Balance Of Payments Research Articles

Poverty, Unemployment and Human Development in Nepal: Effectiveness of Economic Reformation Policies of 1990s

Nepal initiated economic reformation measures during late 1980s under the guidance and support of IMF and world Bank when its balance of payment (BoP) turned negative in 1982/83 and remained negative for three consecutive years. The sequential governments after restoration multiparty democracy in Nepal in 1990 implemented various measures of economic reformation related to trade liberalisation, investment and foreign exchange regimes, unification of the exchange rate, rationalisation of the tariff structure and tax system, promotion of export and strengthen public expenditure management were introduced. The aim of these reformation policies was to reduce poverty by accelerating economic growth and increasing employment opportunities. This paper attempts to evaluate effectiveness of these economic reformation policies of 1990s in reducing poverty and unemployment and improve human development condition in Nepal. It is descriptive and analytical in nature. Secondary sources of data have been used to carry out this paper. Books, research articles, reports of national and international agencies have been used as secondary sources of data. Descriptive statistical tools have been used to interpret results. This paper finds that reformation policies of 1990s have remained ineffective to reduce poverty and unemployment and improve human development condition at expected level.

Monetary policy effect on balance of payment in West Africa

The study examined monetary policy regimes and the balance of payment in West Africa. The study's objective was to examine the effect of monetary policy regimes on the balance of payment in West Africa. The study adopted an ex-post facto research design and obtained secondary data from documents of the Central Banks of the WAMZ countries, the World Bank Development Indicator (WDI), and the International Monetary Fund (IMF) database from 2001 to 2021. The estimation technique employed was the Panel Autoregressive Distribution Lag model, complemented by the Juodis, Karavias, and Sarafidis (2021) granger-causality test. According to the findings, the various monetary policy regimes in West Africa had conflicting effects on the balance of payments. It demonstrates how that goal can be achieved in the short term using the money supply and monetary policy rate. However, over time, policy rate had a positive effect on the balance of payments, as the money supply was insignificant. These results are particularly importantcrucial given the goal of unifying the monetary policy regime in the ECOWAS in 2027. Based on the findings, the paper concluded and recommends that to achieve a balance of payment equilibrium in West Africa, the monetary policy rate is an effective tool, this is because it is significant in explaining the changes in the balance of payment in the countries in West Africa. Thus, monetary authorities should ensure a correct balance of the rate when to increase or decrease the policy rate with the hindsight of implications on the current account.

Effect of trade openness on economic growth in Nigeria

The study investigated the effect of trade openness on economic growth in Nigeria. Time series data were collected from the Central Bank of Nigeria Statistical Bulletin from 1990 - 2022. While balance of payment was the proxy for economic growth (the dependent variable); the proxies for the independent variable (trade openness) were import, export and broad money supply to act as control variable. The method of data analysis employed in this study includes descriptive statistics, correlation analysis and unit root test. Ordinary Least Square was used to estimate the model. The findings revealed that import has no significant effect on balance of payment; export has significant effect on balance of payment; while broad money supply has insignificant effect on balance of payment in Nigeria. The study recommends that government should encourage huge investment on infrastructure development in order generate more economic activities; reduce the cost of doing business and increase the factors that drive productivity in Nigeria; and ensure stability in the interest, exchange rate and other monetary policy tools.

תכנית החירום לייצוב המשק ב=1985: בחינה מחודשת

The Emergency Stabilization Plan is recognized as a turning point in the economic history of Israel. It transformed Israel from an economy characterized by extensive state intervention to a market economy, in which the private sector is much more dominant. Although there is an extensive literature on the long-term impact of the plan, historical research on the plan itself—its formation, implementation, and immediate consequences—is limited. Moreover, the existing research focuses on the domestic factors that allegedly caused the crisis. In this article, I reopen the ‘black box’ of the Stabilization Plan to identify the international factors that contributed to the economic crisis, with the goal of tracing the evolution of the Plan and its implementation based on archival research and reevaluating its successes and failures. The article makes three key arguments: First, I argue that the economic crisis of the 1980s was fundamentally a debt crisis, which was caused by international factors, in contrast to existing research which underlines the role of inflation, which was allegedly caused by the government's careless fiscal policy. Second, I argue that the Stabilization Plan proposed by Michael Bruno and approved by the government was based on neo-mercantilist principles that were designed to address Israel's trade balance deficit and external debt. The policy was grounded on the logic of internal devaluation, according to which the lowering of real wages will encourage Israeli exports and improve the competitiveness of the Israeli economy. This claim challenges the existing literature which emphasizes the neoliberal components of the Plan and the reduction of state involvement in the economy. Thirdly, I argue that the Plan proposed by Bruno and approved by the government in fact failed to achieve two of its declared objectives: lower inflation and an improvement in the balance of payments. It failed due to the very effective protests by workers and the Histadrut (the national labor union) against the government’s intention to freeze wages. I further argue that the policy instrument that eventually stabilized prices was an interest rate hike initiated by the Bank of Israel, with the support of the Minister of Finance. I argue that the involvement of the Bank of Israel was not part of Bruno’s original plan. Although the Bank’s policy led to a reduction of inflation, it did not achieve the Plan’s other objective, that is, to improve Israel’s balance of payments. Based on this interpretation, it appears that the Stabilization Plan was not an ideological transformation from a collectivist ideology to a liberal one, but rather a modification of Israel’s collectivist spirit to better suit the globalized era.

Contabilizar el comercio imperial: analysis of early double-entry accounting books with TEI/DEPCHA

Abstract This article discusses the encoding of double-entry accounting books from the 16th-century Spanish Empire and presents initial stage results from analyzing the encoded text, based on our case study. We selected the accounting books containing transactional data from 1558 to 1560. The encoding process followed the Text Encoding Initiative proposed by the Digital Edition Publishing Cooperatives for Historical Accounts (DEPCHA), with some additional attributes specific to the ontology of the double-entry books. The article explains the method of encoding and describes the unique characteristics of the ledger, such as the format of bookkeeping and the spatial arrangement of information. We adopted DEPCHA’s markup methodology to represent the accounting vocabulary and used the @ana attributes to invoke a domain ontology for bookkeeping structure of transactions. The results from the data analysis focus on three aspects: identification of person names, accounting terms, and checking the balance of payments. The study concludes by highlighting our contribution to expanding new semantic vocabularies within the DEPCHA’s Bookkeeping Ontology, namely “bk: Total” and “bk: SubTotal.” It illuminates the flexibility in name spelling and the preference for mundane vocabularies in the left column of the ledger, while emphasizing accuracy in numerical values and calculations in the right column. We propose further encoding and analysis of transactional records to enhance the understanding of historical double-entry commercial records.

Investigating the Nexus between Inward Foreign Direct Investment and Capital Goods Imports: Empirical Evidence from Pakistan

This research found the empirical analysis between capital goods imports and inward foreign direct investment (FDI) of Pakistan by applying the annual time series data from 1975 to 2020. The importance of this area of research arises from its role in the balance of payments by incorporating foreign direct investment in the capital goods import demand model. The autoregressive distributed lag (ARDL) technique is used to estimate the long run relationship between dependent and independent variables. Furthermore, fully modified least square (FMOLS) and Dynamic ordinary least square (DOLS) techniques are also applied to check the robustness of the estimated long-run results. The findings indicate that capital goods import is positively influenced by foreign direction in the case of Pakistan. Moreover, domestic income, and relative price both have theoretically correct signs. On the other hand, the coefficient of export is negatively associated with import demand, which means that capital goods imports are not used in the promotion of export growth in Pakistan. We recommend that an import substitution policy should be encouraged to divert FDI toward the promotion of export growth and hence reduce the trade deficit in Pakistan.

PUBLIC MANAGEMENT OF CURRENCY SECURITY IN UKRAINE: CHALLENGES AND PERSPECTIVES IN MODERN REALITIES

The article examines issues related to the effectiveness of public administration in the field of monetary security in Ukraine. The article presents general characteristics of the nature, state, and dynamics of the effectiveness of public administration in the field of currency security in Ukraine. The assessment of the current state and dynamics of the currency security indicators in Ukraine was made on the basis of the characteristics of the state monetary policy components indicators compared to similar indicators in Poland. The characteristics of exchange rate dynamics, GDP dynamics, and labour market dynamics in Ukraine and Poland are presented. The main economic factors affecting the exchange rate, namely the inflation rate and the state of the balance of trade account of the balance of payments have been considered. The main factors reducing the efficiency of Ukraine's monetary security administration are detailed. The dynamics of the indicators of the level of Ukraine's shadow economy proved to be contrary to the goals and objectives of the "Strategy of Ukraine's Economic Security until 2025". The ways to minimize the negative influencing factors and, accordingly, strengthen the implementation of monetary and credit policy and improve the efficiency of state management of monetary security of Ukraine were proposed. The development of currency circulation in Ukraine is ensured by the state's influence on monetary relations by specially authorized bodies with different legal statuses and powers. In practice, difficulties arise in the application of monetary law in the process of currency regulation. The mechanisms of interaction between state control bodies in the field of currency regulation have not yet been established, which weakens the position of the state in the currency market and hinders the process of integration into the international economic system.

Http://etet.org.ua/?page_id=532&lang=en&aid=705

A comprehensive investigation of the exchange rate as one of the critical indicators of macroeconomics has remained relevant since the introduction of the Jamaican monetary system. Moreover, the topic is even more important for small open economies and their financial sustainability. Logically, currency risks are of similar importance. However, their analysis, assessment, and management are complicated tasks. The reason is the dual nature of the exchange rate since it can generate autonomous shocks and act as an independent factor on other economic categories, such as inflation, interest rate, balance of payments, or export earnings. On the contrary, it can be a function of the same indicators but indirectly or with a time lag. Thus, an error or deviation from the direct object of study at any risk management stage - identification, analysis, evaluation, or management - can cause the actor's financial or economic losses. In particular, a study of the inflationary currency risk requires instruments of fundamental analysis for its assessment. In contrast, it is possible to use both fundamental and technical analysis tools for the exchange rate risk, depending on the objective. As a result, it is necessary to find a careful step-by-step consideration, or in other words, a way of organizing the study of currency risks. In this article, we have proposed a way based on the integration of the approach of Easterby-Smith et al. (2018) and the conceptual modeling of Guizzardi (2005). According to the proposed logic and structure, the correctness of choosing the appropriate way of quantifying risks depending on the preliminary theoretical analysis is demonstrated. The approach is suitable for the study of other economic phenomena or processes.

Методологічні підходи до дослідження валютних ризиків на макрорівні

A comprehensive investigation of the exchange rate as one of the critical indicators of macroeconomics has remained relevant since the introduction of the Jamaican monetary system. Moreover, the topic is even more important for small open economies and their financial sustainability. Logically, currency risks are of similar importance. However, their analysis, assessment, and management are complicated tasks. The reason is the dual nature of the exchange rate since it can generate autonomous shocks and act as an independent factor on other economic categories, such as inflation, interest rate, balance of payments, or export earnings. On the contrary, it can be a function of the same indicators but indirectly or with a time lag. Thus, an error or deviation from the direct object of study at any risk management stage - identification, analysis, evaluation, or management - can cause the actor's financial or economic losses. In particular, a study of the inflationary currency risk requires instruments of fundamental analysis for its assessment. In contrast, it is possible to use both fundamental and technical analysis tools for the exchange rate risk, depending on the objective. As a result, it is necessary to find a careful step-by-step consideration, or in other words, a way of organizing the study of currency risks. In this article, we have proposed a way based on the integration of the approach of Easterby-Smith et al. (2018) and the conceptual modeling of Guizzardi (2005). According to the proposed logic and structure, the correctness of choosing the appropriate way of quantifying risks depending on the preliminary theoretical analysis is demonstrated. The approach is suitable for the study of other economic phenomena or processes.

La Balanza de Pagos y la Posición de Inversión Internacional de España en 2023

Rationale The balance of payments and international investment position provide insight into Spain’s economic relations with the rest of the world, which have important implications for the domestic economy. Analysis of these statistics takes on added significance against a backdrop of global uncertainty. Takeaways •In 2023 the Spanish economy’s net lending as a percentage of GDP reached its highest level since 1995, driven by the improvement in the trade balance and positive developments in services, with record high credits in both travel services and other services. •The negative net international investment position declined further in 2023 to stand at 52.8% of GDP (its lowest level in 19 years), as a result of GDP growth and the positive balance of financial transactions with the rest of the world. •Spain’s outward and inward foreign direct investment positions increased in 2023 due to the positive amount of financial transactions, although these were down slightly on the previous year, and the likewise positive amount of revaluations.

A STUDY ON IMPACT OF FOREIGN DIRECT INVESTMENT ON BALANCE OF PAYMENTS

Foreign Direct Investment (FDI) exerts a multifaceted influence on a country's Balance of Payments (BOP), encompassing both the capital and current accounts. In the capital account, FDI inflows represent crucial long-term investments by foreign entities into domestic assets, spanning from establishing new ventures to acquiring existing businesses or funding infrastructure projects. These inflows augment the country's capital base, providing essential funding for development endeavors, particularly vital for emerging economies. Additionally, FDI facilitates technology transfer and managerial expertise, fostering innovation and enhancing productivity. Consequently, this bolsters the competitiveness of domestic industries, potentially leading to increased exports and improved trade balances. However, FDI outflows, in the form of profits, dividends, and royalties repatriated by foreign investors, impact the income account of the current BOP, constituting outflows. Furthermore, FDI's influence extends to exchange rates, where significant inflows may lead to currency appreciation, affecting trade dynamics.

Unravelling the devaluation puzzle: Empirical insights into the transmission channel on balance of payments and output in Ethiopia

Background Empirical studies on the impact of devaluation in developing countries, including Ethiopia, have revealed diverse and mixed results. The effects can be positive or negative depending on the specific economic context and policies in place.This study addresses the devaluation puzzle by providing a more comprehensive and nuanced understanding of how devaluation affects the balance of payments and output. Methods To achieve this, we employ a recursive structural vector autoregressive (SVAR) model focusing on Ethiopia from 2001Q1 to 2023Q4. Results The findings reveal that exchange rate shocks negatively affect the balance of payments in both the short and long run, with a greater impact observed in the short run. Shocks in other variables, such as foreign exchange rate reserves, inflation, and interest rates, exert a stronger influence on the balance of payments than the exchange rate itself in the long run. In addition, shocks in the exchange rate significantly impact foreign exchange rate reserves in the long run, highlighting the complex dynamics of exchange rates and the indirect nature of the exchange rate channel. Exchange rate shocks also negatively impact output growth in both the short and long run. Conclusion The study concludes that devaluation has a contractionary effect through various channels. Devaluation increases the money supply, leading to inflationary pressures and a decline in output. It also increases interest rates, which further reduces output. In addition, devaluation reduces foreign exchange reserves, resulting in a fall in the balance of payments and a decrease in output. We suggest policymakers prioritize exchange rate stability through practical monetary and fiscal policies. In general, International financial institutions, particularly the National Bank of Ethiopia, should reconsider their devaluation-focused policies, considering the complexities and potential negative consequences associated with devaluation.

Macroeconomic factors influencing the Saudi balance of payments’ current account dynamics from 1995 to 2019

Reliable development reports highlight persistent deficits in developing countries’ balance of payments since the 1980s and 1990s, attributed to monetary turmoil and ambitious development plans. Saudi Arabia faces similar challenges as the leading economy in the Middle East and North Africa region.The objective of this study is to pinpoint the macroeconomic determinants influencing Saudi Arabia’s current account balance from 1995 to 2019. This aligns with the objectives of Saudi Vision 2030, which emphasizes economic diversification and sustainability.Eleven macroeconomic determinants were subjected to the Principal Component Analysis model and the Autoregressive Distributed Lag model for analysis. Five determinants, such as budget balance, goods exports, per capita gross domestic product, gross domestic product growth, and domestic liquidity growth, were identified as significant contributors to the current account balance. The Autoregressive Distributed Lag model revealed that goods exports, domestic liquidity growth, gross domestic product growth, and per capita gross domestic product exert a statistically significant positive impact on the current account balance in the long term.The research findings highlight the significance of goods exports, economic growth, and domestic liquidity in shaping Saudi Arabia’s current account balance, emphasizing the need for diversification away from oil dependence to mitigate economic vulnerabilities. The study underscores the implications for Saudi Vision 2030, stressing strategic policy interventions to foster non-oil exports and stimulate economic growth. Additionally, the analysis identifies temporal variations in export dynamics, emphasizing the importance of policy continuity and adaptability for economic resilience. AcknowledgmentsThe authors gratefully acknowledge financial support from The Deanship of Scientific Research, King Faisal University (KFU) in Saudi Arabia. The present work was done under Project Number (CHAIR 138).

Evaluation of Russian OFDI based on balance of payments and OECD data (before COVID-19)

Evaluation of Russian OFDI based on balance of payments and OECD data (before COVID-19)

MACROPRUDENTIAL POLICIES CAPITAL FLOW MANAGEMENT

This article aims to present the legitimization process of macroprudential capital flow management policies as a tool for economic stability after 2009, when such policies started to have the support of multilateral institutions such as the IMF. To this end, we conducted extensive bibliographical research, bringing together several academic strands to present how this process of transformation and acceptance developed and the motivations, impacts, and effective results of these policies. As a result, we verified that the use and effectiveness of these management strategies must follow an arrangement in which their scope must involve several other policies of the fiscal, macroprudential, monetary, exchange rate, and capital control, mainly in emerging economies and in these cases, reduce financial fragility and maintain the macroeconomic stability of these countries in the face of adverse shocks to the balance of payments caused by excessive capital inflows or outflows, mitigating the resulting externalities in the process.Keywords: Macroprudential policies / Stability / Capital flow

MULTINATIONAL COMPANIES FOR BUSINESS INTERNATIONALIZATION THROUGH FOREIGN DIRECT INVESTMENT (FDI) IN GLOBALIZATION: TRENDS FOR VALUES

This paper analyzes and describes multinational companies as a business internationalization strategy through foreign direct investments FDIs for business internationalization to reach business values in the frames of globalization. The analysis and results demonstrated that Multinational companies (MNCs) and foreign direct investments (FDIs) may face challenges and risks in new locations, economic and political instability, difficulties of infrastructure, distrust in the locations, locations, difficulties of balance in payment, challenging negotiations in business agreements and quality contracts, borders and transportation challenges, challenging in the market size. Multinational companies that go for foreign direct investment have an economic impact and can affect a country's economy in various ways, for example, in the balance of payments, in growth rates and in job creation. The effect of foreign direct investment by multinational companies can be negative or positive depending on certain factors. A multinational company’s pattern of internationalization represents different factors of possibilities, costs, risks and difficulties faced during its internationalization. In conclusion, Foreign direct investment (FDI) is an important step towards business internationalization and if the domestic company decides to go multinational towards FDI, it has to consider the factors of ownership, location and internalization to reach business internationalization as confirmed in Dunning’s framework and this analysis.

THE REALITY OF DIGITAL TRANSFORMATION ON ALGERIAN MACROECONOMIC VARIABLES: AN ANALYTICAL STUDY

Through this paper, we are clarifying the need to move towards applying digital transformation strategies. Algeria’s indicators and achievements in digitization and their impact on macroeconomic variables, inflation, crude internal output, and balance of payments are effective solutions for developing the economy and moving to a digital and knowledge economy. Digital transformation also depends on various technologies and fields of artificial intelligence in terms of Productivity, competitiveness, leadership, innovation, and other fields. Digital transformation also boosts economic growth and promotes the telecommunications and technology sectors. Thus, this study aims to focus on the digitization of sectors of the Algerian economy, and enhancing them with various artificial intelligence techniques, as the basis for directing economic policies and making strategic decisions that contribute to enhancing the competitiveness of various economic institutions, and improving levels of economic growth and various Algerian macroeconomic indicators. The study found several findings related to the need to develop the infrastructure of the media and communication sector. Enhancing Internet access and improving digital and financial services, promoting production and consumption, improving education and vocational training skills while minimizing the macroeconomic impact on the environment, Dissemination of e-work culture and use of its technologies in all education sectors, health, smart mobility, tourism, etc. And it’s only by relying on the human resource that is the effective link in developing digital transformation strategies through research and innovation.

The Impact of Foreign Direct Investment on Economic Growth in Jordan: A Study of the Period 1978-2021

Objective: This paper aims to measure the impact of foreign direct investment on economic growth in Jordan during the period (1978-2021), based on a set of standard tests that will help clarify the relation between the variables of the study. Theoretical Framework: This paper proposes to examine the benefits of an open market economy based on trade and investment liberalization. The focus will be on factors that attract foreign direct investment, such as improving GDP, infrastructure, and political stability. These factors significantly impact employment rates, technology transfer, export development, and balance of payments. Method: The study used Eviews-9 to estimate a suitable linear model. A unit root test using ADF methodology indicated stationary variables at I(0) level. The Johansen methodology was used to perform a joint integration test, which showed that the two variables were complementary according to the Trace Test and Maximum Eigenvalue. Results and Discussion: After estimating the results of the equation using the Ordinary Least Squares regression (OLS), the results indicate that if the percentage of foreign direct investment increases by 1%, the GDP increases by 0.05%. All transactions are statistically significant at a level less than (0.01). R2 also indicates that FDI explains 18% of changes in GDP. Research Implications: Foreign direct investment is crucial for developing countries like Jordan, as it helps increase cash flows. Jordan strives to create favorable laws to attract more investments. Originality/Value: The study compared Jordan's case with previous studies and found similarities and differences. Jordan's political, security, and geographical situation, along with continuous development of investment-related legislation, made it more fortunate than others.

GLOBAL MONITORING OF FINANCIAL INDICATORS OF DEVELOPMENT AND INNOVATION AS A PREREQUISITE FOR WARNING OF FINANCIAL CRISES

Despite the existing developments that reveal the problems of the financial sector and financial innovations, it is worth focusing our research on such points. It is worth doing detailed monitoring of financial indicators at the level of many countries from different parts of the world, which reflect the state of financial innovation. In addition, a relevant study related to the monitoring of financial indicators is the analysis of indicators on which the stable development of society depends. It is also worth not only displaying the dynamics of financial indicators over a long period of time, but also trying to show the forecast values of such indicators in the coming years. It is this approach that will allow us to form a certain vision regarding the prevention of financial crises in the future. The article examines the indicators of net lending, gross debt and cyclically adjusted balance of payments of the countries for the period 2007-2024, and also indicates the corresponding forecast indicators for 2025-2027. The monitoring was carried out and the prospects for the development of the field of financial innovations for the countries for 2007-2027 were determined. We also investigated the need to track and understand current financial innovations that will allow us to counteract the manifestations of financial crises in the future. It was confirmed as a result of research into the state of innovation of individual states (in particular, the Fintech sphere) that precisely those countries that invest in the development of scientific and technical developments have the opportunity to develop the economy faster. It is established that the financial sector of innovation has changed significantly from the model of traditional corporate banks to powerful ecosystems of banking and non-banking markets. It has been confirmed that the prospects for the development of Blockchain technology in the field of finance are that such technology will allow the financial sector to further develop in the direction of security, stability and reliability, and therefore prevent the occurrence of financial crises in the future. It was revealed that financial innovations can exist and develop at the same time and other financial indicators can deteriorate (increase in debt and budget imbalance). Therefore, in order to understand and prevent crises, it is worth developing an appropriate level of tracking and forecasting the smallest changes in financial indicators at the global level.

The Impact of Cross-Cultural Customary Transportation on International Capital Flows

Economic globalization promotes the development of cross-border investment, and cultural differences in transportation between different countries also play an important role in this process. Starting from cross-cultural customary transportation, analyze the impact of public transportation on international capital flow, and propose economic and legal suggestions from the perspective of transportation governance, for the sake of promoting the effectiveness of international capital flow. By combining theoretical analysis and interdisciplinary integration methods, the study suggests if the "left-hand" rule is applied to the driving direction, it can increase the traffic safety factor, promote the effective development of public transportation, promote exchange rates and international balance of payments, and improve the dispute resolution on international investment. Starting from the socio-cultural perspective, this study aims to explore interdisciplinary issues between law and economics, providing reference and inspiration for social governance and policy formulation.