Effects Of Trade Liberalization Research Articles

Long-term effect of trade liberalization on human capital: evidence from Chinese students

ABSTRACT This study examines the long-term effects of trade liberalization on human capital accumulation for students, specifically through schooling decisions. To establish this linkage, I leverage the significant reduction in trade tariffs following China’s WTO accession in 2001 as an identification strategy and construct the shift-share instrument variable for each Chinese prefecture’s exposure to trade shock. Utilizing cognitive test scores from the China Family Panel Studies (CFPS) dataset for cohorts aged between 13 to 20 at the time of trade liberalization, I find that the trade shock leads to a decline in cognitive test scores approximately 15 years later. Furthermore, combining CFPS data with the China Population Census, I demonstrate that export expansion has resulted in a reduction in university enrollment and less education years among youth.

The Effect of Trade Liberalization on Economic Growth in Kenya

Trade liberalization and its impact on economic growth has been a subject of debate for many years both at international and local level. The debate has been lengthened by the fact that there are no theoretical underpinnings that directly link trade liberalization to economic growth or are there any absolute terms and conditions by which trade liberalization leads to economic growth. Trade liberalization is the removal or reduction of barriers to trade that ensures free movement of goods and services from one nation to another. Kenya liberalized their trade with the hope of having dynamic gains from trade, and that the liberalization will lead to economic growth and, consequently, improve welfare. However, its key development challenges still include poverty, inequality, youth unemployment, continued weak private sector investment, and the vulnerability of the economy to internal and external shocks. This study aimed to examine the effect of trade liberalization on economic growth in Kenya and finding empirical answers to this phenomenon is what motivated this study. The objective of the study was to examine the effect of manufacturing output and foreign direct investment on Kenya’s GDP. Foreign direct investment and manufacturing output were tested to determine their effect on the Kenyan economic growth. This study adopted descriptive research design. Time series data spanning 1990 to 2022 was used for the study. The data was meticulously sourced from the World Bank. A time series diagnostic test was carried out on the data. This study adopted descriptive designs. Vector Autoregressive (VAR) model was applied. Results showed that foreign direct investment inflows and manufacturing output had a significant effect on economic growth in Kenya. In conclusion, these findings imply that although foreign direct investment (FDI) may have negative effect on Kenya's economic growth while manufacturing output support economic growth. In order to sustain long-term economic growth, Kenyan policymakers may want to consider ways to draw in beneficial FDI while simultaneously emphasizing the manufacturing sector which will be beneficial for the economy.

The effects of trade liberalization on inequality in nutrition intake: empirical evidence from Indian districts

BackgroundDespite the positive impact of trade liberalization on food availability in India, severe inequality in nutrition consumption at the district level persists. Empirical evidence on the relationship between trade liberalization and nutrition consumption inequality often offers a country-level perspective and generates disputed outcomes. The study aimed to explore the effects of trade liberalization on inequality in nutrition consumption at the district level in India and to examine the heterogeneity of the impact on different nutrition consumption.MethodsOur study employed the Gini Index to measure nutrition consumption inequality of 2 macronutrients and 5 micronutrients at the district level in India during 2009–2011, utilizing the comprehensive FAO/WHO individual food consumption data. The import tariff was adopted as a proxy for trade liberalization, as its externally imposed nature facilitates a causal interpretation. We further identified the direct causal relationship between food trade liberalization and inequality in nutrition consumption using a fixed effects model.ResultsThe results show that more than 50% of the individuals in the survey districts did not meet the dietary standards for both macronutrients and micronutrients. Food trade liberalization hindered the improvement of inequality in nutrition consumption. As import tariffs were reduced by 1%, the inequality in intake of calories, zinc, vitamin B1, and vitamin B2 increased significantly by 0.45, 0.56, 0.48, and 0.66, respectively, which might be related to food market performance. The results also highlight the positive role of the gender gap, female-headed households, and caste culture on inequality in nutrition consumption in India.ConclusionsTo ease the shock of liberalization and minimize its inequality effects, complementary measures should be adopted, such as improving food logistic conditions in poor areas, and nutrition relief schemes.

Pro-poor consumption effects of trade liberalization: Evidence from China

This study examines the impact of trade liberalization on the consumption welfare of urban households in China. The results indicate that trade liberalization in consumer goods has improved the consumption welfare of Chinese urban households with a “pro-poor” distribution across regions and households in a region, suggesting that the consumption effects are more pronounced for less developed regions and low-income households in a region. Within a city, differences in the consumption effects arise from variations in household consumption structures and the tariff-price pass-through among different types of products. Across cities, differences in the consumption effects stem from the dual heterogeneity in industrial structure and consumer demand. The variety effect resulting from changes in the types of imported consumer goods also enhances the consumption effects of trade liberalization.

Import tariffs and transport prices

AbstractThis paper discusses how import tariffs interact with transport prices in episodes of trade liberalization. We develop a model of a transport industry that operates under imperfect competition and economies of scale. Double marginalization due to market power reduces the effects of trade liberalization, while a larger trade volume may support them due to economies of scale. We use a large data set of maritime transport data and combine them with tariff data to find that economies of scale beat market power: a decline in the tariff implies a decline in freight rates.

Effects of trade liberalization on the Indian dairy sector’s trade performance

Effects of trade liberalization on the Indian dairy sector’s trade performance

Effect of trade liberalization on ASEAN-China exports: A gravity model approach

Effect of trade liberalization on ASEAN-China exports: A gravity model approach

THE IMPACT OF TRADE LIBERALIZATION ON THE PERFORMANCE OF TANZANIA’S EXPORT SECTOR – A TIME SERIES ANALYSIS FROM 1980 TO 2019

Aim: This article aims to enhance understanding of the impact of trade liberalization on Tanzania’s export performance. As many studies conducted, both in developing and developed countries, have yielded mixed results and the relationship varies across different nations, it is difficult to provide a definitive answer to the question of whether trade liberalization affects Tanzania’s export sector without first conducting an empirical analysis. Methods: This study employs a quantitative research methodology because it allows for a larger sample size, greater objectivity, and accuracy. Due to the nature of the study and the data used, a statistical study design was chosen. Macroeconomic data spanning 1980 to 2019 was obtained from the World Bank and the Tanzania Bureau of Statistics to analyze the effects of trade liberalization on export performance using vector error correction and autoregressive distributed lag models. Results: The results reveal a sig­nificant positive correlation between trade liberalization and subsequent export performance, as well as the interdependencies between trade liberalization and foreign direct investment (FDI) strategies. There is a re­ciprocal relationship between trade liberalization and exchange rates, implying the significance of competent exchange rate management in enhancing export competitiveness. Conclusions: The study concludes that trade liberalization, FDI, and export performance have a long-term positive correlation. This implies that a carefully executed trade liberalization policy is crucial not only for the expansion of the export industry sector and the influx of capital, but also for the transformation and development of the nation.growth.

The Growth Prospects for Nigeria in Joining the African Continental Free Trade Area

This paper examines the potential benefits and challenges of Nigeria joining the African Continental Free Trade Area (AfCFTA) agreement, which aims to create a single market for goods and services across Africa. Using a computable general equilibrium model, we simulate the effects of trade liberalization under different scenarios of tariff reduction, trade facilitation, and regional integration. We find that Nigeria stands to gain from participating in the AfCFTA, especially if it is accompanied by improvements in infrastructure, customs procedures, and regulatory harmonization. However, we also identify some potential costs and risks, such as trade diversion, revenue loss, and adjustment costs for some sectors and regions. We recommend that Nigeria adopts a proactive and strategic approach to maximize the opportunities and mitigate the challenges of the AfCFTA, such as diversifying its export basket, enhancing its competitiveness, strengthening its domestic policies, and engaging in regional cooperation. Keywords: AfCFTA, Nigeria, trade liberalization, regional integration, computable general equilibrium model

Effects of Government Price Policies on Major Agricultural Commodities in Andhra Pradesh, India

This study was concerned with analysis of export competitiveness and quantification of impact of price policies in Andhra Pradesh on net social loss in production and consumption, and welfare gain of farmers and consumers and change in Government revenue with respect to major food grains and commercial crops. Policy Analysis Matrix and Partial Equilibrium Model in the Marshallian economic surplus framework are employed in this study. The findings from Policy Analysis Matrix revealed that, on the input side, the farmers are more subsidized for rice and maize, as Nominal Protection coefficient on Tradable Inputs are less than one across all the major importing countries (unlike for chickpea, cotton lint and chilies (dry)). However, from the output side (Nominal Protection coefficient on Tradable output), the farmers producing rice, maize and chilies (dry) are more protective compared to social prices. Considering both input and output policies together, the farmers are simultaneously protective (Effective Protection Coefficient) for rice and maize and hence, the overall transfer from society to farmers is positive (Subsidy Ratio to Producers). The findings from Partial Equilibrium Model showed that total net social loss was found to be positive implying protectionism favoured the farmers across all the selected commodities. Further, the net social loss in production turned out to be positive confirming the main postulate of this study—a price greater than the equilibrium price will reduce the quantity demanded. The protectionist policies further led to a positive effect of trade liberalization on the welfare in the State and an increase in foreign exchange earnings, except for chickpea (in view of its net-importer status). Unlike farmers, consumers in Andhra Pradesh suffered welfare loss due to higher domestic prices over border prices for rice, maize and chilies (dry), However, there is a considerable increase in Government revenue due to pricing policies formulated by the Government of Andhra Pradesh. The welfare gains to farmers are negative for chickpeas and cotton in view of higher domestic prices compared to border prices. So, the key point evident is that due to protectionism, the magnitude of net loss to consumers’ welfare compared to welfare gain of farmers is higher between Rs. 21916 lakh to Rs. 23768 during TE 2020-21 implying welfare transfers from consumers to farmers. Thus, the Government of Andhra Pradesh is spending an enormous amount of money to keep the protection policies going for the benefit of farmers. However, considering the net importer status of chickpeas, the Government should further escalate the subsidy both in production and marketing programs.

Trade liberalization, city size, and urban wage premium: evidence from China’s city and individual micro-data

In the context of trade liberalization and new urbanization, it is important to study how urban openness leads to wage premiums and improvements in income distribution. This paper utilizes micro-data from the Chinese Household Income Project and matching data from 144 cities to investigate the relationship between trade liberalization, urban scale, and urban wage premiums. The results indicate that trade liberalization significantly increases urban wage premiums, which is particularly evident during the early stages of China’s accession to the WTO. However, this effect may fluctuate over time. Surprisingly, in China, the urban scale can increase labor wage income, but it does not magnify the wage premium effect of trade liberalization. Heterogeneity tests based on regions, firms, and income groups suggest that the wage premium effect of trade liberalization is higher in eastern and central region cities than in western region cities, labor wage growth in the service sector is more pronounced than in the industrial sector, and the impact of trade liberalization on wage growth for the middle and lower-income groups is greater than for the high-income group, which helps to narrow income disparities among different groups. These findings are of great policy significance for improving income distribution through labor market liberalization. In this context, they highlight the importance of comprehensive openness and new urbanization in China.

Examining the Effects of Trade Liberalisation Using a Gravity Model Approach

Abstract The main objective of this article is to study the impact of trade liberalisation in Croatia as one of the first structural reforms being implemented, covering the period from 2000 to 2021. The panel data model was specified using a two-step system generalised method of moment estimator. The obtained results show that trade liberalisation measured through the specific indices encompassing a broader set of both tariff and non-tariff barriers, size of the trade sector, freedom of foreign exchange market, and capital controls positively impacted export performance. The results also showed a negative and statistically significant effect of remoteness on trade, confirming that geographical distance is an essential indicator of transportation costs. The coefficient for Schengen accession was positive and statistically significant, indicating that the Schengen agreement has boosted exports and that we can expect the same for Croatia, especially in the context of simultaneous accession to the Eurozone and the Schengen area on 1 January 2023.

Firm Heterogeneity and International Trade Liberalisation: A Generalized Cournot Oligopoly Approach

Abstract The main goal of this article is to contribute to the theoretical analysis of international trade under imperfect competition using the Cournot oligopoly model with heterogeneous firms. In particular, our objective is to provide some insights into the role of cost asymmetry in studying the effects of trade liberalisation in the Cournot oligopoly framework. In order to introduce firm heterogeneity into the oligopoly model we use the generalised Cournot framework with asymmetric firms that differ in terms of their productivity, levels of output and market shares. We show that trade liberalisation leads to the elimination of less productive firms and results in lower equilibrium prices, higher sales per firm and lower markups in the industry.

Trade liberalization, regional trade openness degree, and foreign direct investment:Evidence from China

This paper investigates the relationship among trade liberalization, the degree of trade openness (DTO) and regional foreign direct investment (FDI) using Chinese data for 2001–2018 by hand collection. We apply the fixed effect model and find that both trade liberalization and regional DTO have a significantly positive relationship with regional FDI. Furthermore, a variable coefficient model is used to prove that the effects of trade liberalization on regional FDI are heterogeneous across regions. Finally, we use the threshold model to prove the significant threshold effects of DTO on the relationship of trade liberalization and FDI. This paper provides theoretical and policy support for countries with obvious regional differences to attract FDI.

The dark side of the boom: Dutch disease, competition with China, and technological upgrading in Colombian manufacturing

The natural resource boom of the 2000s spurred growth in income and consumption in many commodity-exporting nations. However, this paper brings together a previously unused combination of data sets from Colombia to document evidence of a downside – the currency appreciation associated with this boom led to a significant and persistent decline in R&D spending and in investment in technological upgrading by Colombian manufacturing firms. Our empirical strategy exploits differences in firms' sales across products and export destinations to create firm-specific measures of exposure to exchange rate shocks both abroad and at home. We link these new measurements of exchange rate exposure with Colombian micro data on R&D investment and technology upgrading. The key finding is that real exchange rate appreciation drives significant reductions in both firm-level R&D investment and a measure of technology upgrading that includes expenditure on capital goods, technology licensing, worker training, and other expenditures related to the adoption of new technology. Even after key commodity prices dropped significantly in the mid-2010s, inducing a substantial and long-lasting Colombian currency depreciation, investments in R&D and technology upgrading remained at subdued levels. Our estimated effects suggest that the resource boom and associated appreciation had a significant and persistent negative effect on technological development of Colombian manufacturing firm, and these conclusions remain even after careful attempts to simultaneously control for rising competition with Chinese manufacturers, which also had a negative effect on Colombian firms' technology investments, and the effects of trade liberalization at home and abroad. Similarities between Colombia and other commodity-exporters suggest that the effects documented in this paper may be widespread.

Effects of trade liberalization on the global decoupling and decomposition of CO2 emissions from economic growth

Evidence of climate change is widespread and severe across all parts of the world. This poses a threat to humanity, and the entire environment. Appropriate policies are therefore required to help reduce greenhouse gas emission levels, limit the rate of global warming and its impact on climate change while pursuing national growth targets. This study employs the Tapio decoupling method to analyse the decoupling relationship (DR) between economic growth and carbon dioxide (CO2) emissions from 1998 to 2018. We also apply the Logarithmic Mean Divisia Index (LMDI) decomposition method on an extended Kaya identity to analyse CO2 emissions drivers in 145 countries. Last, the study examined the relative impacts of trade intensity and trade efficiency on the DR between economic growth and CO2 emissions. The results revealed that regions with relatively many developing and emerging countries (i.e., SSA, EAP, LAC, MENA, and SA) generally performed Weak Decoupling (WD), Expansive Negative Decoupling (END) and Expansive Coupling (EC), and the decoupling process was largely unstable. The ECA and NA regions on the other hand, which are typically composed of developed economies performed stable WD and Strong Decoupling (SD) statuses throughout the study period. The evidence further revealed that while trade intensity, activity, population, output per carbon emission and Carbon Intensity (CI) effects promote CO2 emissions, trade efficiency and energy intensity (EI) hinder emissions. We recommend that developing countries should enforce laws and cooperate with the developed economies to gain access to green technology to promote environmental sustainability.

Public Policies Shaping Mexican Small Farmer Practices and Environmental Conservation: The Impacts of 28 Years of PROCAMPO (1994–2022) in the Yucatán Peninsula

Conditional cash transfer (CCT) programs, generally viewed as policies to modernize and increase agricultural production and commercialization, also have social and environmental impacts. Among the first Mexican CCT programs, PROCAMPO is directed toward traditional agriculture and pays farmers for permanent cultivation, ignoring traditional fallow systems. It was implemented nationally in 1994 to counteract the effects of trade liberalization. Its objectives encompassed modernizing and improving agricultural competitiveness and environmental conservation. Here, we analyze PROCAMPO from the perspective of environmental conservation to understand its effects on agricultural practices and forest cover, specifically in the Yucatán Peninsula, where agriculture sustainability was previously achieved via an alternating cycle of multi-crop system (milpa) and forest. We performed an in-depth program analysis, reviewing 51 documents, including scientific literature, technical evaluations, and official records. Research consistently showed direct effects of PROCAMPO on agricultural practices resulting in extensive land use change, including a reduction in crop diversity and the elimination of traditional milpas and fallow. PROCAMPO has impacted conservation by causing high rates of deforestation. Our findings show the need to reorient the design and implementation of agricultural policy to increase agroecosystem resilience and ecological service provision to face climate change.

Structural gravity and the gains from trade under imperfect competition: Quantifying the effects of the European Single Market

The structural gravity model is the workhorse model in international trade to estimate the drivers of trade costs. We propose a new gravity estimation procedure that allows us to disentangle exogenous trade costs and endogenous aggregate markups under oligopoly. Our method can be easily implemented in standard gravity data sets, and we illustrate it by analyzing the competition and welfare effects of the European Single Market. We find that abolishing the European Single Market would increase domestic aggregate markups in EU member countries by 2 to 6 percent. Welfare effects of trade liberalization are larger due to changes in competition among domestic and foreign firms. Our findings highlight that evaluations of trade policy changes and trade cost reductions should also consider their effects on competition.

Trade Liberalization and Gender Inequality in India: A Task Content of Occupations Approach

Abstract This paper considers the differential impact of input and output tariff liberalization on gender outcomes in India’s labour markets. It is the first to distinguish between occupational categories based on their task content to analyse these effects. Recent evidence suggests that trade induced competition and technological upgradation can reduce gender-employment and gender-wage gaps in labour markets. This paper identifies the occupational categories most affected by these competition and technology adoption effects of trade liberalization. It finds that competition effects of output tariff liberalization increases employment of female workers in routine occupations – both manual and cognitive – and reduces gender-employment gaps in routine manual occupations. On the other hand, input tariff liberalization worsens gender-employment gaps in routine manual occupations. The effect of input tariff liberalization on female workers in routine cognitive occupations, however, is to increase cohort-level employment, and there is some evidence that it increases cohort-level average wages for female workers and reduces the gender-wage gap in non-routine cognitive occupations.

A STUDY ON THE IMPACT OF TRADE LIBERALISATION IN INDIA

The impact of trade liberalization in India has been a subject of significant academic and policy interest, particularly since the early 1990s when the country embarked on a path of economic reforms. This research paper explores the multifaceted consequences of trade liberalization on India's economy. Through a comprehensive analysis of empirical data, economic indicators, and scholarly literature, the paper examines both the positive and negative impacts of trade liberalization. The positive effects of trade liberalization are evident in India's impressive economic growth, driven by increased exports, foreign direct investment, and enhanced efficiency and competitiveness of industries. The opening of international markets has expanded consumer choices and improved product quality. Export growth has bolstered foreign exchange reserves and positively influenced the balance of payments. However, this paper also delves into the challenges posed by trade liberalization. It highlights the vulnerability of the Indian economy to external shocks due to increased global integration. Income inequality has widened as the benefits of liberalization have not uniformly reached all segments of society. Job displacement, particularly in industries facing stiff competition from imports, and agricultural challenges arising from competition with cheaper imported agricultural products, are significant concerns. The paper emphasizes the need for policymakers to address the negative consequences of trade liberalization by implementing measures to mitigate income inequality, support displaced workers, and strengthen the agricultural sector. The method used here was the empirical method. The sampling method taken here was the convenient sampling method and the sample size was 200. The sampling frame was established within the city of Chennai, located in the state of Tamil Nadu. The dependent variables are level of awareness regarding the impacts of trade liberalization in India, positive impact of trade liberalization on India's GDP, negative implications of trade liberalization on the Indian economy, main objectives of economic liberalization are the effective distribution of resources and competitive advantages and the independent variables are age, gender, educational qualification, salary and occupation. The research tools used here are simple bar charts, independent sample T test, univariate analysis of variance and correlation . It also underscores the importance of strategic economic planning to manage potential trade imbalances and prevent undue concentration of economic power. In conclusion, this research paper provides a comprehensive analysis of the impact of trade liberalization in India, highlighting its dual nature bringing both opportunities and challenges. By examining empirical evidence and drawing insights from scholarly sources, the paper contributes to a nuanced understanding of the complex relationship between trade liberalization and economic outcomes in India. KEY WORDS: Trade liberalisation, Global market, Trade barriers, Domestic sectors, Gross Domestic Product (GDP).