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Davies, Ronald B.
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Davies, Ronald B.
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Davies, Ronald B.
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Now showing 1 - 8 of 8
- PublicationThe Infant Industry Argument: Tariffs, NTMs and InnovationOne rationale for the infant industry argument is that, by protecting domestic firms from foreign competition, this increases rents and investment in innovation and other growth enhancing measures. Using data on 4,750 firms across 13 developing countries, we examine whether protection via tariffs or non-tariff measures (SPS and TBT specifically) increase innovation in either products or processes. We find no such evidence; instead we find a small negative impact of protection, particularly tariffs and TBTs, on innovation.
526 - PublicationIrexit: Making the Worst of a Bad SituationRelative to the rest of the EU, Ireland is especially vulnerable to the fallout from Brexit, both economically and politically. With increasing frustration over the reaction from Brussels, some are suggesting that an Irish exit from the EU would benefit the nation. A key argument for this is that it would allow for reintegration with the UK, thus preserving one of its largest trading partners. Using a structural general equilibrium model, we estimate that such a move would worsen the impacts of Brexit by as much as 250%, with low-skill workers disproportionately affected. This is due to the fact that while the UK is one of Ireland's single-nation trading partners, when compared to the EU27 as a group, it is much smaller.
237 - PublicationNon-Tariff Barriers, Enforcement, and Revenues: The Use of Anti-Dumping as a Revenue Generating Trade Policy(University College Dublin. School of Economics, 2017-03)
; ; ; ; In contrast to developed countries, developing nations are especially reliant on trade taxes, particularly tariffs, as a source of government revenue. As such, tariff liberalization provides them with an incentive to switch towards other revenue generating trade barriers such as anti-dumping duties. The effectiveness of this is potentially limited due to the greater enforcement challenges with the exporter specific anti-dumping relative to broad-based tariffs. We examine this by estimating the impact of anti-dumping measures for 82 importing countries from 2008-2014. We find that anti-dumping's trade effects are larger for countries with greater policy enforcement, especially in low income countries. Although the results are somewhat sensitive to the measure of enforcement, our overall findings indicate that for countries with weak enforcement, tariff liberalization combined with a shift towards non-tariff barriers like anti-dumping is likely to lower government revenues and hamper their ability to provide the infrastructure and education needed for development.318 - PublicationExport Processing Zones and the Composition of Greenfield FDIExport processing zones (EPZs) are an increasingly common type of special economic zone. They are designed to facilitate international trade by lowering trade costs, such as import duties and/or export taxes. EPZs should thus be particularly attractive locations for multinational enterprises engaging in vertical, trade-intensive, foreign direct investment (FDI). Using data on worldwide greenfield FDI projects over the period 2003-2014, we find patterns consistent with this hypothesis. EPZs have a large positive effect on manufacturing FDI projects with a production focus, especially in trade- and labour-intensive sectors. Overall, our results suggest that EPZs are an effective tool to attract manufacturing FDI which exploit the opportunities offered by global value chains.
234 - PublicationThe Impact of Protection on Observed Productivity DistributionsAs is well established, one prediction of the heterogenous firms literature spearheaded by Melitz (2003) is that trade liberalization, by increasing import competition, drives less productive domestic firms from the market. This increases average productivity of the domestic economy via the “selection effect”. In addition, it has the potential to affect the skewness of the observed productivity distribution, i.e. the gap between the productivity of the median firm and average productivity. We examine these predictions empirically using data on 28 sectors across 99 countries. On the whole, we find that higher protection levels lower average productivity and drive a larger wedge between mean and median productivity. This latter suggests that policy decisions based on mean outcomes may arrive at different conclusions than those based on median voters.
201 - PublicationThe Impact of Everything But Arms on EU Relative Labour DemandThe Everything But Arms agreement, introduced by the EU in 2001, eliminated duties on most imports from the least developed countries. To avail of these benefits, however, the exported product must contain a sufficiently large share of local content. Thus, the agreement may have affected both the quantity and the factor content of exports from the least developed countries to the EU. Using a panel of sector-level data across countries, our estimates suggest that, contrary to expectations, the agreement may have increased the skill-content of these exports, benefitting the lowest-skilled EU workers at the expense of their highest-skilled counterparts. This result, however, is entirely driven by textile trade; when omitting this industry, we find no significant effects. This suggests that the EBA may have led to the local provision of higher-skill inputs in the textile industry.
207 - PublicationRoyale with cheese : the effect of globalization on the variety of goodsThe key result of the so-called “New Trade Theory” is that countries gain from falling trade costs by an increase in the number of varieties available to consumers. Though the number of varieties in a given country rises, it is also true that global variety decreases from increased competition wherein imported varieties drive out some local varieties. This second result is a major issue for anti-trade activists who criticize the move towards free trade as promoting “homogenization” or “Americanization” of varieties across countries. We present a model of endogenous entry with heterogeneous firms which models this concern in two ways: a portion of a consumer’s income is spent overseas (i.e. tourism) and an existence value (a common tool in environmental economics where simply knowing that a species exists provides utility). Since lowering trade costs induces additional varieties to export and drives out some non-exported varieties, these modifications result in welfare losses not accounted for in the existing literature. Nevertheless, it is only through the existence value that welfare can fall as a result of declining trade barriers. Thus, for these criticisms of globalization to dominate, it must be that this loss in the existence value outweighs the direct benefits from consumption.
193 - PublicationTariff Evasion, the Trade Gap, and Structural TradeWhile it is well-recognized that there are differences in the trade values reported by exporters and importers, a literature has emerged linking this trade gap to tariff evasion. These efforts, however, lack a structural theoretic underpinning and limit their product-level investigations to a small number of countries. Our first contribution is to provide a structural model of endogenous tariff evasion, one which then highlights the importance of both tariffs and border enforcement. Our second contribution is to use a global, product-level dataset from 2002-2019, the analysis of which is consistent with our model’s predictions.
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