On the twin deficits hypothesis and the import intensity in transition countries / Hubert Gabrisch

This article aims to explain the increasing deficits in the trade and current account balances of three post-transition countries–Czech Republic, Hungary, and Poland–by testing two hypotheses: the twin deficit hypothesis and increasing import intensity of export production. The method uses co-integration and related techniques to test for a long-run causal relationship between the fiscal and external deficits of three post-transition countries in Central and Eastern Europe. In addition, an import intensity model is tested by applying OLS and GMM. All the results reject the Twin Deficits Hypothesis. Instead, the results demonstrate that specific transition factors such as net capital flows and, probably, a high import intensity of exports affect the trade balance.

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Environmental Protection in the EU and the WTO: Is Article XX GATT in its Present Interpretation Consistent with the Current Standard of Environmental Protection of the EU? / Antonia Walter

In this essay, I address the different approaches of the EU and the WTO to the trade and environment conflict and find out in how far the present environmental policy of the EU is compatible with the conditions of the WTO’s Art XX GATT. Therefore, I first establish the current level of environmental protection in the EU by analysing the standard aimed
for by the EU and its realization in legislation and jurisprudence. To show how environmental protection works in practice, I analyse selected case law and show how EU courts treat trade restrictions on environmental grounds enacted by Member States. Having evaluated the current standard of the EU, I proceed to compare the result with the WTO. I briefly
explain institutional environmental developments within the GATT 1947, important environmental cases before the establishment of the WTO 1994 and textual changes in the new WTO Agreement. I then evaluate how Art XX GATT is dealt with in key case law and simultaneously compare this to the results of my analysis of similar EU cases. To conclude, I give a brief outlook on pending cases and a summary of the results of my study in both the EU and the WTO ambit. I point out some important differences in legal texts and case law and finally come to give a negative answer to my initial question.

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Technological effects of intra-OECD trade in manufacturing : A panel data analysis over the period 1988-2008 / Javad Abedini

This article seeks to study how intra-OECD trade in manufacturing goods has affected technological heterogeneity across member states during 1988-2008. To this aim, we derive a panel data version of the Eaton and Kortum (2002) normalised trade model to estimate, annually, the technological heterogeneity of OECD countries. We find a gradual technological convergence across the group as the sensitivity of intra-group trade to price factors increases over time. However, the results diverge when considering European and non-European OECD sub-samples, separately. We find that technological convergence is not an automatic result of intra-group trade but, for that, a more general programme of economic liberalisation, including free movement of capital and labour, is also required.

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Trade Policy Implications of Global Value Chains / SĂ©bastien Miroudot, DorothĂ©e Rouzet, Francesca Spinelli

Taking global value chains (GVCs) into account has important implications for trade policy. When production is vertically fragmented and trade in intermediate inputs is prevalent, one has to look differently at a certain number of issues. Through case studies, this paper provides new evidence on the incidence on services of tariffs levied on goods (case study 1) and then discusses effective rates of protection in a world of GVCs and what the removal of tariffs on intermediate inputs implies, using the example of Canada (case study 2). To illustrate how trade agreements could be made more relevant for GVCs, the paper further looks at sectoral approaches in trade negotiations through the example of the Information Technology Agreement (case study 3) and finally compares the network of regional trade agreements in force with global production networks (case study 4).

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Trade Openness, Corruption and Factor Abundance: Evidence from a Dynamic Panel / Sugata Marjit, Biswajit Mandal and Suryadipta Roy

Using the Heckscher–Ohlin–Samuelson–Vanek (HOSV) framework, this paper illustrates a relationship between corruption and the pattern of international trade that depends on the factor endowments of countries.
The relationship between trade openness and corruption is empirically investigated by using a panel dataset on trade openness, corruption and capital–labor ratio, and applying estimation techniques developed for dynamic panels. The regression results provide strong support to the hypothesis that the effect of corruption on trade openness depends on relative factor abundance.

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Trade and the Speed of Convergence / E. Young Song

Numerous studies on income convergence estimate the convergence equation derived for autarkic economies using data from the world that is increasingly integrated. This paper derives a convergence equation for a world integrated by trade from the standard Heckscher–Ohlin model with factor price equalization. The convergence equation for an integrated world differs from the autarkic one in that (1) the growth rate of each economy is increasing in the global growth rate; (2) the rate of convergence is increasing in the global growth rate; and (3) the rate of convergence, under conventional parameter values, is much lower.

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International carbon emissions trading and strategic incentives to subsidize green energy / Thomas Eichner and RĂĽdiger Pethig

The article examines strategic incentives to subsidize green energy in a group of countries that operates an international carbon emissions trading scheme. Green subsidies of either sign on top of emissions cap regulation reduce the welfare of the group of countries, but this may not hold for individual countries. The cases of small and large countries turn out to exhibit significant differences. While small countries refrain from subsidizing green energy and thus implement the efficient allocation, large permit-importing countries may subsidize green energy in order to influence the permit price in their favor.

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