Kolloquium: Essays on Regional and Development Economics / Unilateral Environmental Policy and Offshoring

Abstract Feiipe Santos-Marquez:
In this talk, I will present four essays that explore key issues in regional and development economics. The first essay employs the Getis filter within the Solow growth model to analyse income per capita convergence across Chinese provinces from 1992 to   2017, revealing significant reductions in inter-regional disparities driven by technological progress. The second essay investigates the spatial diffusion of wind energy technology in post-Fukushima Japan. The third essay examines the effects of free trade agreements on urban growth in tri-border areas, finding that such agreements boost economic activity in cities by 7-12%. The fourth and primary focus of this talk is on the impact of the Netflix series Narcos on tourism in Colombia. Using the Synthetic Control Method (SCM) and its extension, the Synthetic Synthetic Control Method (SSCM), I provide evidence that Medellín experienced an increase in international visitors by 2023 compared to counterfactual predictions. This essay highlights the influence of media on tourism, offering a methodological extension for causal inference in small-sample contexts.

Abstract Simon Bolz:
A long-standing question in trade and the environment is to what extent an open economy can implement strict environmental policy without merely shifting pollution abroad. This paper provides new insights by examining how offshoring affects emissions leakage and global emissions in response to a unilateral environmental policy reform. Using a general equilibrium model with heterogeneous firms and endogenous offshoring decisions, we analyse these effects, incorporating standard modeling elements where firms allocate labor between production tasks and emissions abatement. We find that global emissions respond non-monotonically to a unilateral emission tax increase: when the initial tax differential is small, emissions decline; however, as differences widen, leakage can exceed 100%, causing a net rise in global emissions. This paradox arises due to a global technique effect –as the most productive, cleanest domestic firms offshore, incumbent offshoring firms import inputs produced with increased emissions intensity due to a declining effective emissions tax abroad. Our findings contrast with comparable models of trade in final goods: the mode of globalization matters.