Benefits Of Liberalization Research Articles

Transmission network price setting model for the promotion of liberalized market for the power industry in Taiwan

Currently, privatized state-owned Taiwan Power Company (Taipower) has a monopoly over energy production and vertically integrates the electricity market in Taiwan. Because of the geographical environments, economies of scales, social structures, and diverse political ideologies in Taiwan, the electricity market exhibits unique characteristics. To maximize the benefits of electricity liberalization, future market operations must not only involve conventional considerations for economic dispatch; overall social welfare should be included by incorporating the perspectives of fairness, responsibility, and the environment, and key electrical grid operations should be executed appropriately. We responded to the future market liberalization planning by including factors, such as, environmental effects and government policies, in addition to electrical line construction, and operation cost factors involved in the entire operational model planning. On the basis of responsibility sharing, this study used the simulated-responsibility three-phase pricing method. The proposed pricing method is expected to help attain the following policy goals:1.Achieving reasonable power price allocations;2.Simultaneously ensuring fair and efficient electric grid operation;3.Changing the operation orientations of the power plants and electrical grid facilities; and4.Increasing the rate of renewable energy use.

Critical Examination of the Impact of Trade Liberalization on the Economies of Developing Countries

Various studies on how trade liberalization (a term which describes removal of or reduction in the trade practices that thwart free flow of goods and services from one nation to another) can affect economic growth and poverty have found that trade liberalization in general can be a positive development strategy to foster economic growth and help reduce overall poverty (McCulloch and A. Harrison 2005). However, there is a caveat that the impact of trade liberalization is much greater and more effective if there are effective governmental institutions and key investments in place – including strong legal, education and healthcare systems as well as basic infrastructure requirements such as roads and sanitation systems, among others. More so, trade also carries a risk for specific countries; it often involves losers as well as winners. In this simple study, Least Developing Countries (LDCs) were found to be ultimate losers given the fact that they have not yet been able to put in place special social, institutional, legal and cultural preconditions that are critical for them to reap the benefits of trade liberalization.

Financial Liberalization in India: The Way Forward or Backward

The 2007/08 global financial crisis has led to renewed interest on the role of financial liberalization in economic development. Financial liberalization affects economic growth through two channels, namely, capital accumulation and total factor productivity (TFP) increase. The literature on the direct and indirect linkage between financial liberalization is very diverse with some studies showing substantial gains from financial liberalisation in terms of growth while others showing little or no benefits of financial liberalisation. India is today at a junction where its capital account, equity markets and banking sector are being increasingly getting integrated with the world economy. The Capital account has become fairly open in terms of volume of flows and fewer formal restrictions. This paper analyses the current state of India's financial sector, the challenges it poses and recommends strategies to ride over those challenges and reap in the benefits of financial liberalization.

If You’re Going Through Hell, Keep Going: Nonlinear Effects of Financial Liberalization in Transition Economies

ABSTRACTDid increasing the level and pace of financial liberalization during transition expose countries to crises? And if a crisis did strike, did liberalization do more harm or good? Using a database of 28 transition economies over 22 years, this article examines these questions across a host of economic outcomes, including savings and the size of the private sector. The results provide evidence that, while liberalization may initially increase the probability of a crisis, the prospect of a crisis drops dramatically at higher levels of financial openness. Moreover, the benefits of liberalization across several metrics outweigh the risks of these intermediate stages.

Twenty-First Century Palestinian Development Studies

Within the wide range of research and studies about Palestinian development, especially in the past twenty years, a new school of literature has recently emerged, drawing on heterodox economic and social science, settler-colonial studies, and the widening critique of neoliberalism. Studies in this issue of JPS are a selection of the intellectual output of a younger generation of scholars who have challenged the thrust of preceding literature produced by international and donor organizations, academics, and Israeli and Palestinian research projects. This new body of research critiques and proposes alternatives to scholarship that placed study of Palestinian economy and society within the parameters of the peace process, premised upon the supposed benefits of globalization and liberalization and more recently, reform and state-building as a precursor to national liberation.

Capital market openness and volatility: an investigation of five Sub-Saharan treasury bill rates

Purpose – The purpose of this paper is to model the volatility of treasury bill (T-bill) rates in five Sub-Saharan capital markets to investigate whether or not differences in capital mobility affect volatility. Design/methodology/approach – Primary data was collected from weekly T-bill auctions in five Sub-Saharan countries and was analysed using a range of Generalised Autoregressive Conditional Heteroscedasticity (GARCH) models in order to determine the volatility characteristics of each of these instruments. Differences in the institutional arrangements for each market are used to interpret the results of the econometric analysis. Findings – Evidence is presented that indicates that the size and financial liberalisation of capital markets affect volatility. While the markets with the greatest exposure to international investors exhibit greater volatility in the long-run, the presence of non-residents in the market appears to contribute to more efficient pricing of these instruments. Research limitations/implications – The limited sample restricts the ability to generalise these findings, however, the finding that differences exist in the volatility of these markets even though they are geographically similar indicates the value of this methodological approach. Practical implications – The finding that greater capital mobility may result in increased volatility and greater efficiency has significant policy implications for governments and market regulators who have to weigh the costs and benefits of financial liberalisation. Originality/value – The paper employs a unique data set to model the volatility characteristics of the selected T-bills to improve the understanding of the behaviour of these important instruments in Sub-Saharan frontier markets. More specifically the study provides a novel empirical approach to addressing the question of whether capital mobility is linked to increased volatility. The finding that capital mobility is linked to greater market efficiency offers a fresh insight to this debate.

Pakistan’s Trade Performance in Two Decades of the WTO Regime: Implications for the Future

In the Financial Year 2014–2015, which marks the completion of two decades of the WTO trading arrangements, Pakistan registered the highest ever trade deficit of USD 22.95 billion. Mehnaz Bhaur conducts a trend analysis and finds out that the country’s trade deficit is a systemic issue characterized by a gradually widening trade gap, which has undergone a further decline in the previous year. If this trend is not managed, Pakistan’s economy will undergo a downward spiral marked by low exports, high imports, low productivity, decline in growth, lack of investment, increased debt, and extreme poverty. The situation can be compounded by the evolving demographic realities with the population projected to double in thirty-five years, resulting in a large unemployed youth presenting a potential risk of conflict in the country. Where some benefits of trade liberalization have been registered; those are not substantial to offset the challenges presented by the rising import bill and sluggishness of the economy. Pakistan needs to adopt a comprehensive set of policy actions concentrating on creating a stable macroeconomic framework, devising a credible business-friendly environment and developing skilled youth to be able to realize the promises of trade liberalization linked with sustainable growth outcomes.

Analyzing Trade Liberalization Effects in the Egg Sector Using a Dynamic Gravity Model

The objective of the paper is to explore potential changes in trade induced by a liberalization scenario when taking into account persistence in trading partners. Our approach is based on the development of a gravity model that takes into account the dynamics at the extensive margin of trade as well as the persistence effect of the intensity of trade. Our empirical contribution is on the egg sector, where the persistence in trading partners is acute. Our results indicate that the use of static models underestimate imports of table eggs by more than 50% in Canada, when compared with the use of panel dynamic specification. The dynamic specification helps explain why trade liberalizations often increase trade creation between countries that had already been trading partners, while new trading partnerships remain scarce following trade liberalization. Our results also confirm the importance of sunk cost and their negative impact on the probability of export market participation for developing countries. Those results raise questions regarding the benefit of trade liberalization for developing countries, in terms of accessing new market, if they do not benefit from special treatments.

Agricultural trade liberalisation and price volatility in Bangladesh and Tanzania: a comparative analysis

This paper examines the impacts of agricultural trade liberalisation on the welfare of smallholder farmers in Bangladesh and Tanzania. Using secondary data for the pre and postliberalisation periods for two main agricultural crops from Bangladesh (rice) and Tanzania (maize) we analysed the correlation between domestic and international prices of rice and maize to investigate impacts of agricultural trade liberalisation on price stability/volatility and food security with a view to analysing the economic benefits of trade liberalisation for smallholder farmers. To understand price volatility, we used the Huchet-Bourdon (2011) method to estimate the coefficient of variation of the level of prices (CV) and the corrected coefficient of variation (CCV). We found that the values of both CV and CCV for consumer price in the postliberalisation period were quite large, suggesting greater volatility of consumer price of both crops. We further found that productivity growth did not necessarily lead to income gains for smallholder farmers in either country due to price volatility and the lack of market integration. This study illustrates the contradictory outcomes of agricultural trade liberalisation. We recommend complementary policy interventions to achieve enhanced welfare outcomes from agricultural trade liberalisation.

Consecuencias económicas de los regímenes financieros: una nueva perspectiva de las políticas bancarias de México y Brasil, 1890-1910

Este trabajo compara las consecuencias de las diversas políticas financieras adoptadas en México y en Brasil en las últimas décadas antes de la primera guerra mundial. En la década de 1890, los gobiernos nacionales de México y Brasil persiguieron sorprendentemente diferentes políticas de regulación bancaria. En Brasil, después de la caída de la monarquía, las autoridades experimentaron brevemente con la liberalización financiera. En México, en la misma época, los funcionarios de la administración pública habían creado un sistema bancario con más restricciones y regulaciones. Comparamos los costos y beneficios de los sistemas financieros y los efectos macroeconómicos de estos regímenes bancarios diferentes; así, se revisan dos problemas clásicos de la historia financiera, los costos de la fragilidad financiera frente a los beneficios de la liberalización financiera. Observamos los resultados de los sectores financieros y consideramos las diferencias en las medidas generales de los resultados económicos globales bajo estrés.

Should Pakistan Liberalize Trade With India Against the Backdrop of the FTA with China? A Comparative Advantage Analysis for the Manufacturing Sector

Pakistan and India have not yet normalized trade relations and gained the full benefits of bilateral trade despite significant developments to this end since 2011. Pakistan has yet to reciprocate the most-favored-nation status granted by India. This study investigates the benefits of trade liberalization between the two countries by studying the global competitiveness of Pakistan’s industrial sector from a policy perspective. We construct a revealed comparative advantage index for manufacturing products (HS 2-digit level) for Pakistan, India, and China for the period 2003–12, and then identify the changing patterns of comparative advantage for Pakistan. We find that 18 industries should be protected upon liberalizing trade with India. These industries are termed ‘vulnerable’ as they have moved from either borderline competitiveness to becoming uncompetitive or vice versa. Additionally, the excessive concessions granted to China in its free trade agreement with Pakistan and the resistance to opening up trade with India may have resulted in inefficient trade, i.e., imports from a less competitive partner and exports to a less lucrative market. We aim to establish a direction for further research to determine the ex ante impact of trade with India on the economy via a change in the production levels of these vulnerable industries, given the impact of free trade with China and the availability of Chinese substitutes.

The Ongoing Impact of the US-China Air Services Agreements (ASAs) on Air Passenger Markets

AbstractPrevious research has indicated that liberal air services agreements (ASAs) lead to more passengers. Using time-series regression models, this study extends those findings by looking more closely at the evolving ASAs between the United States and China during 1996–2009. Our results indicate that while liberal ASAs generally lead to increased passengers, the extent of this impact depends on the general state of liberalization when the agreement is signed. In addition, this study shows that the benefits of liberalization may not be evenly apportioned between the two countries of carriers.

The Paradox of Agricultural Trade Liberalization in Bangladesh and Tanzania

This paper examines some of the contradictions and theoretical ambiguities of agricultural trade liberalizationon the welfare of smallholder farmers. Using production, consumption and price data for pre-and post-liberalization periods for two main agricultural crops from Bangladesh (rice) and Tanzania (maize) we critically analyse the correlation between domestic and international prices of rice in Bangladesh and maize in Tanzania to estimate impact of agricultural trade liberalization on price stability/volatility and food security to measure economic benefits of trade liberalization on smallholder farmers. Using coefficient of variation of the level of prices (CV) and corrected coefficient of variation (CCV) as measured by Huchet-Bourdon (2011) we found that the values of both CV and CCV for consumer price in the post-liberalisation were quite large suggesting greater volatility of consumer price of rice in Bangladesh and maize in Tanzania in the post-liberalization period. We conclude that price volatility diminishes the potential benefits of agricultural trade liberalization forsmallholder farmers who are net-deficit producers, net-deficit sellers and recommend supplementary policy interventions to achieve enhanced welfare from trade liberalization.

Measuring the Costs and Benefits of Liberalization of Trade in Services: Lessons for Regional Integration and Sectoral Policies

This paper draws insights from the literature on Computable General Equilibrium (CGE) Modeling of potential gains from liberalization for developing countries, in particular Northern, Eastern and Southern African economies. Due to the importance of regulatory framework and to the size of service industries, substantial potential gains are expected from liberalization, by accession to WTO, regional, preferential or bilateral trade agreements. However, it seems that attention should be focused on the specificity of each region and country and that a sectoral approach is necessary. Regarding the choice between multilateral, bilateral or regional liberalization, the optimal framework depends on service industries. Institutions particularly matter for services and reforms should be global and focused. Domestic reforms are necessary prior to trade liberalization.

The Paradox of Agricultural Trade Liberalization in Bangladesh and Tanzania

This paper examines some of the contradictions and theoretical ambiguities of agricultural trade liberalizationon the welfare of smallholder farmers. Using production, consumption and price data for pre-and post-liberalization periods for two main agricultural crops from Bangladesh (rice) and Tanzania (maize) we critically analyse the correlation between domestic and international prices of rice in Bangladesh and maize in Tanzania to estimate impact of agricultural trade liberalization on price stability/volatility and food security to measure economic benefits of trade liberalization on smallholder farmers. Using coefficient of variation of the level of prices (CV) and corrected coefficient of variation (CCV) as measured by Huchet-Bourdon (2011) we found that the values of both CV and CCV for consumer price in the post-liberalisation were quite large suggesting greater volatility of consumer price of rice in Bangladesh and maize in Tanzania in the post-liberalization period. We conclude that price volatility diminishes the potential benefits of agricultural trade liberalization forsmallholder farmers who are net-deficit producers, net-deficit sellers and recommend supplementary policy interventions to achieve enhanced welfare from trade liberalization.

Exploring the nexus between financial openness and informational efficiency – does the quality of institution matter?

This article examines the empirical link between financial openness and informational efficiency of stock markets in 27 emerging markets. Improving on earlier papers, this study has used World Bank’s Worldwide Governance Indicators (WGI) as the proxy of institutional development in dynamic panel data models estimated by generalized method of moments (GMM). Our results show, first, financial liberalization by itself has no impact on enhancing efficiency of stock market. Second, for countries with high level of institutional development, the interaction of trade openness and financial openness become significant. Third, for the same group of countries, interaction effect of financial liberalization and institutional development leads to more efficiency in stock market. Hence, our finding demonstrates the utmost importance of institutional development and its role on liberalization. Our results conclude that institutional development and trade openness are pre-requisites for a country to benefit from financial openness. Our study further provides empirical evidence to theoretical model proposed by Basu and Morey (2005) that governance is the missing link between stock market efficiency and financial liberalization. Our findings suggest that policy makers in developing economies should enhance the quality of their institution in order to optimize the benefits of financial liberalization.

Frequency and aircraft size dynamics in a concentrated growth market: The case of the Chinese domestic market

Despite the explosive growth of the Chinese aviation sector and the major industry reforms undertaken in recent decades, the Chinese domestic market remains highly concentrated with a significant element of regulation and governmental control in areas such as market entry and airline fleet planning. In this study, we investigate the frequency strategies and aircraft choices of airlines operating in this concentrated growth market. Our empirical investigation suggests that airlines mainly accommodate rapid traffic growth by flying more frequently, although increased aircraft size also contributes to market expansion. We also find a negative relationship between market concentration and flight frequency. Due to the more balanced market structure resulting from mergers among leading airlines since 2002, there has been a moderate reduction in market concentration at route level, contributing to a 3.7% increase in traffic volume from 2002 to 2008. The results of our study suggest that Chinese travelers have yet to fully enjoy the benefits of market liberalization, and airports should prioritize increasing capacity related to aircraft movements over the accommodation of larger aircraft.

Trade Liberalization Economic Growth and Poverty Reduction in Nigeria

This paper examines the causal relationships between trade liberalization growth of the Nigerian economy and poverty. This study applied time series data for Nigeria. We employed the recently introduced Pesaran et al (2001) ARDL approach. Evidence from the study suggest that trade liberalization does not cause poverty reduction, implying that the benefit of trade liberalization does not trickle down to the poor in Nigeria. This suggests that countries with high propensity to import and poor commodity prices need not to strictly follow the one size fit all trade liberalization policies rather each country need to focus on trade policies peculiar to its own environment, which can deliver growth and translate growth into a meaningful poverty reduction.

Depth versus rigidity in the design of international trade agreements

I examine the impact of depth and rigidity in international trade agreements. Increasing the depth of required cooperation lowers the likelihood of full compliance and the stability of a trade regime. In contrast, increasing the rigidity of an agreement raises the likelihood of full compliance and lowers stability. Both depth and rigidity can lower tariffs if a state does not defect from its treaty obligations. I argue that if we control for the benefits of trade liberalization, then observable treaties will have a negative relationship between depth and rigidity. Deep agreements will be flexible, while shallow agreements will be rigid.

Korea's Trade Liberalization and Consumer Welfare

Trade liberalization benefits consumers, according to trade theories, because it gives them access to a wider variety of products at lower prices than what their home country could supply. Despite Korea’s continuous trade liberalization over the years, however, it is criticized that Korean consumers have rarely realized welfare enhancement due to trade liberalization, pointing to no change or even an increase in consumer prices of imported goods for which tariff was reduced or eliminated through trade liberalization or effectuation of free trade agreements with other countries. While it is generally believed that trade liberalization benefits consumers, there is only a handful of direct evidence on the gains from trade that particularly focuses on consumers’ welfare. In this report, we examine and estimate the welfare impacts of trade liberalization and increased trade on consumers. First, we investigate the trend of prices of imported consumer goods over time and then identify factors that might affect those prices. Second, we examine changes in product variety available in Korea due to trade liberalization and estimate how these changes in product variety affect Korean consumers’ welfare. In particular, within a constant elasticity of substitution (CES) framework, we develop a price index for import that is corrected for new and disappearing varieties by following Feenstra’s (1994) approach and using Korea’s trade data. New varieties lower unit costs, depending on their substitutability with other varieties and their expenditure shares. Third, we investigate the marketing margins of imported consumer goods from the border to final consumers and estimate the margin on every stage for each marketing channel.