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Europe > Ukraine

You are looking at 1 - 10 of 33 items for :

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  • Trade Policy; International Trade Organizations x
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Cover IMF Working Papers
How Widespread is FDI Fragmentation?
Joanne Tan
This paper examines the extent to which FDI has fragmented across countries, the ways it has done so, using a modified gravity approach. The paper finds that FDI fragmentation is, for now, not a widespread phenomenon. Instead, fragmentation is circumscribed in two ways. First, the paper finds that geo-economic fragmentation has occurred only for certain industries that likely have strategic value, including computer manufacturing, information and communications, transport, as well as professional, scientific and technical services. Secondly, fragmentation appears to be more pronounced for outward FDI from the US, notably in a shift of US FDI from China to advanced Europe and the rest of Asia. This shift appears to be driven by both the intensive and extensive margin. Fragmentation is also more pronounced for immediate rather than ultimate FDI, with evidence of ultimate parent companies aligning the geopolitical mix of their intermediaries more closely to that of their final FDI host destinations. Overall, the results suggest that fragmentation, where found, may be a response to targeted policies that have placed curbs on certain types of FDI on national security grounds, rather than an indiscriminate breakup of investment links between non-ally countries.
Keywords:
Fragmentation; Foreign Direct Investment; FDI fragmentation; host destination; FDI from the US; FDI from China; FDI host destination; Exchange rates; Manufacturing; Trade agreements; Europe; Asia and Pacific; Global; Western Europe
Cover IMF Working Papers
The Heterogeneous Effects of Uncertainty on Trade
Ibrahim Nana
,
Rasmané Ouedraogo
, and
Sampawende J Tapsoba
This paper empirically investigates the relationship between uncertainty and trade. We use a gravity model for 143 countries over the 1980-2021 period to assess the impact of uncertainty on bilateral trade. We confirm that, in general, uncertainty has a negative impact on trade. The findings suggest that a one standard deviation increase in global uncertainty is associated with a decline in bilateral trade by 4.5 percent, with fuel and industrial products trade being the most impacted. This negative impact is observed for uncertainty on both sides of the border, with a higher impact of uncertainty from the importing country. The article goes deeper into the analysis and shows that deeper trade integration (horizontal integration) mitigates the negative impact of uncertainty on trade. In contrast, higher participation in global value chains (vertical integration) amplifies the negative effect of uncertainty on trade. We find that geopolitical tensions amplify the deterrent effect of uncertainty on trade. Finally, the result is heterogeneous across income levels, regions, and resource endowment: (a) uncertainty has a negative impact on bilateral trade between Emerging Markets and Developing Economies and Advanced Economies; however, (b) at the regional level, Africa and Europe’s intraregional trade decrease as uncertainty surges. (c) Evidence shows that non-resources-rich countries are more at risk.
Keywords:
Trade; Uncertainty; Geopolitics; Global Value Chains; Gravity model; trade decrease; sectoral trade; bilateral trade; importing country; resource endowment; Plurilateral trade; Exports; Imports; Gravity models; COVID-19; Global; Middle East; Europe; Africa
Cover IMF Working Papers
Changing Global Linkages: A New Cold War?
Gita Gopinath
,
Pierre-Olivier Gourinchas
,
Andrea F Presbitero
, and
Petia Topalova
Global linkages are changing amidst elevated geopolitical tensions and a surge in policies directed at increasing supply chain resilience and national security. Using granular bilateral data, this paper provides new evidence of trade and investment fragmentation along geopolitical lines since Russia’s invasion of Ukraine, and compares it to the historical experience of the early years of the Cold War. Gravity model estimates point to significant declines in trade and FDI flows between countries in geopolitically distant blocs since the onset of the war in Ukraine, relative to flows between countries in the same bloc (roughly 12% and 20%, respectively). While the extent of fragmentation is still relatively small and we do not know how longlasting it will be, the decoupling between the rival geopolitical blocs during the Cold War suggests it could worsen considerably should geopolitical tensions persist and trade restrictive policies intensify. Different from the early years of the Cold War, a set of nonaligned ‘connector’ countries are rapidly gaining importance and serving as a bridge between blocs. The emergence of connectors has likely brought resilience to global trade and activity, but does not necessarily increase diversification, strengthen supply chains, or lessen strategic dependence.
Keywords:
Trade; Foreign direct investment; Geoeconomics; Fragmentation; supply chain resilience; restrictive policy; nonaligned connector; years of the Cold War; surge in policy; Trade balance; Imports; Trade agreements; Trade policy; Global
Cover IMF Staff Country Reports
Republic of Kazakhstan: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper applies a range of quantitative methods to explain recent inflation dynamics in Kazakhstan. It presents an overview of recent developments and utilizes a principal component analysis to decompose inflation in Kazakhstan between global, regional, and domestic sources. In addition, it estimates a Phillips curve model, augmented with external variables, to quantify the drivers of inflation. The paper also estimates a vector autoregressive model to look more closely at dynamic effects. The results show that external factors have had a strong impact on inflation dynamics in Kazakhstan in the recent period, but domestic factors remained important. Looking ahead, inflation in Kazakhstan will depend significantly on the global environment but will also be shaped by domestic policy decisions. In the near term, premature monetary policy loosening should be avoided. In the medium term, efforts to strengthen the monetary policy framework should continue to help moderate the volatility of inflation and reach the inflation target. Fiscal policy should remain supportive of price stability.
Keywords:
I. data definition; inflation expectation; inflation in Kazakhstan; I. simulation result; drivers of inflation; Inflation; Oil exports; Oil production; Consumption; Real exports; Global
Cover IMF Working Papers
Geoeconomic Fragmentation: What’s at Stake for the EU
Chikako Baba
,
Ting Lan
,
Ms. Aiko Mineshima
,
Florian Misch
,
Magali Pinat
,
Asghar Shahmoradi
,
Jiaxiong Yao
, and
Ms. Rachel van Elkan
Geoeconomic fragmentation (GEF) is becoming entrenched worldwide, and the European Union (EU) is not immune to its effects. This paper takes stock of GEF policies impinging on—and adopted by—the EU and considers how exposed the EU is through trade, financial and technological channels. Motivated by current policies adopted by other countries, the paper then simulates how various measures—raising costs of trade and technology transfer and fossil fuel prices, and imposition of sectoral subsidies—would affect the EU economy. Due to its high-degree of openness, the EU is found to be exposed to GEF through multiple channels, with simulated losses that differ significantly across scenarios. From a welfare perspective, this suggests the need for a cautious approach to GEF policies. The EU’s best defence against GEF is to strengthen the Single Market while advocating for a multilateral rules-based trading system.
Keywords:
Geoeconomic fragmentation; cross-border restrictions; trade; innovation; multinational production; energy; European Union; Single Market; EU economy; EU integration; EU foreign direct investment linkage; EU State aid; Manufacturing; Foreign direct investment; Fuel prices; Comparative advantage; Exports; Global
Cover Policy Papers
Review of the Role of Trade in the Work of the Fund
International Monetary Fund. Strategy, Policy, & Review Department
This paper outlines key changes in the global trade landscape in recent years, reviews the role of the Fund in this area, and outlines a trade strategy for the Fund going forward. The analysis points to three key messages. First, while trade has been resilient vis-à-vis recent global shocks, the deteriorating trade policy environment poses risks to the current levels of prosperity. Second, the Fund has responded quickly to key trade developments in its multilateral surveillance, but attention to trade policy has declined pointing to the need of improved expertise. Third, a reinvigorated trade strategy for the Fund would help country authorities to address key challenges, including adjusting to structural changes associated with climate change and new technologies; promoting policy coherence between trade and non-trade objectives such as climate, inequality, and security; and managing rising geopolitical tensions and risks of geo-economic fragmentation.
Keywords:
trade policy; international trade; geo-economic fragmentation; bilateral surveillance; multilateral surveillance; trade expertise; value chain; fund Agenda; fund expertise; core trade area; addressing trade opportunity; trade diversification; trade-distortive policy; trade landscape; transparent trade policies; trade facilitation agreement; areas of fund expertise; Trade finance; Trade tensions; Trade barriers; Trade in services; Global; Asia and Pacific; East Asia
Cover Staff Discussion Notes
Geoeconomic Fragmentation and the Future of Multilateralism
Mr. Shekhar Aiyar
,
Mr. Jiaqian Chen
,
Mr. Christian H Ebeke
,
Mr. Roberto Garcia-Saltos
,
Tryggvi Gudmundsson
,
Ms. Anna Ilyina
,
Mr. Alvar Kangur
,
Tansaya Kunaratskul
,
Mr. Sergio L. Rodriguez
,
Michele Ruta
,
Tatjana Schulze
,
Gabriel Soderberg
, and
Mr. Juan P Trevino
After several decades of increasing global economic integration, the world is facing the risk of policy-driven geoeconomic fragmentation (GEF). This note explores the ramifications. It identifies multiple channels through which the benefits of globalization were earlier transmitted, and along which, conversely, the costs of GEF are likely to fall, including trade, migration, capital flows, technology diffusion and the provision of global public goods. It explores the consequences of GEF for the international monetary system and the global financial safety net. Finally, it suggests a pragmatic path forward for preserving the benefits of global integration and multilateralism
Keywords:
Geoeconomic fragmentation; globalization; global economic integration; geopolitical blocs; international monetary system; global financial safety net; multilateralism; costs of economic fragmentation; rules-based multilateral system.; IMF AREAER report; U.S. Dollar share; trade openness; trade agenda; share of Global Foreign Exchange; Capital flows; Trade barriers; Global
Cover IMF Staff Country Reports
Republic of Serbia: Third Review Under the Policy Coordination Instrument, Request for a Stand-By Arrangement, and Cancellation of the Policy Coordination Instrument-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Serbia
International Monetary Fund. European Dept.
In the wake of the Covid pandemic, Serbia embarked on a well-paced consolidation path to rebuild buffers, supported by a program under the Policy Coordination Instrument (PCI). Given higher energy prices and domestic electricity production problems, high global inflation, weaker trading partner growth, and spillovers from Russia’s war in Ukraine, the authorities have requested financial support under a two-year Stand-by Arrangement (SBA) of SDR 1,898.92 million (290 percent of quota, about EUR 2.4 billion). The SBA supports economic and financial policies to address external and fiscal financing needs, maintain macroeconomic and financial stability, and continue to strengthen the economy’s performance and resilience through structural reforms. The PCI was cancelled upon approval of the SBA.
Keywords:
oil price shock; energy price inflation; energy price pressure; public debt debt ratio; reference rate; existing Policy Coordination Instrument; Inflation; Energy prices; Energy sector; Imports; Tariffs; Global; Europe
Cover IMF Staff Country Reports
Republic of North Macedonia: Request for an Arrangement under the Precautionary and Liquidity Line-Press Release; Staff Report; and Statement by the Executive Director for Republic of North Macedonia
International Monetary Fund. European Dept.
North Macedonia's economy has been hit by two large external shocks. While recovering from the pandemic, the outlook deteriorated again following Russia's invasion of Ukraine and sharply rising energy and food prices. Given high dependence on energy imports, the external financing need has increased, while at the same time, global financial conditions have tightened, increasing the cost of market financing.
Keywords:
authorities of the Republic; A. Policy commitment; policy implementation; authorities' action; government financing; EU accession negotiations; Energy prices; Inflation; Tariffs; Global
Cover Policy Papers
Annual Update on SDR Trading Operations
International Monetary Fund. Finance Dept.
This paper provides an update on the status of the SDR trading market and operations one year after the historic fourth general allocation of SDRs. In the reporting period, SDR trading has been dominated by SDR sales due to the 2021 SDR allocation. The VTAs continue to have ample capacities to meet the demand for exchange of SDRs into currencies. Staff has made significant progress in further strengthening the SDR trading market. Since the SDR allocation, eight new VTA members have been welcomed to the SDR trading market and many existing VTA members provided additional operational flexibilities. Discussions with a number of potential new entrants continue in the broader context of SDR channeling, which encourages contributors to have VTAs.
Keywords:
SDR sale; SDR trading market; SDR trading capacity; SDR amount; SDR market; VTA member; Trading arrangements; Freely usable currencies; Currencies; Middle East and Central Asia