Encouraging Exports Research Articles

Changing the Trade and Development Consensus: Evidence Building from Little, Bhagwati, Krueger, and Balassa in the 1960s

Economists became skeptical about the benefits of free trade for developing countries during the Great Depression, but in the 1960s some had come to recognize the problems with import substitution policies and the benefits of encouraging exports. This article examines how four economists who led this transition—Ian Little, Jagdish Bhagwati, Anne Krueger, and Bela Balassa—came to their views and helped build a new professional consensus on trade policy and economic development. In each case, practical experience, and empirical observation, particularly from India, helped shape their opinions, persuading two of the four to revise their previous beliefs.

Market Structure, Profitability and Regulation of Telecommunication Industry in India

The telecom industry in India has witnessed exponential growth in the past decade; however, its profitability has been on the decline post 2008. This study analyzes the determinants of profitability of the industry during 2010–2022 using the conventional structure-conduct-performance paradigm. We estimate a dynamic panel data model to understand the role of endogeneity and profit persistence in the industry. Our findings are contrary to what the theory predicts and highlight the importance of the regulatory and institutional framework of the industry. Results suggest that there is profit persistence in the industry. The study finds that among conduct variables, export intensity has a positive impact while selling intensity has a negative impact on profitability. While size is not significant, concentration has a negative impact on profitability. Import has a negative impact on profitability. These results suggest that as the telecom industry transitioned from a monopoly to an oligopolistic market with players competing in different domains and services, selling and advertisement intensity has diminishing returns to profitability while export intensity emerges as an important driver of profitability. Results also suggest the importance of the production-linked incentive scheme encouraging exports and the need for regulating concentration and encouraging import substitution.

What Determines Egypt’s Demand for Foreign Reserves?

Objective: The main objective of this paper is to identify the determinants of the demand for foreign reserves in Egypt. Methods: The buffer stock model, quarter-century data spanning over the past 20 years, and Auto-Regressive Distributed Lag (ARDL) regression are all employed to estimate Egypt's demand function for foreign reserves, assess its stability, and predict how swiftly it may change if the underlying Cointegrated connection is disturbed. Results: The results reveal that exports and imports have elasticities of demand for foreign reserves of 1.16 and -3.69, respectively. Moreover, Egypt's foreign reserve assets have notably increased due to foreign direct investment and foreign portfolio investment growth. Lastly, the demand function for foreign reserves is steady, and in the event of a shock, it returns to its steady state in less than two years. Conclusion: To improve Egypt's foreign reserve holdings, policymakers should concentrate on measures encouraging exports and attracting foreign investment.

Does bilateral trade in cereals within SADC reflect virtual trade in water between countries with different water endowments?

ABSTRACT This paper examines intraregional bilateral trade in virtual water embedded in cereal flows between the Southern Africa Development Community (SADC) states. A gravity model is employed to examine whether annual bilateral trade depends on differences in water endowments, but also includes socio-economic and political determinants that affect trade. There is evidence that the abundance of water resources in a country influences trade for a product that is water dependent. Thus, the adverse effect of water scarcity in a country may be ameliorated by encouraging exports of water-intensive cereal crops where water is in abundance and imported where water is scarce.

Pengaruh Jumlah Produksi, Nilai Tukar dan Inflasi terhadap Komoditi Ekspor di Indonesia Tahun 2015-2020

Exports are the biggest contributor to each country's foreign exchange earnings. The role of Indonesia in taking part in international trade transaction players cannot be separated from the success factors in it. This quantitative study has the aim of knowing the success of exports from the impact of the independent variables on the amount of production, exchange rates and inflation for the 2015-2020 period. Footwear is the main center of the commodity under study. This research is located in Indonesia which uses a secondary data library review technique in the form of a monthly time series. The quantitative study method used as a reference for analytical calculations is the regression model. With the intention of knowing the impact of more than one independent variable. The final finding of this study explains that overall footwear exports have the influence of the independent variables on the amount of production, exchange rate and inflation. Total Production partially has a positive role in encouraging export success. On the other hand, the exchange rate and inflation in the short term show an insignificant impact in encouraging the success of footwear exports. Referring to the findings of this quantitative study, it is hoped that the government will pay more attention to the determinants of export success, especially footwear so that policies and innovations continue to be considered.

Impact of International Trade on Economic Growth in Nigeria

Using data from the World Development Indicator (WDI) and the Central Bank of Nigeria (CBN) Statistical Bulletin, this article analyzed the impact of exports, imports, the currency rate, and inflation on Nigeria’s economic development between 1981 and 2020. The research employed Autoregressive Distributed Lag (ARDL) bound testing methodology. The variables utilized in the study were evaluated for stationarity using the Augmented Dickey-Fuller and Philip Perron test, and the bound testing process was applied to the equations. The lag of variables test can be performed to determine the relationship between the variables. The outcome demonstrated that variables are stationary at first difference. Economy growth, exports and imports, exchange rate, and Inflation all exhibit long-term cointegration, as determined by a cointegration test. Export positively impacted on growth while inflation and exchange rate were found to be negatively affecting growth in Nigeria. The article indicates that there is a beneficial association between international commerce and economic growth and supports the policy of encouraging exports and expanding Nigeria’s presence on global markets.

Increases in oil price or oil exports: Which one is more positive on trade balance for African OPEC Member Countries?

AbstractThis study examines whether an increase in oil prices or oil exports will improve the trade balance in African OPEC Member Countries. The annual panel data of four African OPEC Member Countries, namely Algeria, Angola, Libya and Nigeria were used in the study. The aim of the study is to determine whether African OPEC Member Countries will benefit more from an increase in oil prices or an increase in oil exports coupled with a depreciation in the exchange rate. Two panel estimators were used, namely a fully modified OLS and a dynamic OLS. The results indicate that both an increase in oil prices and in oil exports will improve the trade balance of African OPEC Member Countries; but the greater benefit will be from an increase in crude oil exports. Furthermore, depreciation in the exchange rate will discourage imports, while it will be insignificant in encouraging exports. Policymakers should know that it will be more beneficial to increase oil exports rather than oil prices in order to improve the trade balance of their country. The oil producing countries are supplying the crude oil based on the equilibrium in the world market demand increase in economic activities is favourable to trade balance. In addition, the central bank has to realise that devaluing the exchange rate is not an effective way to improve exports since it will not lower the price of domestic crude oil.

Productivity effects of processing and ordinary export market entry: A time‐varying treatments approach

AbstractChina's policy of encouraging export processing has been the topic of much discussion in the academic literature and policy debate. We use a recently developed econometric approach that allows for time varying “treatments” and estimate economically and statistically significant positive causal effects of entering into export processing and ordinary export markets on subsequent firm level productivity. These productivity effects are shown to be larger than those accruing to firms who enter into ordinary exporting. Interestingly, the estimation of quantile treatment effects shows that the positive effects do not accrue similarly to all types of firms, but are strongest for those at the low to medium end of the distribution of the productivity variable. We also find that export processors gain more when entering the industrialised North rather than the South, while this does not appear to matter much for ordinary exporting.

Investigating the role of export product diversification for renewable, and non-renewable energy consumption in GCC (gulf cooperation council) countries: does the Kuznets hypothesis exist?

This study explores the effects of renewable and nonrenewable energy demand on export product diversification, economic growth, natural resources, human capital, and trade in GCC (Gulf Cooperation Council) countries using data of six countries from 1990 to 2019. The empirical analysis integrates the panel unit root tests (IPS and CIPS), panel quantile regression, and fully modified OLS models. The empirical results confirm that there exists a significant negative relationship between renewable energy and export diversification; signifying that diversification of products will reduce renewable energy. Similarly, when compared to the square of export product diversification, it shows a positive and significant correlation. The empirical findings highlighted the presence of Kuznets's hypothesis between export product diversification, renewable, and non-renewable energy consumption. Furthermore, the findings suggest that natural resources and economic growth may increase overall energy consumption in GCC countries. It implies an important policy suggestion that encouraging export diversification will reduce GCC countries' reliance on oil to meet energy demand.

Can exporting resolve overcapacity? Evidence from Chinese steel companies

The global overcapacity in the steel sector has triggered growing trade disputes and tensions worldwide. However, it is controversial whether steel overcapacity should be a systemic trade concern and if exporting can resolve steel overcapacity. This paper investigated the nexus between exporting and overcapacity at the firm level. We estimate a measure of capacity utilization (CU) for a large sample of Chinese steel companies. By statistically comparing the estimated CU distributions, we found that, before exporting, exporters have more excess capacity than non-exporters. Moreover, we found that exporting has no significant impact on a firm's CU ex-post. As steel overcapacity has become a global issue, the weak demand in the export markets is far from being adequate to absorb excess capacity and improve the capacity utilization of exporting firms. Our study implies that encouraging export cannot act as a strategy to resolve overcapacity, although China's steel production overwhelmingly feeds the country's domestic market.

Fiscal policy and economic growth: Evidence from Central and Eastern Europe

This study aims to estimate the impact of three fiscal instruments (direct tax revenue, indirect tax revenue and government consumption expenditure) on the economic growth of ten new European Union member states from Central and Eastern Europe– Bulgaria, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. We examine the hypothesis about the effect of expansionary fiscal policy on economic growth. The study employs a vector autoregression and annual Eurostat data for the period 2007–2019. Four control variables (the shares of gross capital formation, household consumption, exports in GDP, and the economic growth in the euro area) are included in the model to account for the influence of non-fiscal factors on economic growth. The empirical results indicate that the real output growth rate in the ten new member states of the European Union is negatively affected by direct tax revenue, while economic growth in the euro area, exports and gross capital formation are positively related to economic growth. The results also imply that government consumption and indirect tax revenue have no significant impact on the growth rate of real output of the ten studied countries from Central and Eastern Europe. It may be inferred that policymakers in the new European Union member states can raise economic growth by encouraging exports and investment and by lowering the share of direct tax revenue in GDP. From the three analyzed fiscal instruments (direct taxes, indirect taxes and government consumption expenditure), only one has proven to be effective in the case of the new member countries.

The Causality and Dynamic Relationship between GDP Growth, Export, and Import: Empirical Evidence from Ethiopia

This empirical study investigated the co-integration and the dynamic relationships between GDP growth, export and imports of Ethiopia using time series data from 1981-2017. The stationarity test of variables are done by using Augmented Dickey-Fuller and the Phillips-Perron tests. Choosing the optimum lag of the model are done by using the Akaike Information Criterion. The ARDL and ECM estimation techniques are applied to determine the short-run and long-run relationships among the variables including the Granger causality techniques. For the co-integration test, we found long-run relationships among the variables. This empirical study result found: 1. Positive and significant long-run effects of export for the GDP growth in Ethiopia. 2. A bidirectional long-run relationships between export and imports. 3. A positive and significant short-run relationship between import and GDP growth. 4. There is a correct sign coefficients of the ECM model result with a moderate speed of adjustment to correct the discrepancy between the short run and long-run dynamics. 5. A unidirectional Granger causality from export and imports to GDP growths. 6. A bidirectional Granger causality relationship between export and imports. This study finding implied that the long-run growth of GDP in Ethiopia can be enhanced by encouraging exports and imports.

Foreign Direct Investment, Trade Openness and Economic Growth: Evidence from Ghana

This article investigates the relationship among foreign direct investment, trade openness and economic growth in Ghana taking the period of post-liberalization covering 1975-2017. The Augmented Dickey-Fuller (ADF) test for unit root, regression analysis, descriptive analysis, and Pearson correlation was used to investigate the relationships. ADF test for unit root result shows all variables to be integrated of order one, that is they are stationary after the first difference. The study extracted and used secondary data sources derived from the World Development Indicators (WDI) of the World Bank and Bank of Ghana website over the period 1975-2017. The study proxied foreign direct investment, inflation, and trade openness were used as an independent indicator while GDP growth (annual %) was the dependent indicator. Using the Ordinary Least Squares (OLS) estimator, the study revealed that trade openness is the main factor affecting GDP growth (annual %) in Ghana. Also, the study finds that foreign direct investment and Inflation had (﹣, or +) impact but were not statistically significant on GDP growth (annual %). Therefore, the study concludes by recommending robust measures to enhance trade openness in terms of encouraging exports and inflow of FDI through the creation of an enabling and friendly environment to do business for output growth dynamics in Ghana.

AN EMPIRICAL ANALYSIS ON THE IMPACT OF THE FOREIGN DIRECT INVESTMENTS ON EXPORT PERFORMANCE: TURKEY CASE

While foreign direct investment (FDI) may be a strong source of export incentives in developing countries, its role is still controversial. On the one hand, foreign investment has been suggested to increase exports in developing countries through superior technology and capital, while on the other hand, it is claimed that the role of FDI in encouraging exports depends on the motivations behind this investment. This shows that the nature of the link between FDI and export performance is not clear and should be empirically investigated by country basis. The main purpose of this study is to reveal the effect of foreign direct investments on exports in the case of Turkey.

Do economic reforms promote urbanization in India?

Recent urban population explosion in developing countries demands for several policy considerations. Is India ready for it? In this perspective, we assess the impact of economic reforms on urbanization in India for the period of 1991–2016. It is found that economic reform variables (except import of goods and services as % of GDP) have a positive effect on urbanization. The vector error correction model shows that economic reforms have influenced only on total urban population with a very slower rate with the speed of adjustment of 0.003. The short-run effect is also negligible. Granger causality test shows that there is no causal relationship between them. Therefore, we conclude that economic reforms do not promote urbanization in India. Our results also support the Krugman and Elizondo (J Dev Econ 49:137–150, 1996) hypothesis about the relationship between trade policy and urban agglomerations. Finally, we suggest that we need to promote urbanization through encouraging export for higher and sustainable economic growth in India.

Impacts of export restructuring on national economy and CO2 emissions: A general equilibrium analysis for China

Sectoral adjustment for China’s export is vital to transform the Chinese economic structure so that high-quality development can be achieved. However, it is unknown to what extent export restructuring will affect the national economy and carbon dioxide (CO2) emissions. This study quantifies the potential economic and CO2 emission impacts of export restructuring under various export structure patterns and climate policies scenarios by using a global computable general equilibrium (CGE) model. Results show that China’s export restructuring will lead to 0.5–0.7% increase of Gross Domestic Production (GDP) and 2.0–2.2% increase of consumption in 2030 under all the non-climate policy scenarios, although the export volume will decrease. Meanwhile, CO2 emissions per GDP and total employment will both decrease under all the scenarios. At the sectoral level, the transport equipment sector will increase significantly in output, employment and CO2 emissions, while the textile sector will suffer substantial output and employment losses. Considering the application of climate policies, the USA pattern has the highest GDP and is the most carbon efficient among the three export structures. China’s export restructuring will also increase global GDP and consumption by around 0.2% and 0.4%, respectively. Such results suggest that encouraging export of service, transport equipment and reducing export of textile would be effective for China’s economic development and CO2 emission reduction.

Spain trade in view of some migratory and economic considerations

The importance of trade and migration flows has become crucial in a time of long and global crisis. This paper analyzes how migration and other significant and novel economic considerations explain international trade. The methodology consists a panel data’ analysis of trade processes measured by export from Spain and import to Spain in 90 countries from 1998 to 2015 regarding immigration and other economic variables. The results show that immigration facilitates international trade of sending and receiving countries. Likewise, the results provide an indirect evidence that labor productivity is relevant for international trade and it also supports the existence a “Say’s Law of Immigration. In addition, the paper shows how labor-intensive countries favor the exports from Spain, and by contrast, capital-intensive countries facilitate the imports from Spain. Finally, the results add empirical evidence about how the lack of technology infrastructure act as a non-tariff trade barrier, meanwhile the membership to EU reduce trade costs, encouraging exports and imports for any country.DOI: http://dx.doi.org/10.5755/j01.ee.29.1.19387

A policy framework and industry roadmap model for sustainable oil palm biomass electricity generation in Malaysia

The current global trends demonstrate the significant role of renewable energy in meeting the growing energy demand across all sectors to support national economic growth. In Malaysia, palm oil is one of the major agricultural export commodities with a total production of 17.7 million tonnes or 41% of the total world palm oil production in 2008. This research evaluates the sustainability of the grid-connected oil palm biomass renewable energy industry in Malaysia and proposes a policy framework and industry roadmap. The factors investigated include resource supply, the efficiency of waste to energy conversion technology used in the existing plants, and the attractiveness of the electricity interconnection scheme in encouraging exports of excess power from the participating mills to the main grid. A literature review and field survey were conducted to understand the barriers and possible enhancements to the current FiT system. The study concluded that harmonisation between upstream and downstream palm oil agricultural activities is essential for achieving the goal of making the oil palm biomass waste to energy industry sustainable. The policy framework and industrial roadmap models provide a distinctive enhancement to the FiT system besides indicating the way towards a sustainable biomass to the energy industry.

Does the US EXIM Bank really promote US exports?

AbstractThis paper investigates the impact of US Export‐Import Bank (EXIM) on US exports particularly in the wake of international competition from foreign national export credit agencies (ECAs). We employ a gravity framework on a country‐industry‐year‐level panel data set that matches EXIM authorisations with US bilateral exports. Our results depict the general ineffectiveness of the Bank in promoting exports within and across industries. Some heterogeneities behind the general finding are also uncovered: industries other than aerospace parts and products are more likely to benefit from EXIM authorisations, and EXIM authorisations to larger businesses seem to be more effective in encouraging exports. Furthermore, we find no evidence that EXIM encourages US exports by offsetting foreign ECA competition. These results are neither affected by competing countries’ membership to the OECD Arrangement nor by the size of American firms that received EXIM support. Our results cast doubt on the ubiquitously positive claims made by the Bank and its supporters, yet also provide policy lessons for countries that are either in the inception stages of establishing their own ECAs or are now placing greater importance on ECA financing in encouraging exports.

Overview on China's Rare Earth Industry Restructuring and Regulation Reforms

Abstract: Rare earth elements (REEs) that are key to new technologies and green innovations are critical to life in modern societies. China continues to dominate the global REEs market despite several international trade disputes and market fluctuations. Pressured by an increasingly difficult situation, the Chinese government has been carrying out industry restructuring and has introduced regulatory reforms in recent years to promote the healthy development of the rare earth industry. This paper reviews the literature on the development of the rare earth industry and analyzes the reform policies, combining this with an analysis of relevant macroeconomic data. It discusses the current status of China's rare earth industry, the progress of industrial restructuring and the main problems the rare earth industry faces. The paper discusses the evolution of rare earth policies from that of “open production and open supply” to that of “limiting low quality development but encouraging export of high quality rare e...