Degree Of Economic Integration Research Articles

Analyzing the Evolution of China-Africa Economic Integration: A Wavelet Approach

This study analyzes the evolution of Africa's degree of economic integration with China from 1993 to 2019. The study period encompasses a number of China-Africa bilateral economic treaties, which the literature claims are prolific and have significantly strengthened Africa's degree of economic integration with China. We develop a theoretical argument that, if this assertion holds, the integration indicator must reflect a long-run upward trend that is less obstructed by noise. To validate this argument, we use a wavelet approach and find no evidence necessitating failure to reject the null hypothesis of no periodicity, suggesting that the integration indicator was statistically noisy over the study period. This finding suggests that interpreting the evolution of China-Africa economic integration primarily through bilateral economic pacts can be deceptive. The interpretation should instead be exploratory in nature to unpack some hidden motivations associated with this integration. Our preliminary investigation revealed that the Angola Model is primarily driving China-Africa economic integration. Therefore, it is plausible to argue that China-Africa economic integration is perpetuated to exploit natural resources rather than to enhance hard infrastructure development in Africa, as purported in the literature.

Returns-to-education gaps between native and migrant workers: the infl uence of economic integration on their drivers. Are Active Labour Market Policies (ALMPs) an eff ective remediation tool? A case comparison: Italy, Germany, Denmark and Cyprus

This paper answers the research question of whether economicintegration influences the drivers behind returns to education for native, EU and non-EU workers in the selected countries. It fills two gaps in the literature, assessing the role of economic integration in determining differences in returns on investments in education and testing whether ALMPs can bridge them. The literature has identified that returns to education vary between national and foreign workers. Differences among nationality groups regarding the quality of their educational background, their knowledge of the hosting labor market, or the mismatch between the qualifications and skills acquired abroad and those demanded by the local economy have been put forward to explain the gaps in returns to education. This paper contends that those factors might be economic reasons behind the differences in the returns to education but that their effect is mediated by the different degrees of economic integration between the host country and workers’ home country.

Regional economic integration via detection of circular flow in international value-added network.

Global value chains are formed through value-added trade, and some regions promote economic integration by concluding regional trade agreements to promote these chains. However, it has not been established to quantitatively assess the scope and extent of economic integration involving various sectors in multiple countries. In this study, we used the World Input–Output Database to create a cross-border sector-wise network of trade in value-added (international value-added network) covering the period of 2000–2014 and evaluated them using network science methods. By applying Infomap to the international value-added network, we confirmed two regional communities: Europe and the Pacific Rim. We applied Helmholtz–Hodge decomposition to the value-added flows within the region into potential and circular flows, and clarified the annual evolution of the potential and circular relationships between countries and sectors. The circular flow component of the decomposition was used to define an economic integration index. Findings confirmed that the degree of economic integration in Europe declined sharply after the economic crisis in 2009 to a level lower than that in the Pacific Rim. The European economic integration index recovered in 2011 but again fell below that of the Pacific Rim in 2013. Moreover, sectoral economic integration indices suggest what Europe depends on Russia in natural resources makes the European economic integration index unstable. On the other hand, the indices of the Pacific Rim suggest the steady economic integration index of the Pacific Rim captures the stable global value chains from natural resources to construction and manufactures of motor vehicles and high-tech products.

Coping with Disasters: Two Centuries of International Official Lending

Official (government-to-government) lending is much larger than commonly known, often surpassing total private cross-border capital flows, especially during disasters such as wars, financial crises and natural catastrophes. We assemble the first comprehensive long-run dataset of official international lending, covering 230,000 loans, grants and guarantees extended by governments, central banks, and multilateral institutions in the period 1790-2015. Historically, wars have been the main catalyst of government-to-government transfers. The scale of official credits granted in and around WW1 and WW2 was particularly large, easily surpassing the scale of total international bailout lending after the 2008 crash. During peacetime, development finance and financial crises are the main drivers of official cross-border finance, with official flows often stepping in when private flows retrench. In line with the predictions of recent theoretical contributions, we find that official lending increases with the degree of economic integration. In crises and disasters, governments help those countries to which they have greater trade and banking exposure, hoping to reduce the collateral damage to their own economies. Since the 2000s, official finance has made a sharp comeback, largely due to the rise of China as an international creditor and the return of central bank cross-border lending in times of stress, this time in the form of swap lines.

International Migration in Asia and the Pacific - Determinants and Role of Economic Integration

International migration is an essential element of economic integration. Yet, the intraregional movement of people and labor in Asia and the Pacific has stagnated in recent years even as the flow of goods, services, and investment have steadily risen. This paper examines key factors driving the movement of people from and within the region using bilateral international migrant stock data. Our analysis shows that commonly known determinants such as income differences; population size; and political, geographical, and cultural proximities between the migrant source and destination countries are associated with greater movement, along with the growing share of older population in destination economies and the similarities in the level of educational attainment. The paper also finds that cross-border migration is affected, in varied directions, by the degree of economic integration between the source and destination economies, especially through bilateral trade and value chain links. The offshoring of production—and hence jobs and other economic opportunities—to migrant source countries suppresses outmigration, but the expected rise in the source country income will eventually promote migration by relaxing financial constraints.

CURRENCY SUBSTITUTION AND THE DEMAND FOR MONEY IN FIVE EUROPEAN UNION COUNTRIES

The high degree of economic integration has led to an increased degree of currency substitution in the EU countries, which could bring instability in national money demand functions while an EU-wide money demand function could be more stable. Currency substitution usually takes the form of cross border deposits (CBD), which are not included in the traditional monetary aggregates. Thus, extended monetary aggregates that include the relevant CBDs are defined in this study. In order to investigate the implications of currency substitution for the stability of the demand functions, the traditional and extended monetary aggregates for five EU countries are defined in addition to EU-wide monetary aggregates. The estimated EU-wide demand for extended money appears to be stable suggesting that there is scope for monetary policy at the European level. However, the stability of the area-wide aggregate has been impaired when the relevant CBDs are not included.

Trade networks and colonial trade spillovers

AbstractThis paper provides new empirical evidence regarding the formation of international trade networks. Established trade relations may open the gate to new trade opportunities, as they allow meeting new trade partners over time. We test this prediction and its implications for aggregate trade patterns by using the experience of ancient trade linkages between former colonies and their former colonizers (colonial trade linkages). We first show, using aggregate trade data, that former colonies have more trade with former colonizer's neighbors (colonial trade spillovers). We then show that the past export and import experience of former colonies with the colonizer have an impact on the propensity to trade similar products with third countries. In particular, the trade spillover effect is negatively related to geographical distance between third countries and the colonizer, and positively affected by their degree of economic integration.

Globalization: evolution of capitalist market economy through “Internalization of the Market”

The purpose of this article is to theoretically explain and understand globalization in the course of evolution of capitalist market economy through “internalization of the market.” Globalization can be visually depicted as a simultaneous process of expansion of Market and reduction of State and Community. The ultimate destination of globalization is free investment capitalism with ubiquitousness of Marx’s fictitious capital and Becker’s human capital. Differentiating two tendencies in globalization, “extensive expansion of market” and “intensive deepening of market”, we elaborate how the latter tendency proceeds. Based on the view of exogenous market of Marx and Hicks, three modes of commodification—external (E mode), internal (I Mode) and general (G mode)—are identified with different degree of economic integration by the market. They take place successively in internalization of the market. Using the concepts, capitalist economy is defined as the combination of G mode commodification of general goods and E mode commodification of labour-power. We analyze the transition of three modes of capitalist economy using the simple models of corn and labour-power and have found out that the real wage w tend to increase and the uniform rate of profit r tend to decrease as the capitalist economy advances its degree of commodification of labour-power from E Mode to I Mode and to G Mode. Most advanced G Mode capitalist economy can self-activate by countering the falling rate of profit by introducing process innovation either in corn or labour-power sector.

LINGUAL GENERALITY AS AN INSTRUMENT OF THE CIVILIZATION FORMATION (ON THE EXAMPLE OF TURKIC CIVILIZATION)

The role of Turkic language is examined in the process and development of the Turkic civilization in this report. For the first time the Turkic language is analyzed as the consolidating tool of the civilization formation. An assumption about interdependence of the Turkic language with the synthetic type of agglutinative class and properties of language openness is presented here. Belonging of the Turkic language to this language class could be explained by the nomad lifestyle, policy of conquering, high degree of economic integration, interaction of languages and cultures as well as expansion of territorial space. The use of historical and civilization approaches to the study of language origin have allowed us make the conclusion about the sufficiently independent consolidating method of the Turkic lingual generality development.

Economic Prospects in the Context of Growing Regional Interdependencies: the European Union and the Eastern Partnership

The paper deals with the European Union programme devoted to the eastern neighboring states. Through its European Neighbourhood Policy (ENP), the EU works with its southern and eastern neighbours to achieve the closest possible political association and the greatest possible degree of economic integration. This goal builds on common interests and values — democracy, the rule of law, respect for human rights, and social cohesion. The EU is concerned that, despite sufficient funding and support from the EU, the targeted states did not raise to the EU targets for the programme or at least to a relevant one. We assume that such fact happened mostly because, although having very diverse economic and reform pasts emerged from the post-soviet period, they were considered and approached as a single group. The main hypothesis: has the umbrella of the EU funds in terms of the EaP provided for the six targeted states to intensify the growth of regional interdependencies as well as political cooperation and progressive economic integration? The main goal of the paper is to assess, by means of the statistical and comparison approach, the development and the economic sustainability of six targeted states (Belarus, Moldova, Ukraine, Armenia, Azerbaijan, and Georgia) in the period before and after the programme launching – the degree of regional interdependence and economic integration. The research was conducted using the methods of empirical (regression) analysis, theoretical explanations, descriptive analysis, and the Granger causality test.

Trade Networks and Colonial Trade Spillovers

This paper provides new empirical evidence regarding the formation of international trade networks. We test whether trade experience in a given country can generate new trade opportunities with other countries, and investigate the role played by geographical and political factors. We address the issue of the endogeneity in the formation of trade networks by using the experience of ancient trade linkages between former colonies and their former colonizers (colonial trade linkages). We firstly show, using aggregate trade data, that former colonies have more trade with countries being geographically more proximate or having more trade with the former colonizer (colonial trade spillovers). We then show that the microeconomic dynamics of former colonies’ exports and imports at the product level is significantly influenced by the geographical proximity between trade partners and the former colonizer, or their degree of economic integration. These results are consistent with the predictions from models of trade networks (Chaney, 2014). Overall, they confirm that the microeconomic dynamics of trade contribute to shape the cross-sectional distribution of aggregate trade flows across countries.

Foreign Direct Investment and Growth : EU, EMU and Transition Economies

This paper empirically examines the relationship between Foreign Direct Investment (FDI) and economic growth conducting a panel data analysis for a period of 20 years (1989~2008) in three different country groups: European Union member-countries, European Monetary Union member-countries, and countries in transition. These three country groups differ in many dimensions, one of which is their degree of economic integration. In contrast to the theoretical work that tends to suggest that FDI inflows have a positive effect on economic growth, we do not find a robust causality relationship between FDI and economic growth.

Harnessing Natural Resources for Diversification

This article outlines a vision for Africa in 2050 in which the continent narrows the gap in per capita income and development outcomes that it has with middle- and high-income countries. Specifically, this article describes the challenges of building on Africa’s endowment of natural resources to become a supplier of intermediate and finished goods and agricultural products, with a diversified private sector, a growing service sector, and a high degree of economic integration on the continent and in the world. First, the article outlines Africa’s resource endowment. Africa has a fairly modest global reserve position, with the exception of gemstones, titanium, and bauxite. Second, the article evaluates African countries’ track record in terms of extraction and processing, including a classification of countries according to their reliance on resource rents. Next, the authors present a vision for Africa’s extractive industries that has the ultimate goal of macroeconomic stability. The article suggests that stabilization/liquidity funds and wealth funds contribute to an increase in the quality of public investment and monetary policy. Finally, the authors suggest that African governments should encourage the growth of an ecosystem of supportive industries around the natural resource sector to increase the number of positive spinoffs from the extractive industries.

Foreign versus Domestic Survival in a Changing Environment

This paper explores whether and how environmental dynamics can affect foreign and domestic survival. Utilizing a unique longitudinal data set with 420 manufacturing plants created in the protected developing Greek economy (1960–1980), we test these plants’ ability to survive in the new, integrated environment (1981–2001), when Greece became a member of the European Union (EU). After controlling for time and age effects, we find that environmental dynamics in terms of integration and economic development negatively influence the survival of all tariff-jumping and unskilled labor-intensive plants, regardless of their ownership. However, survival evolution of foreign-owned and domestic plants differs over time depending on the country’s degree of economic integration. Specifically, during the shallow integration period (1981–1990), foreign-controlled plants tend to retain a survival premium, which they appear to have acquired in the protectionism era. This means that foreign-owned plants benefited more from external environmental dynamics in terms of tariff protection compared to domestic ones. Nevertheless, in the deep integration period (1991–2001), the declining survival rates tend to converge, and the foreign survival premium completely disappears. Consequently, in the long run, environmental change similarly affects foreign and domestic survival.

Emerging of New Poles of Economic Power in the World

In a globalized and multipolar world, the concept of “regional leader” represents a core element. Gradually, besides the USA as “a universe unto itself” for more than five decades, there emerged other poles of power, initially under the form of regional leaders. Among the main regional leaders, we can mention: Germany, France and United Kingdom in Europe, Japan, China and India in Asia, Russia at the confluence between Europe and Asia, Brazil in Latin America. Simultaneously, it appeared and deepened different forms of alliances, associations and unions characterized by different degrees of economic integration. Taking into consideration its ascension during the last decades, we can assert that China has the vocation of a global leader.Resorting to a set of indicators and indexes and shares in the world GDP, trade and investment flows, we demonstrate that the EU, USA and China are at present the three major poles of economic power in the world. While the first two are recording a decline in terms of their shares in the global GDP, trade and investment flows, by contrast, China is marking an accelerate rise in the field of trade in goods but a moderate one at the level of trade in services and FDI. The financial and economic crisis emphasized furthermore some trends, pointing out the major challenges induced by the relocation of the poles of economic power in the world.

The relationship between exchange rates and international trade: a literature review

AbstractThis paper surveys a wide body of economic literature on the relationship between exchange rates and trade. Specifically, two main issues are investigated: the impact of exchange rate volatility and of currency misalignments on international trade flows. On average, exchange rate volatility has a negative (even if not large) impact on trade. The extent of this effect depends on a number of factors, including the existence of hedging instruments, the structure of production (e.g. the prevalence of small firms), and the degree of economic integration across countries. The second issue involves exchange rate misalignments, which are predicted to have short-run effects in models with price rigidities. However, the exact impact depends on a number of features, such as the pricing strategy of firms engaging in international trade and the importance of global production networks. Trade effects of currency misalignments are predicted to disappear in the long-run, unless an economy is characterized by other relevant distortions. Empirical results broadly confirm these theoretical predictions.

The Relationship between Exchange Rates and International Trade: A Literature Review

This paper surveys a wide body of economic literature on the relationship between currencies and trade. Specifically, two main issues are investigated: the impact on international trade of exchange rate volatility and of currency misalignments. On average, exchange rate volatility has a negative (even if not large) impact on trade flows. The extent of this effect depends on a number of factors, including the existence of hedging instruments, the structure of production (e.g. the prevalence of small firms), and the degree of economic integration across countries. The second issue involves exchange rate misalignments, which are predicted to have short-run effects in models with price rigidities. However, the exact impact depends on a number of features, such as the pricing strategy of firms engaging in international trade and the importance of global production networks. This effect is predicted to disappear in the long-run, unless some other distortion characterizes the economy. Empirical results confirm that short-run effects can exist, but their size and persistence over time are not consistent across different studies.

The Relationship between Exchange Rates and International Trade: A Review of Economic Literature

This paper surveys a wide body of economic literature on the relationship between currencies and trade. Specifically, two main issues are investigated: the impact on international trade of exchange rate volatility and of currency misalignments. On average, exchange rate volatility has a negative (even if not large) impact on trade flows. The extent of this effect depends on a number of factors, including the existence of hedging instruments, the structure of production (e.g. the prevalence of small firms), and the degree of economic integration across countries. Exchange rate misalignments are predicted to have short-run effects in models with price rigidities, but the exact impact depends on a number of features, such as the pricing strategy of firms engaging in international trade and the importance of global production networks. This effect is predicted to disappear in the long-run, unless some other distortion characterizes the economy. Empirical results confirm that short-run effects can exist, but their size and persistence over time are not consistent across different studies.

The impact of third-country effects and economic integration on China's outward FDI

The study employs a spatial econometric model to explore the impact of third-country effects and economic integration on China's outward FDI (OFDI). The results show that the pattern of China's OFDI tends toward a complex FDI without third-country effects. The degree of economic integration and host country's political risk both have a negative influence on China's OFDI. Furthermore, greater cultural proximity between China and the host country, as well as greater per capita income (market size), both have significant benefits to China's OFDI. The host country's market opportunity has a significant negative effect on China's OFDI.

Economic Integration, Tax Erosion, and Decentralisation: An Empirical Analysis

This paper addresses the issues of whether and how the degree of economic integration may affect central government tax revenues and the intensity of decentralisation. To this purpose, we empirically test the direct impact of economic integration on central tax revenues using the concept of implicit tax rates (ITRs) updated to take into account mobile and immobile capital taxation. On this basis we derive a country-specific measure of tax erosion that is used as a determinant of the decentralisation of the public sector in an Arellano-Bond environment. We find that: i) an increase of economic integration generates a downward pressure on ITRs on mobile capital, and growing at increasing rates as far as economic integration increases; ii) the process of tax erosion gives rise to a corresponding process of increasing public sector decentralisation.