28 Items

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Journal Article

Internalization of Externalities in International Trade

| May 16, 2023

Using disaggregated customs data about exporters from nine countries, I demonstrate that informational externalities are determinants of entry, survival, and growth of exporters at the product–destination market level. I show that exporters who optimize entry decisions and internalize informational externalities survive longer and grow faster. Then, I conceptualize why exporters enter certain international markets and why not all exporters from the same origin survive and grow in these markets. I incorporate the interaction between the performance and number of peers in a given market to identify a potential learning externality that exporters may be exposed to. Also, I highlight that, even without the formation of formal networks, the observation of the actions of peers in export markets can deliver implications for export flows: exporters may not need to start small in new markets if the actions of peers in those markets reveal enough information. By helping to explain how export relationships survive and grow, I complement the literature on the determinants of export diversification and signal to export promotion agencies the importance of internalization of informational externalities by exporters.

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Journal Article

On the Economic Potential of Cannabis Cultivation in Lebanon

| May 03, 2023

The causes and drivers of Lebanon’s economic crisis are well known and documented, with most studies and reports focusing on Central Bank monetary policy and Ministry of Finance measures. Less is known about prospective, unconventional economic policies that Lebanon could adopt to alleviate the impact of the crisis. One such policy would entail focusing on economic sectors in which Lebanon has a comparative advantage. Lebanon can capitalize on its comparative advantage by identifying foreign markets with untapped potential, an approach which presents the best opportunity to boost exports without additional public spending. Controversially, one such export product is cannabis. In 2020, McKinsey & Company produced an economic policy report titled “Lebanon Economic Vision”, in which they estimate that cannabis cultivation in Lebanon has the potential to generate 4 billion US dollars (USD) in revenues annually. Below, we focus on four of the report’s findings and recommendations, as well as potential discrepancies in those findings and recommendations, which deserve keen attention and scrutiny.

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Paper

ECONOMIC SHOCKS AND SKILL ACQUISITION: EVIDENCE FROM A NATIONAL ONLINE LEARNING PLATFORM AT THE ONSET OF COVID-19

| Apr. 03, 2023

We study how large shocks impact individuals’ skilling decisions using data from the largest online learning platform in Saudi Arabia. The onset of the COVID-19 pandemic brought about a massive increase in online skilling, and demand shifted towards courses that offered skills, such as telework, likely to be immediately valuable during the pandemic. Consistent with a model where individuals trade off reskilling costs with their expectations of future labor market conditions and their duration of work, we find that shifts into telework courses were largest for older workers. In contrast, younger workers increased enrollments in courses related to new skills, such as general, occupation-specific, and computer-related skills. Using national administrative employment data, we provide suggestive evidence that these investments in skills in early 2020 helped users maintain employment over the course of the pandemic.

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Journal Article

How Can Fiscal Policy Untap Lebanon’s Manufacturing Potential?

| Mar. 14, 2023

While Lebanon's economic crisis has rapidly worsened since 2019, untapped opportunities for exploiting existing productive capacity and enhancing local manufacturing remain. The cost of labor has decreased as poverty rates have increased and as the Lebanese pound’s (LBP) value has deteriorated. These developments have prompted Lebanese entrepreneurs to launch business initiatives focused on manufacturing sophisticated products, such as electric bicycles and lithium batteries. Such decisions suggest – or signal that the business community is confident – that there are enough unemployed individuals with relevant skills to meet labor demand in these sectors. These initiatives could entice qualified youth to forego emigration, create high-quality private sector jobs, produce additional sophisticated products, increase economic output, reduce demand for public sector jobs, and efficiently utilize savings in the absence of a functioning banking sector. While the state is not currently incentivizing such initiatives, their numbers and size could grow using fiscal policy tools, namely, tax incentives. Such measures would not only aid entrepreneurs and firms but also contribute to diversifying Lebanese manufacturing. 

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Ibrahim Chalhoub/AFP via Getty Images

Analysis & Opinions - Project Syndicate

How Foreign Powers Could Break Lebanon's Gridlock

| June 15, 2022

It is well known that factionalism and corruption have long stood in the way of the kinds of structural reforms that Lebanon needs. But an overlooked problem is the inaction of foreign powers that could easily compel domestic changes if they had the right incentives.

People walk outside a coronavirus vaccine center at the old Jiddah airport, Saudi Arabia, Tuesday, May 18, 2021

AP Photo/Amr Nabil

Analysis & Opinions

Economic Shocks and Skill Acquisition: Evidence from a National Online Learning Platform at the Onset of COVID-19

We study how large shocks impact individuals’ skilling decisions using data from the largest online learning platform in Saudi Arabia. The onset of the COVID-19 pandemic brought about a massive increase in online skilling, and demand shifted towards courses that offered skills, such as telework, likely to be immediately valuable during the pandemic. Consistent with a model where individuals trade off reskilling costs with their expectations of future labor market conditions and their duration of work, we find that shifts into telework courses were largest for older workers. In contrast, younger workers increased enrollments in courses related to new skills, such as general, occupation-specific, and computer-related skills. Using national administrative employment data, we provide suggestive evidence that these investments in skills in early 2020 helped users maintain employment over the course of the pandemic.

A shipping vessel moves into a port in Tokyo, Thursday, June 2, 2022

AP Photo/Hiro Komae

Analysis & Opinions

Internalization of Externalities in International Trade

| Sep. 25, 2021

Using disaggregated customs data about exporters from nine countries, I demonstrate that informational externalities are determinants of entry, survival, and growth of exporters at the product–destination market level. I show that exporters who optimize entry decisions and internalize informational externalities survive longer and grow faster. Then, I conceptualize why exporters enter certain international markets and why not all exporters from the same origin survive and grow in these markets. I incorporate the interaction between the performance and number of peers in a given market to identify a potential learning externality that exporters may be exposed to. Also, I highlight that, even without the formation of formal networks, the observation of the actions of peers in export markets can deliver implications for export flows: exporters may not need to start small in new markets if the actions of peers in those markets reveal enough information. By helping to explain how export relationships survive and grow, I complement the literature on the determinants of export diversification and signal to export promotion agencies the importance of internalization of informational externalities by exporters.