The macroeconomic impacts of international trade and integration
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Citation
Abstract
The past few decades have seen an unprecedented rise in international trade and
integration. In addition to increasing trade flows of final goods and services, the
fragmentation of the production process across national borders has resulted in a
rise in trade of intermediate inputs. Countries also continue to expand and deepen
the rules governing international integration in a growing number of areas that have
become standard in modern free trade agreements, such as intellectual property. This
research explores three topics related to international trade in a highly integrated
world, showing that integration has resulted in some quantifiable benefits.
In the first chapter, I examine Western European industries that source intermediate
inputs from lower cost countries in Central and Eastern Europe. I use variation in
foreign sourcing driven by subsidies received by firms in Central and Eastern Europe
to identify the impact on Western European industries. Foreign sourcing is associated
with higher employment, wages per worker and higher skill employment. I also
discuss some of the potential costs, even though I do not attempt to quantify them.
Although every country benefits from foreign sourcing, the gains accrue to countries
that are most involved in regional supply chains.
The second chapter analyzes whether restrictive intellectual property provisions
improve or hurt access to biological medicines in Chile, finding that strong provisions
increase both the volume and unit value of imported medicines. The results indicate
that while both a market expansion effect that results in a greater ability to import
and market power effect that raises prices are present, the market expansion effect
dominates.
In the final chapter, I focus on a negative impact of integration, the potential
for imports to surge following job losses in certain occupations during the Great
Recession. I analyze whether changes in an occupation’s employment in a state
resulted in changes in the content of state imports. I find evidence that these changes
might be related, but no causal evidence to suggest that employment changes caused
changes in the content of imports.