The erosion of colonial trade linkages after independence

Head, Keith; Mayer, Thierry; Ries, John

doi:10.1016/j.jinteco.2010.01.002

Cited by 820 publications

(643 citation statements)

References 27 publications

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“…One problem is worth mentioning here. As more extensively discussed in Head et al (2010), zeros in the trade data can either represent "true" zeros (i.e. no trade actually occurs between the two countries)…”

Section: Empirical Methodologymentioning

confidence: 99%

The Vulnerability of Sub-Saharan Africa to Financial Crises: The Case of Trade

Berman¹,

Martin²

2012

IMF Econ Rev

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Motivated by the 2008-2009 financial crisis and the trade collapse, we analyze the effect of past banking crises on trade with a focus on African exporters. We show that they are particularly vulnerable to a banking crisis in the countries they export to. We distinguish between an income effect (during a banking crisis, income and exports to the country fall) and a disruption effect (a banking crisis disrupts the financing of trade channels). For the average country, the disruption effect is moderate (a deviation from the gravity predicted trade of between 1 to 5%). We find however that the disruption effect is much larger and long-lasting for African exporters as the fall in trade (relative to gravity) is 10 to 15 percentage points higher than for other countries in the aftermath of a banking crisis. This vulnerability of African exports in the short-run does not come from a composition effect, i.e. from the fact that primary exports are disrupted more severely than manufacturing exports. Instead, we provide suggestive evidence that the dependence of African countries upon trade finance is an important determinant of their vulnerability to banking crises in partner countries.

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Section: Empirical Methodologymentioning

confidence: 99%

The Vulnerability of Sub-Saharan Africa to Financial Crises: The Case of Trade

Berman¹,

Martin²

2012

IMF Econ Rev

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“…These measures are supposed to account for the economic attractiveness of both countries. In order 6 The source of the distance and common language variables is CEPII bilateral trade data (Head, Mayer, & Ries, 2010). For more information please refer to: http://www.cepii.fr/anglaisgraph/bdd/distances.htm to control for the internationalisation of economic activity, we also include measures of foreign direct investment for each country (in current US$).…”

Section: The Determinants Of International Technological Collaborationmentioning

confidence: 99%

Global technological collaboration network: network analysis of international co-inventions

Prato

Nepelski

2012

J Technol Transf

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Global innovation networks are emerging as a result of the international division of innovation processes through, among others, international technological collaborations. At the aggregate level, the creation of technological collaboration between countries can be considered as mutually beneficial (or detrimental) and their random distribution is unlikely. Consequently, the dynamics and evolution of the technological collaborations can be expected to fulfil the criteria of a complex network. To study the structure and evolution of the global technological collaboration network, we use patent-based data of international co-inventions and apply the network analysis. In addition, extending the gravity model of international technological collaboration by measures controlling for countries position in the network, we show that that a country's position in the network has very strong impact on the intensity of collaboration with other members of the network.

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“…This flexibility is important to pick up trade cost changes when they de facto occur (not when we would de jure expect them), and allows the strength of such effects to develop over time (rather than imposing a constant effect). The resulting model -estimated using bilateral trade data over the period 1980-2004 with data for trade liberalisation (both provided by the CEPIITradeProd and CEPII-Gravity databases; Head et al, 2010;de Sousa et al, 2012) -provides a very good approximation of trade flows, with an average R 2 of 98% (88% when looking exclusively at variation within country-pairs over time), and variables used as trade cost proxies are statistically significant well beyond the 99% confidence level. From this set of estimations, we extract predicted values for bilateral trade integration as follows (Head and Mayer, 2011): 22 21 Moreover, regional trade agreements may be endogeneous (Baier and Bergstrand, 2007).…”

Section: Measuring Trade Liberalization (And Market Potential)mentioning

confidence: 98%

“…Clearly, as the tax gap between countries i and j is the same as that between countries j and i, we only include each country- 15 The set of countries includes Australia, Austria, Canada, Switzerland, Germany, Denmark, Spain, Finland, France, Great-Britain, Greece, Hungary, Ireland, Italy, Iceland, Japan, Korea, Mexico, the Netherlands, Norway, New-Zealand, Poland, Portugal, Sweden, Turkey and US. The starting point follows from the availability of corporate tax rate data (source: Loretz, 2008), while the endpoint is due to the lack of data allowing for the correction of the endogeneity of liberalisation after 2004 (source: CEPII-TradeProd and CEPII-Gravity databases; Head et al, 2010;de Sousa et al, 2012). Although using trade flow data provided by, for instance, the IMF might have allowed us to slightly extend our time dimension, we prefer to rely on the CEPII-TradeProd dataset because it exploits mirror trade flows (i.e., it reports on both exporting and importing countries), which significantly improves both the coverage and accuracy of trade data (see Mayer et al, 2008 EATR is the most appropriate measure.…”

Section: Model Specificationmentioning

confidence: 99%

Trade integration and corporate income tax differentials

Exbrayat

Geys

2013

Int Tax Public Finance

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Building on recent contributions to the New Economic Geography literature, this paper analyses the relation between asymmetric market size, trade integration and corporate income tax differentials across countries. First, relying on Ottaviano and Van Ypersele's (2005) footloose capital model of tax competition, we illustrate that trade integration reduces the importance of relative market size for differences in the extent of corporate taxation between countries. Then, using a dataset of 26 OECD countries over the period 1982-2004, we provide supportive evidence of these theoretical predictions: i.e., market size differences are strongly positively correlated with corporate income tax differences across countries but, crucially, trade integration weakens this link. These findings are obtained controlling for the potential endogeneity of trade integration and are robust to alternative specifications. 2 "You've had a broad substantial reduction in corporate tax rates outside the US. That occurs at a time when it's much easier (...) for companies to shift investment and income to take advantage of lower tax rates overseas. (...) To have a more competitive system, you want to try to bring down the rate closer to the range of our major trading partners." (Timothy Geithner, former US Treasury Secretary, Wall Street Journal, 28-30 January 2011, 9) IntroductionLooking at the evolution of corporate tax rates in developed countries over the last three decades, two observations stand out. The first is a decline in corporate tax rates (Figure 1, (Figure 1, right-hand side). ---Figure 1 about here ---Recent studies indicate the importance of such tax differences for firm location or FDI flows (Bénassy-Quéré et al., 2005;Kammas, 2011;Brülhart et al., 2012). Empirical analyses aimed at understanding what allows some countries to sustain higher tax rates than others have, however, not followed suit. 2 Yet, such insights can have important policy implications.1 This decline is also present when looking only at countries that were OECD members throughout the 1982-2011 period. 2 While numerous studies analyse the decline in corporate tax rates (Devereux et al., 2002(Devereux et al., , 2008Davies and Voget, 2008), Gilbert et al. (2005) is the only study analysing the determinants of corporate tax rate differentials. Compared to that study, we provide a firmer theoretical rationale for the analysis, address potential endogeneity problems, control for the influence of various country-level variables, and employ a Our results support theoretical predictions from Ottaviano and Van Ypersele (2005) and Haufler and Wooton (2010). Specifically, we show that the tax gap responds positively to population size (and GDP) differences between countries and, crucially, that this relationship is significantly attenuated by trade integration. Our analysis thereby controls for the endogeneity of standard measures of trade integration by extracting the level of trade liberalisation between each country-pair from a gravity equation (Rose ...

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The erosion of colonial trade linkages after independence

Cited by 820 publications

References 27 publications

The Vulnerability of Sub-Saharan Africa to Financial Crises: The Case of Trade

The Vulnerability of Sub-Saharan Africa to Financial Crises: The Case of Trade

Global technological collaboration network: network analysis of international co-inventions

Trade integration and corporate income tax differentials

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