining the size of international spillover effects of natural disasters. Result show that spillovers are short-lived and negligible if the country affected by an event is small, but sizable for large economies. As a byproduct of our methodology, we provide measures of monthly country-specific economic activity.

Date: Tuesday, October 29, 2019, 12.30 – 13.30

Venue: Lecture Hall (A032), Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)

KCG Lunch-Time Seminar 2019-10:

Corporate Social Responsibility in Global Value Chains: The Role of Downstreamness and Stakeholders’ Demand

Frauke Steglich (IfW & KCG)

Abstract: Negative social and environmental outcomes within global value chains (GVCs) heavily fuel rejection of globalisation all over the world. Firms face the risk of reputation losses if they do not produce in line with human rights due diligence and reduce environmental degradation along GVCs. Corporate Social Responsibility (CSR) appears as a promising tool in signalling good-will towards sustainable production. In this paper, we contribute to the understanding of the drivers of emerging market firms’ engagement in CSR. We employ panel data of the Indian manufacturing base, which allows us to observe monetary spending on staff welfare, social and community as well as environmental-related expenses. Using panel and matching techniques, we provide novel insights on how firms’ position in a GVC affects CSR engagement. Our results indicate that firms which are positioned more downstream in a GVC are more engaged in CSR because the social and environmental performance of these firms is more visible for final consumers who are a key source of stakeholders’ pressure towards sustainable production. Moreover, we back prior findings that exporters show higher CSR engagement and in particular exports to sustainability demanding countries boost the result.

Date: Friday, October 25, 2019, 12.00 – 13.00

Venue: Medienraum (A211), Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)

KCG Lunch-Time Seminar 2019-9:

Heterogeneity Matters: On the dynamic interaction between trade, development, democracy and conflict

Katrin Kamin (Kiel University & GIGA Hamburg)

Abstract: The past decade has witnessed a  return to protectionist measures as well as a global rise in nationalist movements. Understanding the economic and political effects of such changes in trade policies or levels of democracy has gained renewed importance. There is a vast amount of literature studying the bilateral relationships between international trade flows, democracy, development and conflict. While it finds strong evidence for correlations between the four factors so far no conclusive evidence has been presented as to the direction of causal links between the factors. This paper employs a country specific vector autoregressive model allowing for endogenous dynamic interactions between trade, democracy, development and conflict. More specifically, it analyzes how shocks in one of these variables affect the others over time. The dataset used covers 110 countries and the years 1960 to 2017. Results confirm the presence of simultaneous effects from all variables on one another. In addition, effect size and sign are substantially heterogeneous across countries providing strong evidence against the validity of the homogeneous slope parameter assumption.

Date: Tuesday, October 15, 2019, 12.30 – 13.30

Venue: Lecture Hall (A032), Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)

KCG Lunch-Time Seminar 2019-8:

The Trade Effects of Antidumping Duties: Evidence from the 2004 EU Enlargement

Prof. Dr. Alexander-Nikolai Sandkamp (Kiel University & Kiel Institute)

Abstract: With over 1,600 measures in force in 2017, antidumping (AD) duties constitute a frequently used trade defence instrument. Theory predicts that, unlike normal tariffs, AD duties raise producer prices. However, empirical evidence remains inconclusive. This paper exploits the EU enlargement of 2004 as a natural experiment. Following their accession to the EU, the new member states inherited the Union’s AD duties. Under plausible assumptions, these duties are exogenous to new members’ trade shocks. In line with theoretical considerations, the paper shows that AD duties raise producer prices, but only for imports originating from countries with Market Economy Status (MES). Import prices from non-MES countries remain unchanged, while quantities fall by more. Furthermore, this paper presents evidence that the trade dampening effects of AD persist over time and that duties also indirectly affect non-targeted exporters.

Date: Tuesday, October 8, 2019, 12.30 – 13.30

Venue: Lecture Hall (A032), Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)

KCG Lunch-Time Seminar 2019-7:

Persistent Zeros: The Extensive Margin of Trade

Dr. Julian Hinz (KCG & Kiel Institute for the World Economy)

Abstract: The extensive margin of bilateral trade exhibits a high level of persistence that cannot be explained by geography or trade policy. We combine a heterogeneous firms model of international trade with bounded productivity with features from the firm dynamics literature to derive expressions for an exporting country’s participation in a specific destination market in a given period. The model framework asks for a dynamic binary choice estimator with two or three sets of high-dimensional fixed effects. To mitigate the incidental parameter problem associated with nonlinear fixed effects models, we characterize and implement suitable bias corrections. Extensive simulation experiments confirm the desirable statistical properties of the bias-corrected estimators. Empirically, taking two sources of persistence — true state dependence and unobserved heterogeneity — into account using a dynamic specification along with appropriate fixed effects and bias corrections changes the estimated effects considerably: out of the most commonly studied potential determinants (joint WTO membership, common regional trade agreement, and shared currency), only sharing a common currency retains a significant effect on whether two countries trade with each other at all in our preferred estimation.

Date: Tuesday, October 1, 2019, 12.30 – 13.30

Venue: Lecture Hall (A032), Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)

KCG-Seminar 2019-6:

Do Standards Improve the Quality of Traded Products?

Prof. Dr. Anne-Célia Disdier (INRA & Paris School of Economics)

Abstract: Quality-focused non-tariff measures are increasingly adopted by policy makers to address market failures. This paper tests for their selection and quality effects in a context of information asymmetry regarding product attributes. Our theory reveals that the enforcement of quality standards (QSs) induces the exit of low-quality firms but also that of some high-quality ones. The overall quality effect is therefore ambiguous. Using French firm data, we find that the QSs imposed by destination countries increase the probability, volume and value of exports of high-productivity medium-quality firms at the expense of low-productivity high-quality firms. QSs improve the average quality of exported consumption goods.

Disdier A.-C., C. Gaigné, and C. Herghelegiu (2018), Do Standards Improve the Quality of Traded Products, CEPREMAP, Document de travail (Docweb) No. 1808, Centre Pour la Recherche Economique et ses Applications.

Date: Friday, July 5, 2019, 12.00 – 1.00pm

Venue: Medienraum (A211), Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)

KCG-Seminar 2019-5:

Foreign Ownership Gone, Inspiration Gone? : Analysing the Effect of Foreign Divestment on Divested Affiliates’ Innovation Performance

Haiou Mao, Ph.D. (Wuhan University)

Abstract: This paper examines the effect of a divestment by a foreign owner on innovation performance of the divested affiliate. We use firm level data for China, combining production data from the Annual Survey of Industrial Enterprises with patent data from the Chinese State Intellectual Property Office. We compare the innovation performance of divested subsidiaries with that of continuing foreign-owned subsidiaries, controlling for the possible selection using propensity score reweighting combined with covariate adjustment. We find a positive effect of divestment on patent applications by the affiliate. The estimated treatment effects imply a substantial increase by about a half due to the divestment. By contrast, there is no statistically significant increase in R&D investment as a result of the divestment. We show that this overall result is mirrored for divested affiliates with minority foreign ownership. Those divested by majority owners also experience an increase in patenting, but also show a decline in R&D activity. We attribute this to Chinese FDI policy. Another important finding is that foreign divestment does not appear to be the reverse of foreign acquisitions. We find that acquisitions by foreign owners also stimulate patenting activity, in a similar way as foreign divestments. Hence, we may conclude that the within firm adjustment processes due to both of these ownership changes acts as a catalyst and reallocates resources to more efficient use.

Date: Friday, June 28, 2019, 12.00 – 1.00pm

Venue: Medienraum, Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)

KCG-Seminar 2019-4:

Slicing the Pie, Quantifying the Aggregate and Distributional Effects of Trade

Prof. Simon Galle, Ph.D. (BI Norwegian Business School)

Abstract: We develop a multi-sector gravity model with heterogeneous workers to quantify the aggregate and group-level welfare effects of trade. The model generalizes the specific-factors intuition to a setting with labor reallocation, leads to a parsimonious formula for the group-level welfare effects from trade, and nests the aggregate results in Arkolakis, Costinot and Rodríguez-Clare (2012). We estimate the model using the structural relationship between China-shock driven changes in manufacturing employment and average earnings across US groups defined as commuting zones. We find that the China shock increases average welfare but some groups experience losses as high as five times the average gain. Adjusted for plausible measures of inequality aversion, gains in social welfare remain positive and deviate only slightly from those according to the standard aggregation method.

Date: Monday, June 17, 2019, 4.15 – 6.00pm

Venue: Lecture Hall, Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)

KCG-Seminar 2019-3:

Impact of the EU-Korea Free Trade Agreement (FTA) on Firms’ Exporting Activity

Sonali Chowdhry (KCG and Kiel Institute for the World Economy)

Abstract: This paper examines multiple margins of firm-level adjustment following the entry into force of the deep and comprehensive EU-Korea FTA in 2011. Using French customs data spanning 2000-2016, the paper exploits variation in tariffs and tariff reductions across products under the FTA, assuming them to be exogenous from an individual firm’s perspective. It then employs difference in differences to identify the impact of the FTA on firms’ exporting activity. On the extensive margin, the FTA led to an increase in the probability of exporting to Korea and an increase in the product scope of firms. On the intensive margin, firms responded to the tariff reduction by primarily lowering unit values. The impact of the FTA is also found to be heterogeneous along the firm size distribution.

Date: Friday, May 10, 2019, 12.00-1.00pm

Venue: Medienraum (A-211), Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)

KCG-Seminar 2019-2:

Export Potential in Services: Do Policy Measures Matter?

Camille Reverdy (University Paris 1-Panthéon Sorbonne)

Abstract: Trade in services has gained importance in the world economy in the last decades, outpacing the growth of trade in goods. Even though services trade represents 13% of global GDP, disaggregated services data is still scarce. Indeed, while developed countries usually report their trade data by service sector and partner, developing countries mostly report only the exports and imports of broad service sectors without any detail on the source or the destination of the trade flow. In an attempt to reduce the information gap existing in services trade, this paper assesses the general equilibrium effects of a reduction in bilateral trade costs, based on a structural gravity model. In a second step, the expected trade values following the reduction in trade costs are compared to the observed export values, representing the ‘trade potential’. Thirdly, I estimate the impact of the policy measures applied by the destination country on the value of this potential. I find that an increase in the level of trade restrictiveness in a given sector decreases the probability that an exporter will face a positive potential with this partner in this sector. Almost 40% of negative potential are associated with a ‘no restriction’ environment in the partner country. Focusing on the ‘intensive margin’, i.e. on the positive potential values, I find that an increase of the restrictiveness level by one unit decreases the value of the trade potential by 1.1%.

Date: Friday, May 3, 2019, 12.00-1.00pm

Venue: Medienraum (A-211), Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)

KCG-Seminar 2019-1:

Productivity Losses and Firm Responses to Electricity Shortages: Evidence from Ghana

Dr. Charles G. Ackah (University of Ghana, Accra)

Abstract: One of the commonly cited obstacles to firms’ operations in developing economies is inadequate access to electricity. In this paper, we explore the impact of electricity outages on firm productivity using arguably exogenous variation in outages across small and medium-sized Ghanaian manufacturing firms induced by an electricity rationing program. We find that eliminating outages in this setting could lead to an increase in firm productivity. We further analyze the strategies firms use to cope with outages. We draw two main conclusions from the analysis in this paper. First, power outages have a significant negative impact on productivity. Our estimates suggest that, for instance, reducing the number of days in a month with outages from the average of about 10 in Ghana to none, as is the typical case in most developed countries, has the potential to increase productivity by about 10 percent. Second, firms are able to reduce the negative productivity impacts of outages by altering their product mix in favor of less electricity-intensive products. This coping strategy can have broader implications for the variety of products available to consumers. Further, we find that one of the most common strategies employed worldwide, the use of a generator, is unable to alleviate the negative productivity impact potentially due to the inability of small firms to efficiently use generators given the substantial economies of scale in electricity generation.

Date: Friday, March 1, 2019, 12.00-1.00pm

Venue: Medienraum (A-211), Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel)