Open access renewable resources, urban unemployment, and the resolution of dual institutional failures

This paper investigates how poverty reduction and natural resource preservation can be simultaneously achieved in a small open dual economy with urban wage rigidity, open access rural resources, and rural-urban migration. An increase in the export tax rate on the rural resource good increases urban unemployment in both the short run and the long run with resource dynamics. Given the institutional failures, the first-best policy is an urban wage subsidy combined with either a rural wage subsidy at a lower rate or, if the urban output price is sufficiently high, a rural tax. When the institutional failures can be resolved endogenously, an increase in the export tax on the resource good can induce rural institutional change away from open access. However, tariff protection of urban manufacturing hinders such a rural institutional change.

The effect of export tax rebates on product quality: evidence from China's agricultural product processing industry

PurposeThis study aims to establish the linkage among export tax rebate (ETR), firm innovation and product quality of Chinese agricultural product processing industry (APPI), so that more targeted policy implications can be discussed.Design/methodology/approachUsing highly disaggregated firm-product-destination-level data through 2001 to 2013 of Chinese APPI, this study employs a two-way fixed effects specification to establish the linkage between ETR and product quality, while the mediational model is adopted to examine potential mechanisms.FindingsBaseline estimates show that a 1% increase in ETR rate leads to a significant increase in the product quality of APPI by 0.12% on the whole. However, there is a nonlinear, inverse-U shaped relationship between ETR and product quality, and the optimal inflection point occurs when ERT rate equals 0.15. Mechanism analyses show that firm innovation is an important impact channel, which explains 9.8% of quality improvement induced by raising ETR. Further heterogeneous analyses reveal both the total effects of ETR on product quality and the mediation effects of innovation are dominated by young SMEs (small and medium-size enterprises).Practical implicationsAuthorities can promote the innovation and then product quality improvement of young SMEs by moderately increasing ETR rate. To ensure ETR more effective in improving quality, it is necessary for the government to encourage innovation. Authorities can reduce the risk of innovation failure for low-tech firms by increasing R&D subsidies, while ensuring innovation returns for high-tech firms in combination with stronger intellectual property protection.Originality/valueFirst, this is one of the earlier studies to explore the relationship between ETR and product quality specifically for Chinese APPI. Second, we show firm innovation as an important mediator so that policies aim at raising ETR rates are eventually beneficial to product quality. Third, using the highly disaggregated data, we allow ETR rate to vary across different products, which is an improvement in the accuracy of previous literature. Finally, our research provides additional empirical evidence for revealing the micro-mechanism of ETR affecting firm behaviors.

Rusal warns on Russian tax and adapts to EU rules

Headline RUSSIA: Rusal warns on export tax, adapts to EU rules

Tax shifts may mar agriculture outlook in Argentina

Significance High export taxes on the soya complex have encouraged farmers to shift to corn. Rising export earnings will help to strengthen international reserves and tax revenues. Argentina’s good harvest and rising global prices for agricultural commodities will give the government some relief from the economic crisis. Impacts Higher agriculture production and prices will boost some regional economies, helping to fuel the post-pandemic economic rebound. Export earnings will ease devaluation fears, while higher export tax revenues will help to offset a lockdown-related fall in tax collection. The threat of new government controls aiming to guarantee domestic food supplies may discourage new investments, curtailing future output.

Testing of the Phillips Curve in Indonesia

This study aims to determine how the results of Phillips theory testing in 34 provinces in Indonesia based on the main sectors contributing to the GRDP. The analytical method used in this study is Product Moment correlation analysis to determine the relationship between the inflation rate variable and the unemployment rate variable. The data used in this study are data on open unemployment and inflation rates taken in 34 provinces in Indonesia from 2014-2018. The results of this study indicate there is no Phillips curve pattern in 34 provinces in Indonesia. The inflation rate variable and the unemployment rate variable in 34 provinces in Indonesia based on the main sectors contributing to the GRDP have a positive but very weak relationship with a correlation value of 0.1089. The problem of price volatility (inflation) contributes, although not significantly to the emergence of the unemployment problem. Government policies are needed to control inflation and reduce unemployment rates such as fuel subsidies, corporate tax reductions, export tax reductions, and control of raw material prices considering that the results of this study indicate that rising inflation will be followed by an increase in unemployment.

DAMPAK KEBIJAKAN DOMESTIK DAN PERUBAHAN FAKTOR EKSTERNAL TERHADAP INDUSTRI MINYAK GORENG INDONESIA

<p>ABSTRAK<br />Minyak goreng merupakan salah satu komoditas penting penghasil<br />devisa bagi Indonesia. Penelitian ini bertujuan untuk mengkaji dampak<br />kebijakan domestik dan perubahan faktor eksternal terhadap industri<br />minyak goreng Indonesia, dengan pendekatan sistem yang menggunakan<br />model ekonometrika dalam bentuk persamaan simultan. Data yang<br />digunakan adalah data sekunder yang terkait dengan produksi, volume dan<br />harga perdagangan domestik, volume dan harga ekspor, dalam bentuk data<br />deret waktu tahun 1978-2001. Pendugaan parameter dilakukan dengan<br />metode two stage least squares (2SLS). Untuk mengevaluasi dampak<br />kebijakan domestik dan perubahan faktor eksternal, dilakukan simulasi<br />model untuk periode 1992-1996 yang menggambarkan kondisi sebelum<br />terjadi krisis ekonomi, dan 1998-2001 menggambarkan kondisi saat terjadi<br />krisis ekonomi. Hasil simulasi menunjukkan bahwa peningkatan harga<br />CPO di pasar dunia pada kedua periode menyebabkan peningkatan ekspor.<br />Kebijakan pengenaan pajak ekspor minyak sawit mentah (CPO) dan<br />peningkatan harga minyak goreng sawit domestik cukup efektif menekan<br />ekspor. Pada periode 1992-1996 kebijakan pengenaan pajak ekspor CPO<br />menyebabkan penurunan penerimaan devisa 1,114 persen (Rp 17,092<br />miliar). Peningkatan harga minyak goreng domestik pada periode 1992-<br />1996 menyebabkan penurunan penerimaan devisa 21,458 persen (Rp<br />329,187 miliar) tetapi pada periode 1998-2001 dampak tersebut dinetralisir<br />oleh penurunan nilai tukar rupiah terhadap US$. Implikasi dari kondisi<br />demikian adalah perlunya optimalisasi pajak ekspor. Penetapan pajak<br />ekspor pada tingkat yang menyebabkan penurunan penerimaan devisa<br />sebaiknya tidak dilakukan. Dampak peningkatan ekspor terhadap<br />penurunan ketersediaan bahan baku minyak goreng domestik dapat<br />diminimalkan dengan mendorong reorientasi pasar minyak kelapa mentah<br />(CCO) dari ekspor ke pasar domestik. Langkah yang diperlukan adalah<br />menghidupkan kembali industri kelapa dengan pengembangan industri<br />pengolahan lanjut minyak goreng berbahan baku CCO, seperti oleokimia,<br />sehingga meningkatkan nilai tambah dan memberi insentif bagi petani dan<br />pelaku industri kelapa.<br />Kata kunci : Minyak goreng, kebijakan domestik, faktor eksternal, model<br />ekonometrika, simulasi kebijakan, penerimaan devisa</p><p><br />ABSTRACT<br />The impacts of domestic policy and external factor<br />changes on Indonesian cooking oil industries<br />Cooking oil is an important commodity in the Indonesian economy,<br />because of its role in foreign exchange revenue. The objective of this study<br />is to analyze the impacts of domestic policy and external factor changes<br />on trade and foreign exchange revenue of Indonesian cooking oil industry.<br />The study was conducted using a system approach by formulating an<br />econometric model of cooking oil industry, utilizing secondary data related<br />to production, volume and price in domestic trade, export volume and<br />price, etc, in the time series for the period of 1978 to 2001. Two stage<br />least squares method was used for estimating the parameters. The result of<br />this study showed that increasing world price of CPO would lead to<br />improve foreign exchange revenue. However, export tax on crude palm oil<br />and increase of cooking oil domestic price effectively decreased the<br />export. In the period of 1992 to 1996 export tax policy on CPO decreased<br />1,114 percent (Rp 17,092 miliar) of foreign exchange revenue. Increase of<br />cooking oil domestic price in the period of 1992 to 1996 caused foreign<br />exchange revenue decrease 21,458 percent, but in the period of 1998 to<br />2001 this impact was netralized by exchange rate of US$ to rupiah. Those<br />implicated that export tax must be optimalized. The impact of export<br />encrease on domestic supply of cooking oil raw material could be<br />minimized by pushing CCO market oriented from export to domestic<br />market and developing final process industry of coconut, for example<br />oleochemical industry, to improve added value and incentive for the<br />farmers and for stakeholders.<br />Key words : Cooking oil, domestic policy, external factor, econometric<br />model, policy simulation, foreign exchange</p>

Baptists and Bootleggers in the Biodiesel Trade: EU–Biodiesel (Indonesia)

EU–Biodiesel (Indonesia) is the latest in two lines of cases. On the one hand, the case offers yet another example of the Dispute Settlement Body striking down creative interpretations of antidumping rules by developed countries. Applying the Appellate Body's decision in EU–Biodiesel (Argentina), the panel found that the EU could not use antidumping duties to counteract the effects of Indonesia's export tax on palm oil. On the other hand, the decision is another chapter in the battle over renewable energy markets. Both the EU and Indonesia had intervened in their markets to promote the development of domestic biodiesel industries. The panel's decision prevents the EU from using antidumping duties to preserve market opportunities created by its Renewable Energy Directive for its domestic biodiesel producers. The EU has responded in two ways. First, through regulations that disfavor palm-based biodiesel, but not biodiesel made from from other foodstocks, such as rapeseed oil commonly produced in the EU. Second, the EU has imposed countervailing duties on Indonesian biodiesel, finding that Indonesia's export tax on crude palm oil constitutes a subsidy to Indonesian biodiesel producers. The EU's apparently inelastic demand for protection raises two questions: First, when domestic political bargains rest on both protectionist and non-protectionist motives and policies have both protectionist and non-protectonist effects, what are the welfare consequences of restraining only overt protectionism? Second, under what circumstances may regulatory approaches be even less desirable than duties for addressing combined protectionist and environmental interests, and would the WTO have the right powers to discipline them in an environmentally sound way?