The New Face of Global Trade in a Post-Pandemic World

The COVID-19 pandemic has raised serious questions about the applicability of international trade theories. International trade has now changed its shape due to this novel coronavirus. It is a fact that no country in the world follows one trade theory. They use multiple theories for their goods and services and will continue to do so. The future of international trade theories is suspected as to which theory will be employed or any new theory of international trade will emerge. Empirical evidence illustrates the emergence of regionalization as compared to globalization. In this context, trade theories will also adjust their forms and assumptions. Therefore, this chapter reconciles international trade theories with actual data, most notably COVID-19.

Transatlantic Trade and Investment Partnership, and Environmental Consequences

We empirically investigate the effect of the <i>Transatlantic Trade and Investment Partnership</i> on the per capita emissions of eight air pollutants and municipal waste. By introducing the same explanatory variables and applying the same empirical strategy and methodologies as in Qirjo and Pascalau (2019), we provide robust evidence suggesting that the implementation of the partnership could be beneficial to the environment because it may reduce per capita emissions of CH₄, hydrofluorocarbons/ perfluorinated chemicals/ SF₆, N₂O, NH₃, and SF₆ for a typical partnership member. This result is based on statistically significant evidence showing that, on average, the pollution haven motive based on national per capita income variations is dominated by the factor endowment argument based on the Heckscher-Ohlin trade theory and the pollution haven motive originating from an inverse measurement of national population density differences. However, we also report statistically significant evidence that the implementation of the partnership could denigrate the environment by increasing per capita emissions of SO₂ and municipal waste.

Trade cooperation in light of the forces that are currently re-shaping international business

In this research work, Author focus on the analysis trade cooperation in light of the forces that are currently re-shaping international business. Accordance to the foreign trade policy theory further trade liberalisation and improved framework policies would increase trade and promote growth. It must be emphasized that openess to trade is associated with higher incomes and growth and there are the need for new approaches to trade cooperation. What indicates the importance and innovativeness of the research is the presentation of the new models of the foreign trade policy and trade interests. First of all it must underline that in the new theoretical terms in the demand for trade policy very important is factor specificity. The low specificity of factors means that factor returns are equalized throughout a region’s economy. On the other hand some factors are stuck in their present uses; therefore, factor returns are not equalized throughout a region’s economy, but are industry specific. The main objective of the research task is to give a comprehensive analysis of current trends in foreign trade theory and policy and in particulary the models of foreign trade policy, trade interests indicated by export orientation and import sensitivity, foreign trade policy in different types of authoritarian regimes, protectionistic pressures in different political system, the level of protectionistic pressures, the variation in the foreign trade policy among states, the liberalisation of China foreign trade policy and their effects, the tendencies to international trade liberalisation and the problem of environmental protection, and the tendencies to bilateralism in the foreign trade policy. It should be stressed that free trade in itself is not responsible for economic growth, but more significant are the determining macroeconomic stability and increasing investment.

Political Economy of Protection

The political economy of protection is a field within economics, but it has significant overlap with its sister discipline, political science. For a political economy of protection, one needs at a minimum two types of economic agents: political decision makers who provide protection, and economic agents who are protected or even actively seek protection. The typical political economy scenario leads to an economic outcome that is not Pareto-optimal: From a general welfare perspective, the political interaction is not desirable. An important task of political economy research is to explain why and how political interaction takes place. For the first part of the question, it appears clear that if protection is actively sought, the protection seeker intends to benefit from his activities. However, if the policymakers were truly interested in Pareto optimality and welfare maximization, they would refuse to protect. Hence a crucial assumption in the political economy literature is that the politicians’ objective function differs from the general welfare function. For the second part of the question, theoretical political economy models consider either the election campaign phase when politicians are eager to win a majority of votes (preelection models) or the phase when the politicians have been elected and may benefit from the spoils associated with holding office (postelection models). Whereas in the election phase, politicians have an incentive to cater to the interests of that part of the electorate that is considered pivotal for the election outcome, in the postelection phase they may be open to, for example, special interest group (SIG) influences from which they derive utility. A first wave of theoretical political economy models originates from the 1980s. Building on these early advances, more elaborate models have been proposed. The most prominent one is the Grossman–Helpman protection for sale (PfS) model. It delivers a postelection general equilibrium framework of trade policy determination. In this common agency model, industry interest groups act as principals and offer the government a menu of contracts of campaign contributions in exchange for trade policy. The PfS model predicts that industries that lobby for protection will obtain trade protection in equilibrium, whereas nonlobbying industries will face import subsidies. Numerous papers have evaluated the PfS model empirically and found that the implied weight on contributions in the governmental welfare function and the implied share of the population represented by lobbies are both very high. Remedies for this surprising result exist, but it has also been argued that the found empirical regularities may be spurious. At the beginning of the 21st century, the majority of political economy literature is still theoretical, but better data availability increasingly offers the opportunity to empirically test theoretical results. A number of challenges remain for the political economy literature, however. In particular, more work is required to better understand policymaker interests. Moreover, an incorporation of political economy aspects into the new trade theory models that allow for intra-industry trade and firm diversity appears to be a promising avenue for future research.

POLITICAL AND ECONOMIC CONTENT OF THE THEORY OF INTERNATIONAL TRADE

Background. Dynamic changes in international economic relations and trade for thorough analysis and forecasting require an adequate paradigm of international trade theory, which would take into account not only economic and political factors of its development, but also the diverse civilizational context of the world community, which determines mental, social and cultural features of the development of a country. Problem research state. Problems of political economy in international trade to some extent affect the research of P. Krugman, M. Obstfeld, J. Frieden, E. Helpman, P. S. Afontsev, A. Mazaraki, T. Melnyk, V. Panchenko, N. Reznikova and others. But the structure of its methodological discourse and the subject of its research remain unclear. The aim of the articleis to clarify the political and economic discourse of the theory of international trade. Materials and methods. The materials of the research were the works of domestic and foreign specialists. In the process of preparing the article, general scientific research methods were used: historical, logical analysis, synthesis and abstraction. Results. Political economy is a normative manifestation of economic theory, which is formed under the influence of socio-economic and political concepts, the formed goals of social development. The subject of political economy of international trade – economic and socio-political relations that determine and accompany international trade and determine the goals and content of trade policy of its subjects. It is proposed to expand the mechanism of formation of relative advantages and trade policy of the country by including factors that determine not only its economic potential and specialization, but also the risks that may be caused by political decisions. It is argued that the problem of «protectionism vs liberalism» in international trade at the state level will always exist. It turns out that the problem of justice in international economic relations and trade is determined by the civilizational content of the development of countries, in which human capital plays a crucial role. Conclusion. The paradigm of political economy in international trade should be based on an expanded interpretation of relative benefits by assessing the impact of economic, social and political institutionson them, the peculiarities of national trade policies.

CONNECTING INTERNATIONAL RiD COOPERATION AND TECHNOLOGY SPECIALIZATION IN OECD COUNTRIES

Technology specialization is supported by processes combining inhouse and external innovation. Applying a macroeconomic and international trade theory approach (Linder, 1961), country specialization depends on international RiD cooperation partnerships. External, international RiD cooperation is essential for technology specialization, as it raises awareness of countries’ position on a global technology map. This paper studies international RiD cooperation as a determinant of countries’ technology specialization. Cross-country panel regression was done on a sample of 37 OECD countries for the period 1980-2018. The analysis examined the effect of international RiD cooperation on technology specialization. Data were obtained from the OECD database. Co-patenting with foreign inventors was used to indicate the level of international RiD cooperation. Patent per technology was used to calculate technology specialization based on the Herfindahl index. Results indicate a positive effect of international RiD cooperation on technology specialization. The effect of RiD cooperation on technology specialization is more pronounced when GDP and RiD expenditure were used as control variables. Additionally, the size of the GDP negatively affects technology specialization. This paper identifies international cooperation as a bridge for global information exchange, which results with countries’ technology specialization.