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This paper estimates trade barriers in government procurement, a market that accounts for 12% of world GDP. Using data from inter-country input-output tables in a gravity model, we find that home bias in government procurement is significantly higher than in trade between firms. However, this difference has been shrinking over time. Results also show that trade agreements with provisions on government procurement increase cross-border flows of services, whereas the effect on goods is small and not different from that in private markets. Provisions containing transparency and procedural requirements drive the liberalizing effect of trade agreements.

This paper estimates trade barriers in government procurement, a market that accounts for 12 percent of world GDP. Using data from inter-country input-output tables in a gravity model, the paper finds that home bias in government procurement is significantly higher than in trade between firms. However, this difference has been shrinking over time. Results also show that trade agreements with provisions on government procurement increase cross-border flows of services, whereas the effect on goods is small and not different from that in private markets. Provisions containing transparency and procedural requirements drive the liberalizing effect of trade agreements.

This paper estimates trade barriers in government procurement, a market that accounts for 12% of world GDP. Using data from inter-country input-output tables in a gravity model, we find that home bias in government procurement is significantly higher than in trade between firms. However, this difference has been shrinking over time. Results also show that trade agreements with provisions on government procurement increase cross-border flows of services, whereas the effect on goods is small and not different from that in private markets. Provisions containing transparency and procedural requirements drive the liberalizing effect of trade agreements.

AbstractPreferential trade agreements have boomed in recent years and extended their reach well beyond tariff reduction, to cover policy areas such as investment, services, competition and intellectual property rights. This paper uses new information on the content of preferential trade agreements to examine the trade effects of deep agreements and revisit the classic Vinerian question of trade creation and trade diversion. Our results indicate that deep agreements lead to more trade creation and less trade diversion than shallow agreements. Furthermore, some provisions of deep agreements have a public good aspect and increase trade also with non‐members.

This study builds on recent efforts by the World Bank and the European Commission in generating detailed poverty estimates at detailed subnational levels (the EU Poverty Map). This information is combined with estimates of subnational trade flow data for subnational regions between 2000-2010, as well as information on country and regional characteristics. Poverty estimates from the EU Poverty Map refers to a relative concept of poverty, measuring the share of population below a country-specific low-income threshold. This notion of relative poverty can be informative of disparities in welfare gains within countries often associated with trade, especially given the current backlash on globalization from the perception that it may leave some segments of the population behind. The negative relationship between poverty and trade is observed when both import and export openness are considered individually, but it arises more clearly in the case of export orientation. Export orientation can be associated with lower levels of poverty particularly in the poorest regions. The relationship between import exposure and poverty rates is not significant. Additional analyses show that export openness is more strongly linked to lower poverty in regions where production tends to be more 'low-tech'. All together, these results suggest that both exports and imports are associated to lower poverty, but especially when it relates to higher export opportunities in poorer regions and where production is concentrated in relatively labor-intensive goods. While this analysis does not consider micro-level effects such as at the enterprise or household level that could possibly show greater heterogeneity, the results suggest that cross-country estimates in the literature that show a positive effect of trade openness on economic performance tend to hold at subnational regional levels in the EU. Overall, this study shows that poverty and the relative concentrations of poor people in the EU is an issue that policymakers should put high on the agenda. Opening markets and creating a more level playing field in global markets for export opportunities is critical for regional development. For certain regions however, policies to support the transition and the mitigation of transition costs may be necessary. While the empirical evidence is still building up, whether this assistance should be industry-based, versus locality based, is an important distinction, as trade shock effects seems to matter more by locality than by industry.

This paper studies the impact of deep agreements on United Kingdom-European Union trade relations. A standard gravity model is applied to assess the effect that European Union membership had on the United Kingdom's trade. The paper uses new information on the content of trade agreements to build a measure of "depth" based on the number of provisions the agreements cover. The analysis relies on information on goods, services, and value-added trade from the World Input Output Database. Deep trade agreements are found to increase goods and services trade by 42 percent, and value-added trade by 14 percent on average. European Union membership had a particularly strong effect on United Kingdom's services and global value chain trade. Because of its membership, the United Kingdom's services trade more than doubled, and the country's backward and forward participation in global value chains increased by more than 30 percent each. The paper uses these estimates to evaluate the future of United Kingdom-European Union trade under different scenarios. The findings show that United Kingdom-European Union trade declines under all scenarios, ranging between 6 and 28 percent for trade in value added. This drop is sharper (particularly for services and global value chain trade) the lower is the depth of the future arrangement relative to the depth of the European Union agreement. As trade flows adjust slowly to changes in trade costs, these effects are expected to emerge over time. But the trade-off between the depth of trade agreements and trade intensity will delimit policy choices going forward.