Round 3, 2025

Six projects have been awarded funding in the third round of the Centre for Inclusive Trade Policy's Innovation Fund.

Supply Chain Disruptions and the EU-UK TCA 
PI: Holger Breinlich (University of Surrey), Martina Magli (Co-Investigator) Universität München, Elsa Leromain (Co-Investigator) University of Antwerp

This project aims to understand how supply-chain disruptions impact firms and workers in the context of the UK-EU Trade and Cooperation Agreement of 2021 (TCA). Using micro-level data between 2009 and 2022, it will study the short-run consequences of the sharp decline in UK imports from the EU caused by the TCA, to assess how firms involved in goods and services responded to this shock.

By linking detailed data on firms and workers, the team will also determine which occupations and skill levels were most affected and how these effects vary across UK regions. The findings will offer policymakers valuable insights to support businesses and workers in adapting to future trade disruptions and fostering inclusive economic recovery.

Understanding Barriers to Trade in Banking Services: Evidence from the UK
Swati Dhingra (Supervisor) LSE, Shania Bhalotia (Co-Investigator) LSE, Sophie Piton (Co-Investigator) Bank of England

The financial sector is crucial for economic growth and financial services are increasingly traded across borders. The UK financial sector amounts to 10% of GDP, which is the largest in terms of share of GDP in the G7. Banking represents about half of the financial sector. However, little is known about the barriers to trade in services in general, and in these services in particular, and its consequent impact. This project studies how changes in non-tariff barriers affect trade in banking services by looking at the change in trade relations between the UK and the EU after Brexit, using data covering banks' cross-border activities. It aims to understand how changes in such barriers affect domestic and foreign activities of banks and productivity dynamics in the sector.

The Labour Demand Costs of Non-Tariff Barriers
Marit Hinnosaur (Principal Investigator) University of Nottingham, Maria Garcia-Vega (Co-Investigator) University of Nottingham, Richard Kneller (Co-Investigator) University of Nottingham

Understanding the effect of Non-Tariff Barriers (NTBs) on firm behaviour has been a fundamental question in international economics. NTBs involve a heterogeneous set of policies, such as export authorisations, customs formalities, standards and technical regulations, and therefore, their costs have been difficult to measure.

This project will pioneer a new approach to the creation of data on the labour tasks and costs of NTBs, using machine learning and detailed job ads. It will also identify the additional labour costs of NTBs by exploiting the technical barriers to trade created under the Brexit EU-UK Trade and Cooperation Agreement. This will enable comparison with Most Favoured Nation tariffs imposed by the EU to countries with which the EU does not have a trade agreement, and to estimate the welfare costs of Brexit.

Trade under Turbulence: Political Tensions and International Trade
Antonio Navas (Principal Investigator) University of Sheffield, Zheng Wang (Co-Investigator) University of Dundee

The recent rise of global political tensions has made countries more vulnerable to international political incidents, causing unintended economic disruptions and generating substantial economic costs. This project aims to investigate the impact of bilateral political incidents on international trade flows and the underlying mechanisms. Using a unique and novel database this project will offer a comprehensive analysis, allowing us to understand what country and product characteristics determine their international trade response and how and why firms and consumers react economically to these incidents. Understanding these behaviours from a social, economic, and political point of view will allow policymakers and governments to recommend solutions to mitigate their impact.

Political Economy and Bilateral Trade Flows
Markus Eberhardt (Principal Investigator) University of Nottingham, Vanessa Boese-Schlosser (Co-Investigator) Berlin Social Science Center

For more than a decade, democracy has been in retreat around the world, including in rich OECD countries, which experienced populist episodes undermining the fabric of modern-day liberal democracy. This creeping deterioration of political institutions (‘democratic backsliding’), clearly makes for a more turbulent global political economy, but what are the economic consequences of this phenomenon and how does the ‘political sentiment’ of governing parties or elites affect countries’ economic prosperity?

Building on a rich source of secondary data and aided by recent methodological developments, this project will study these questions in the context of international trade flows. This study will investigate the trade flow effects of persistent episodes of autocratisation in OECD economies and ‘political sentiment’ - broadly defined, incorporating ideology and populism - in a global sample of countries to ascertain how the ‘political sentiment’ of governing parties or elites affects countries’ economic prosperity. The findings will enable greater understanding of the economic repercussions of political shifts, allowing NGOs, trade associations, and international organizations to create strategies to mitigate these negative economic effects.

Rage Against Globalisation: the Persistent Impact of the UK Miners’ Strike
Valeria Rueda (Principal Investigator) University of Nottingham, Abigail Barr (Co-Investigator) University of Nottingham, Björn Brey (Co-Investigator) Norwegian School of Economics

This project investigates the long-term effects of the 1984 UK miners' strike on individuals and communities. The strike was a pivotal event in the opposition to government-led liberalisation policies and sparked previously unseen levels of social conflicts in the coalfields. The research will explore how this event influenced people's human capital and social cooperation over their lifetimes.By studying the lasting consequences of this conflict, we can examine and better understand how the global order that started taking shape in the 1980s and the conflict it brought has fuelled spatial inequalities, political backlash, and the deepening of the social divide between winners and losers of globalisation. This study aims to inform contemporary research on the persistent consequences of the distributional conflicts triggered by globalisation and liberalisation.