This paper develops an overlapping-generations North-South trade model of secular “stagnation” where technological progress in a knowledge-labor-intensive service sector leads to the excess supply of capital, and hence to a decline in the natural real rate of interest. Skill-biased technological progress in the service sector increases the wage rate and the effective income, the savings used for consumption when being old, for knowledge workers. Technological progress, however, can lower low-skilled workers’ effective income through a decline in the real interest rate. International trade in goods, services, and capital of the North with the capital-hungry South does not change the balance between supply and demand for capital in the long run, and the North’s secular “stagnation” spreads to the entire world.

There is no doubt that various types of public infrastructure play a key role in economic development and social well-being. Over the last two decades, a number of empirical studies have analyzed the relationship between the levels or quality of physical or institutional infrastructure and international trade. While there is enough evidence for the positive effects of infrastructure on trade volumes, the effects on comparative advantage and trade patterns are yet to be elaborated. There is also little evidence on how infrastructure levels can be affected by trade openness or country-specific characteristics through trade channels. The lack of clear empirical evidence on these aspects suggests that the interactions between infrastructure and trade can be complex. A possible explanation of such complexity is the nonconvexity of production technology or increasing returns in the presence of infrastructure. It is well known that nonconvexities and increasing returns may cause multiple equilibria. This paper focuses on the possibility of such multiple equilibria in the context of infrastructure and trade. In particular, this paper presents recent theoretical studies demonstrating the existence of multiple equilibria, irregular patterns of trade, and history-dependent dynamic paths.

This study empirically analyzes the impact of deep regional trade agreements on bilateral migration flows using a structural gravity model for international migra- tion. The sample includes 35 Organization for Economic Co-operation and Devel- opment destination countries and 201 origin countries over 1995-2014. Focusing on the major policy areas in each provision, I find that both the visa-and-asylum and labor-market-regulation provisions increase South-to-North migration flows but fail to increase North-to-North flows. Additionally, although the overall impact of the service provision is negative, policy areas related to the movement of natural persons do not discourage South-to-North migration.
JEL classification:F15;F22

This study examines the impact of immigration on Japan’s bilateral trade. Previous studies focused on countries with open borders, such as the US and European countries, with a large population of immigrants. However, this study focuses on Japan, which is an open economy with closed borders and therefore provides a unique case. I estimate the gravity model using trade and immigrant data at the prefecture level. The instrumental variable method is used to control endogeneity. The author finds evidence that immigrants help improve trade with their country of origin. Additionally, the positive effects of immigration are stronger for consumer goods than industrial goods. Finally, immigrants positively affect both the intensive and extensive margins of trade.
JEL classification:F12, F14, F22

We analyze how six ASEAN Member States (AMS) - Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam - are affected by economic shocks represented by global, domestic, and uncertainty shocks. We collect macroeconomic indicators for 1990-2021 and calculate macroeconomic shocks based on the prediction errors of real GDP growth rates. We reveal that these macroeconomic shocks of AMS are synchronized particularly with the world for the most part of the sample period. Then, our main finding obtained from the regression analysis is that these countries’ economic shocks are associated with global shocks, country-specific domestic shocks, and in some countries, uncertainty. We also review the effects of the COVID-19 pandemic on AMS based on the above-mentioned regression analysis.

Bhutan faces constraints in resources, including foreign direct investment (FDI) for economic development. To address this, the Indian government invests in Bhutan’s hydropower projects based on a unique foreign investment model. Incorporating the distinct features of foreign investment within a computable general equilibrium (CGE) framework, we find that Bhutan can significantly gain from foreign investment in the electricity sector. The gains are even higher with FDI in hydropower projects. Based on the study findings, we propose the national policymakers to open up hydropower projects to foreign investors by revising the country’s FDI policy.