Foreign Access
Export Controls and Innovation in Sanctioned Countries
Xueyue Liu et al.
MIT Working Paper, April 2026
Abstract:
This paper studies how Chinese firms responded to the 2007 U.S. “China Military Catch-All Rule,” which restricted exports of dual-use products with military applications. By comparing sanctioned goods to those that were just excluded from the policy, we estimate firm-level effects on imports, R&D, and patenting. Treated firms sharply reduced imports of controlled products and increased innovation activity: R&D spending rose by 49.1%, patenting by 41.3%, and the number of active inventors by 30.4%. Patenting in related technologies increased by 65.1% and patents on other topics increased by 41.6%, indicating a broad innovation response rather than one narrowly focused on replacing restricted inputs. We also examine domestic suppliers of controlled goods and find that innovation increased, with patent applications related to the restricted products more than quadrupling. Taken together, these results suggest that a key unintended consequence of export controls is their potential to accelerate innovation in the sanctioned economy.
Globalization, Innovation, and Margins of Sourcing
Wenzhuo Lu
Review of Economics and Statistics, forthcoming
Abstract:
This paper uncovers that input tariff reductions result in less domestic innovation, but standard models of trade ensure a positive correlation between importing and innovation. Hence, the paper develops a dynamic framework with a task-specific labor-augmenting productivity and a non-homothetic import demand system to rationalize this finding. The model implies that input liberalization enables firms to use cheaper intermediate imports as a substitute for self-made inputs, a strategy that decreases marginal production costs but also discourages firms from investing in their own inhouse varieties. Finally, the paper compares the effectiveness of trade and innovation policies in boosting aggregate productivity growth.
Falling Dominoes? The Impact of the US Exit from Free Trade on the Sustainability of Trade Cooperation
Barthélémy Bonadio, Andrei Levchenko & Nitya Pandalai-Nayar
NBER Working Paper, June 2026
Abstract:
This paper quantitatively evaluates other countries' optimal tariffs and the prospects of sustaining international trade cooperation when a large player -- the United States -- exits the cooperative trade regime. To guide the analysis, we rely on an analytical characterization of the optimal tariff in a simplified multi-country trade model with endogenous labor supply. A country's optimal import tariffs are a function of its trade partners' expenditure shares on its goods, and the trade and labor supply elasticities. In both the simplified model and the full quantitative multi-country, multi-sector global network model, the impact of the US withdrawal from free trade on other countries' optimal tariffs and the sustainability of the cooperative trade regime is minimal. This is because quantitatively, the key determinants of these objects -- domestic and international trade shares of other countries -- change little from the US withdrawal. This main finding is not sensitive to the trade or labor supply elasticities. Thus, the fall of the US free trade domino is unlikely to cause further dominoes to fall.
Deep learning four decades of human migration
Thomas Gaskin & Guy Abel
Nature, forthcoming
Abstract:
Human migration is a fundamental driver of global demographic change, shaping population structure, labour markets and social policy across countries. Although long-term migration patterns are often linked to economic development, they can shift rapidly in response to shocks such as conflict, environmental crises and political change. Despite its importance, migration remains difficult to measure consistently: existing data are sparse, concentrated in high-income settings and are fragmented across incompatible definitions, temporal resolutions and data types. Past efforts have relied on partial datasets, including flow records, stock estimates and model-based reconstructions with limited coverage. A central challenge is therefore to construct a globally consistent, high-resolution account of migration flows over time. Here we present a new dataset of annual origin-destination migration across 230 countries and regions from 1990 to the present, integrating diverse data sources into a unified modelling framework. By combining official statistics, census-based stocks, net migration estimates and past flow reconstructions, our approach produces temporally detailed and spatially comprehensive estimates that substantially extend existing resources. Using an ensemble of deep recurrent neural networks informed by geographic, economic, cultural and political covariates, we capture both persistent trends and short-term responses to changing conditions -- all while propagating uncertainty to generate confidence bounds. Our results outperform existing five-year flow estimates on held-out data and provide finer temporal resolution, revealing previously obscured dynamics in global migration patterns. This framework highlights regions in which uncertainty remains high and data collection is most urgently needed. By releasing all data, code and trained models, we provide a transparent and reproducible foundation for future work. These advances enable a more timely and detailed understanding of human mobility, with implications for research and policy in an increasingly dynamic global system.
Innovation without Borders? The Geography of Technological Diffusion
Ursel Baumann et al.
NBER Working Paper, June 2026
Abstract:
How well does innovation diffuse across geographic boundaries? To shed light on this question, we present a large-scale field experiment involving 3,300 firms across twelve European Union countries. We elicit firms' perceptions of the share of similar firms in their own country that had invested in artificial intelligence (AI), as well as the corresponding share among similar firms in Germany, France, and Italy. We randomly provide half of the sample with accurate information about both domestic and foreign AI investment. We show that firms substantially underestimate competitors' current AI investment, both domestically and abroad, and that they update their expectations about competitors' future AI investment in response to the information treatment. The treatment also causes a statistically significant increase in firms' own expected AI investment rate (p-value < 0.001). We find strong strategic complementarities within borders: a 1 pp increase in the expected share of domestic peers investing in AI raises a firm's own expected AI investment rate by 0.570 pp. These complementarities are absent across borders: the effect of an increase in the expected share of foreign peers investing in AI on a firm's own expected AI investment rate is statistically insignificant. Overall, our evidence shows that innovation diffusion and strategic complementarities in AI investment are much stronger domestically than internationally.
Unpacking Compliance and "Leakages'' in International Regimes: The Case of the OECD Anti-Bribery Convention
Lorenzo Crippa, Edmund Malesky & Lucio Picci
Journal of Politics, forthcoming
Abstract:
States and non-state organizations often only partially comply with international legal regimes. Such uneven compliance can generate “leakage” -- actions that undermine the regimes intended effects by shifting misconduct to less constrained actors. This paper examines this dynamic in the OECD Anti-Bribery Convention (ABC), an international regime requiring member states to criminalize bribery of foreign public officials. We test the theory that the ABCs enforcement led to leakage, as firms from non-signatory countries increased bribery to exploit the constraints imposed on competitors from compliant states. Using a novel global dataset of documented cross-border bribery cases, a new measure of firm competition in foreign markets, and a difference-in-differences research design, we find that foreign bribery declined among firms headquartered in ABC signatories (compliance) but rose among competitor firms from non-signatories operating in the same industries and host countries (leakage). These results provide the first global evidence of both compliance and leakage effects following intensified enforcement of an international anti-corruption regime.
Financial Consequences of the Belt and Road Initiative
Mehmet Ihsan Canayaz
Journal of Financial and Quantitative Analysis, forthcoming
Abstract:
China’s Belt and Road Initiative (BRI) aims to create economic corridors encompassing two-thirds of the world’s population and 40% of global GDP. Using the inauguration of a railway tunnel between Europe and Asia as a quasi-natural experiment, I demonstrate that countries gaining access to BRI’s freight routes issue significant amounts of high-yield debt. This debt is largely absorbed domestically, reallocating capital away from firms without translating into infrastructure investment. State-owned enterprises appear insulated from tightening financial conditions. I document mechanisms involving political alignment with China, exposure to trade-policy uncertainty, and topographic fit based on historical Orient Express routes.
The First Wave of Globalization and Electoral Populism in the United States
Ze Han & Helen Milner
British Journal of Political Science, April 2026
Abstract:
This paper studies how the first wave of globalization shaped electoral populism in the United States. We assemble a new county-level dataset covering presidential, congressional, and gubernatorial elections between 1870 and 1900 and ask whether deeper integration into international trade increased support for populist parties. We measure globalization exposure with a new port market access index that captures counties’ connectivity to major US ports, weighted by port-level international trade volumes and adjusted for transportation costs. Counties with greater port market access consistently exhibit higher populist vote shares. We then examine the economic mechanisms underlying this relationship. Using a county-level crop portfolio price index constructed from fixed within-county value shares, we show that greater port market access is associated with larger declines in agricultural prices. The political effects of globalization are significantly stronger in counties initially specialized in crops that experienced the largest global price declines. These results highlight the historical origins of the globalization–populism link and suggest that economic dislocation has long been a catalyst for political backlash.
Unconventional Protectionism in Containerized Shipping
Philip Economides
Texas Tech University Working Paper, May 2026
Abstract:
Containerized shipping operates similarly to a bus system, where vessels service round trip routes between origin-destination pairs. To ensure transport equipment availability, vessel owners reposition empty containers on low-volume voyages, from net importer origins to net exporter destinations. I provide novel evidence of balanced bilateral container traffic - only when accounting for empty container repositioning. Motivated by the Ocean Shipping Reform Act of 2022, I estimate a structural model to capture the effects of a US restriction on empty container outflows in favor of stimulating US exports. Although successful in stimulating exports, intervention backfires through elevated import prices, lower transport capacity, and reduced overall trade.
The unintended side effect of the global financial safety net: Elite capital flight
Bernhard Reinsberg & Andreas Kern
Business and Politics, forthcoming
Abstract:
What drives elite capital flight into offshore destinations? While existing literature focuses on regulatory gaps or global tax competition, international bailouts themselves can catalyze elite capital flight. Specifically, we examine how two instruments of the Global Financial Safety Net (GFSN) -- the International Monetary Fund (IMF) and the People’s Bank of China (PBoC)’s swap lines -- impact elite incentives to move wealth offshore. We develop a two-dimensional framework centered on Disbursement Control and Elite Threat Perception to theorize when and how elites extract and expatriate wealth. Using data from 201 countries between 1990 and 2018, we find that the anticipation of IMF programs increases offshore bank deposits by 14.2%, consistent with elites responding to rising threat perception. By contrast, the introduction of PBoC swap lines increases offshore deposits by 92.3%, reflecting extraction under low disbursement control, enabling moral hazard. We illustrate the core mechanisms of our argument through mini-case studies of Angola, Tajikistan, and Mongolia. Our findings reveal a structural vulnerability in the GFSN stemming from regulatory fragmentation and uncoordinated oversight.