Export Promotion Policies Research Articles

Indonesia’s export growth decomposition in ASEAN and ASEAN dialogue partners

Purpose ― This paper evaluates Indonesia's trade integration efforts and their impact on export competitiveness from 1989 to 2021. It examines the evolution of trade arrangements, starting with the ASEAN Preferential Trade Arrangement (APTA) and progressing to bilateral agreements.Methods ― Based on Leamer and Stern, the Constant Market Share Analysis (CMSA) measures Indonesia’s export competitiveness over the years.Findings ― The results indicate no significant improvement in competitiveness during the analysis period, with export growth primarily driven by the effect of world growth. Although competitiveness did not shift markedly over time, it remained positive overall, suggesting a buffer effect during economic crises.Implications ― The paper suggests Indonesia should pursue deeper trade integration and unilateral economic reforms. Drawing on Korea’s experience, combining export promotion policies with trade agreements could enhance market access and foster internal competitiveness.Originality ― This study provides long-term insights into Indonesia’s export competitiveness amidst global trade integration efforts and offers policy recommendations based on the success of Korea’s trade reforms.

Effect of International Trade on the Economic Growth of Nepal

The study explores the relationship between exports, imports, remittance, and economic growth of Nepal for the 1974/75 to 2021/22 fiscal year. Descriptive and analytical research designs were employed on time series data obtained from secondary sources. The Augmented Dickey-Fuller unit root test, co-integration technique, and Error Correction Model (ECM) were employed for empirical investigation. The impact of exports, imports, and remittances on economic growth was analyzed through the ordinary least square regression method for the long run relationship. The result reveals the existence of a long-run relationship between imports, remittances, and gross domestic product. The effect of exports and imports was statistically significant on the economic growth of Nepal and the effects of remittance was statistically insignificant on economic growth. The result emphasizes that the Government should ensure the export promotion policies to achieve Nepal's high and sustainable economic growth by investing in trade infrastructure and export subsidies and creating a favorable environment that encourages using remittance money to support productive sectors of the economy.

Disentangling the relationships between denomination of origin regulatory councils activities and Spanish wineries' export performance

AbstractWorld markets for quality differentiated agri‐food products are highly competitive, presenting significant challenges for firms aiming to compete effectively. Government agencies and business organizations often implement various export promotion policies to address these challenges. This paper explores the role of Denomination of Origin Regulatory Councils in the export activities of Spanish wineries. Hypotheses are developed based on the Resource‐Based View and Institutional‐Based View, considering divergent theoretical predictions. Empirical findings from a comprehensive sample of Spanish wineries across all Denominations of Origin reveal positive associations between wineries' resources and Regulatory Councils' activities with export performance. However, these relationships vary depending on the specific resource or activity. These findings are consistent across different measures of export performance, highlighting the intricate relationships between institutions like Regulatory Councils and the internationalization of member firms.

Impact of Domestic Investment on Economic Growth in Nigeria

This study investigated the impact of domestic investment on economic growth in Nigeria from the period 1990 to 2022. The dimensions that were used to proxy the independent variable are domestic investment, total exports, interest rate and inflation while real gross domestic product was used to proxy economic growth which is the dependent variable. Data used were sourced from secondary sources which includes; World Bank development indicators for various years and the Central Bank of Nigeria annual statistical bulletin. The Statistical Software employed to analyse the data was the eviews9. The results of the Unit root test show that domestic investment, total exports, interest rate and real gross domestic variables evaluated are all stationary after first difference- I(1)- while inflation rate was stationary at level- I(0)-. The Autoregressive distributed lag was used to analyze data. The results of the Autoregressive distributed lag estimates reveal that in both the long run and short run, domestic investment, total exports, coefficients have positive impact on real gross domestic product in Nigeria and both are also statistically significant at five percent level of significance in the long-run in Nigeria. Since it was found that increase domestic investment and total exports bring about economic growth, the study therefore, recommends amongst others that appropriate trade policies in favour of export expansion should be encouraged. The federal government of Nigeria should make concerted effort towards export promotion policy by encouraging domestic investors to go into more production. In order to achieve this, there is need for the government to reduce interest rate and tax rate.

Balance of Payments and Macroeconomic Performance in Nigeria

This study examined the effect of the balance of payments on macroeconomic performance in Nigeria between 1981 and 2021. The specific objectives are to determine the effects of current account balance, capital account, and external reserves on the gross domestic product (GDP) growth rate (the proxy of macroeconomic performance). This study employed secondary data sourced from the United Nations Conference on Trade and Development (UNCTAD), the Central Bank of Nigeria (CBN), and the database associated with Chinn and Ito. The study employed the augmented Dickey-Fuller method to examine the stationarity of the series and tested for cointegration among the variables using the bound test. The relationship between the balance of payments component and the gross domestic product growth rate was analysed using the autoregressive distributed lag (ARDL) method. The study confirmed the long-run relationship between components of the balance of payments and GDP growth. The ARDL shows that in the long run, current account balances had a positive and significant impact on GDP growth. The capital account proved not to be an effective policy for driving economic growth in the long run. It was found that external reserves had a positive and significant impact on GDP growth in the long run. Based on the findings, this study recommended a blend of export promotion policy and import substitution strategy to improve the balance of payments and create more opportunities for economic growth. Again, policymakers should focus on improving the financial depth and strengthening institutions, all of which support the liberalisation of the capital account and foster economic growth.

Publication bias in export promotion impact on export market entry: evidence from a meta-regression analysis

ABSTRACT Export promotion policies and programmes (EPPs) serve as crucial governmental trade instruments, encouraging firms to explore the realm of exporting. These policies encompass various activities designed to assist firms in overcoming obstacles in foreign markets, facilitating their entry into the export domain. To substantiate the justification for such publicly funded measures, the body of firm-level econometric evidence on EPPs’ impact on the probability of export market entry has expanded considerably. Our extensive review of empirical studies conducted up to and including 2020, has identified 479 reported estimates, enabling us to examine the presence and extent of publication bias. Employing meta-regression analyses, our results reveal a sobering reality. We consistently uncover significant and severe positive evidence of publication bias across various specifications, ranging from 3.133 to 5.673. This suggests that the empirical EPPs effect size on the probability of export market entry appears significantly larger than its actual limited effect. Importantly, our findings indicate that in this research field, publication bias is predominantly a consequence of self-censorship rather than interference by journal reviewers and editors. The evidence in the primary studies has, therefore, exaggerated the actual export market entry effect, influencing both with respect to scientific conclusions and policymakers’ decisions.

한국수출입은행의 공적수출금융지원이 한국의 수출에 미치는 영향 연구

Purpose – The purpose of this study is to analyze the impact of official export finance supported by the Export-Import Bank of Korea on Korea's exports. In particular, in order to differentiate from previous studies, the detailed size, as well as the long-term and short-term effects of export financing support on exports, were analyzed. Design/Methodology/Approach – In this analysis, an Export Demand Function Model was introduced. Prior to the empirical analysis, a unit root test and cointegration test were conducted. As a result of the pretest, it was found that the variables included in the analysis were I (1), and the cointegration vector did not exist. Based on these results, a Vector Autoregressive (VAR) model was established. Findings – As a result of estimating the impulse response function, it was found that when an official export finance shock was applied, exports gradually increased from the time of the shock to the third period, and then the increase slowed and converged to zero. As a result of the variance decomposition analysis, the export financing support amount began to show explanatory power in export fluctuations from the second period, and showed about 2.5% explanatory power from the third to the tenth period. Research Implications – It was confirmed that export finance provided to exporting companies plays an important role in helping to promote exports. Therefore, the government and financial institutions should support exporting companies by providing active export financing support, along with export promotion policies.

The Impediments of Export-oriented Economic Growth Strategy’s Implementation in Ethiopia

Exports have a vital role in driving economic growth. For a number of countries including Ethiopia, international trade, especially exports has a critical role namely, an impetus for the national economy. Successively, in the past several years’ the Ethiopia’s government has used export promotion policies and approaches to increase trades and generate export-driven economic development by establishing a comprehensively possible export sectors. Nevertheless, due to the declining exports which resulted in a negative balance of payment, acute shortages of foreign exchange, and mounting international obligations, the country’s export-oriented growth strategy was not successful as intended. Hence this study aimed to investigate the impediments of export-oriented growth strategies implementation in Ethiopia using a mixed research approaches. The result of the study revealed that, it has been found that in spite of some progress or improvements in the export sectors of the study country (i.e., Ethiopia), when compared to past couple of years, the implementation of export-led growth strategies has led to lack of quality services due to poor planning, inadequate resources and poor monitoring and evaluation of the strategies being implemented. This has compromised the quality of each service being delivered. It has also led to a situation where the study country is unable to meet the ever-increasing demand for each of the services or commodities sufficiently. Evidence has confirmed also that the said services rendered are inadequate and not effective. The study also found that the implementation of the existing export-led growth strategy impacts negatively (affects or not as intended) on the provision of quality services and not successful as stipulated in the trade policy of the country. Hence, there is a need to critically consider the specific gaps identified by the study in designing strategies for accelerating development of exports in the country through holistic and integrated approaches. To this end, the outcomes stand important for redesigning export trade policy/strategies to boost the performance of exports and the overall ultimate economic growth in the country, Ethiopia. Keywords: Ethiopia, Export–oriented growth strategy, Impediments, Implementation DOI: 10.7176/PPAR/13-1-04 Publication date: January 31 st 2023

China’s Economic Growth, Global Economic Crisis and China’s Policy Responses (The Quaid-i-Azam Lecture)

As a result of opening and reform, China has maintained an annual average growth rate of 9.8 percent for nearly three decades. China’s growth is based on high savings and high investment. Its export promotion policy has also played a very important role in promoting economic growth. However, as a result of China’s growth pattern characterised by investmentdriven and export promotion, the Chinese economy also has been suffering from serious structural imbalances. Its high and ever-rising investment rate has created overheat and overcapacity in tandem. Its high dependency on external market makes its economy vulnerable to external shocks. The global financial crisis has hit the economy seriously and exposed the structural weakness of the economy. The dramatic fall of external demand led to dramatic slowdown of the economy. The Chinese government responded to the slowdown of the economy swiftly and forcefully. A four trillion Renmibi stimulus package and expansionary monetary policy have successfully stabilised the economy. However, the stimulate policy has worsened structural problems. China’s structure problems include high external dependency, high investment rate, deterioration of environment, widening income gap between different social group and between rural and urban areas, insufficiency in the provision of social goods and so on. Due to its strong fiscal position, there should be no problem with China to achieve a growth rate of 8 percent. At the same time, the Chinese government should be able to tackle its structural problems successfully so as to ensure the sustainability of China’s economic growth. JEL classification: G01, E44, E65 Keywords: Growth, Global Financial Crisis, Stimulus Package, Structural Adjustment

Exports, Imports, and Economic Growth in South Asia: Evidence Using a Multivariate Time-series Framework

This paper examines the export-led growth hypothesis for the five largest economies of the South Asian region using a multivariate time-series framework. The South Asian countries present an interesting case study in view of their increasing outward orientation and adoption of export promotion policies as part of their growth strategies. A key feature of the study is the explicit incorporation of imports in the analysis to make allowance for their role in the export-economic growth relationship. While controlling for imports, the results indicate bi-directional causality between exports and output growth in Bangladesh, India, and Sri Lanka in the short-run. The study finds long-run equilibrium relationships among exports, imports, and output for Bangladesh and Pakistan. However, for India, Nepal, and Sri Lanka, no evidence of a long-run relationship among the relevant variables is found. These results are in contrast to some earlier work that found the export-led growth hypothesis to be a long-run phenomenon for all countries in the region.

How International Aid Significantly Influence Ghana’s Trade Balance

Purpose: The study's goal was to ascertain the impact of foreign aid on Ghana's trade balance, the impact of the country's exchange rate on trade balance, and the causal relationship between foreign aid and trade balance in Ghana. 
 Methodology: Based on vector autoregressive (VAR) methods, descriptive and econometric analysis of time series data from 1982 to 2012 were conducted for the study. The existence of a link between foreign assistance and trade balance was examined using cointegration and causality tests. To ascertain how quickly economic equilibrium will shift from the short run to the long run, the Vector Error Correction Model (VECM) was used.
 Findings: The analysis found that the exchange rate has a favorable impact on Ghana's trade balance and that foreign aid has a negative impact on it. The study also showed a long-term connection between trade balance, exchange rate, and foreign aid as well as a bidirectional causation between foreign aid and Ghana's trade balance. According to the test for VECM, the transition from short-run to long-run equilibrium happened more quickly, at 1.43 or 143 percent.
 Recommendation: The study recommended the Republic of Ghana to undertake an import substitution program in order to decrease the volume of imports that have been contributing to the long-term trade imbalance. Instead of depending on unreliable foreign aid, export promotion policy should be a priority in order to generate sufficient foreign revenues. To accomplish these goals, the Ghanaian government should be intelligently prepared to remove all trade restrictions that Ghanaian exporters faced on the international market.

State export financial support of brazilian manufactured products : a microeconometric analysis

We investigate the impact of Brazilian state financing to exports – Proex, Exim and Drawback – on the performance of firms in foreign trade between 1998 and 2007. We focus on the (i) risk of abandonment of export activity; (ii) number of destinations; and (iii) export value. Through a quasi-experiment with a unique dataset of Brazilian firms entering foreign markets, we find a positive relationship between export programs and the intensive and extensive export margins, as well as with persistence in international trade, although not all three programs are effective. Supported firms had their chance to keep exporting augmented between 4% and 13%, increasing their number of destinations by up to 43% and the export value between 74% and 90%. The results suggest that financial constraints may limit the export potential of firms and highlight the importance of the government’s export promotion policies, mainly in developing countries which systematically suffer from credit market failures.

Export behaviour of firms in India: does gender of the firm owner matter?

PurposeThe purpose of this study is to investigate the impact of the gender of the firm owner on the export behaviour of firms in the Indian context.Design/methodology/approachThe present study utilizes the data from World Bank’s Enterprise Survey. The survey provides information on 9,281 firms located in different regions in India. Binomial logistic regression is employed to examine if the owner’s gender matters for the firm’s export-related decisions (export propensity, export mode, export intensity and export market diversification) as a direct or moderating factor controlling for other possible determinants of export activity.FindingsThe findings of the study reveal that firms with a majority of female ownership are less likely to export. However, once the firms indulge in exports, their choice of export mode and export intensity is not affected by the owner’s gender. The gender of the firm owner plays an important role in export market diversification as it is observed that the firms owned by the majority of women have concentrated export markets.Practical implicationsThe findings advocate the integration of gender perspective into export promotion policies in India. In light of the findings that the gender of the firm owner entails a heterogeneous impact on different dimensions of export, the key areas requiring policy interventions are female entrepreneur’s export participation and export market diversification.Originality/valueThis study augments the previous scholarship by focusing on the intersection of the gender of firm owner and export propensity along with other unexplored dimensions of export behaviour in female entrepreneurship literature viz. mode of export, export intensity and export market diversification.

Determinants of Exports in a Small and Vulnerable Economy: Fiji Islands-A Disaggregated Analysis.

The previous studies of exports performance in Fiji were carried out at the aggregate level. We conduct a disaggregated analysis of exports of three major products, namely, sugar, tourism, and gold. This analysis is useful for developing sector-based export promotion policies. The long run as well as dynamic export demand functions are estimated at the aggregate and disaggregate levels. The results identify a number of factors such as trading partner income, relative prices, productivity shocks, natural disasters, political disturbances, and the exchange rate that affect the export demand for sugar, tourism, and gold, though not in the same way. For instance, tourism and sugar enjoy the highest income elasticity. Sugar export is adversely affected by natural calamities and political upheavals. The political upheavals also affect tourism adversely in Fiji. The exchange rate affects the export of sugar more than others. The idea that devaluation will promote exports in Fiji needs careful investigation because results show that this will happen with a high cost, i.e. 5% nominal devaluation will be required to increase real exports by 1%.

On Exports and Economic Growth: Revisiting Export-Led Growth Hypothesis Including North-South Divide

Objective: The purpose of the present study is to revisit the export-led growth hypothesis in the wake of globalization. This will help in trade policy decisions and make it possible to standpoint whether the export promotion is a good idea to accelerate economic growth. Design: The ELG hypothesis is examined for 107 countries through panel data analysis using cointegration and panel regression tests from 1990 to 2018. The study finds strong support for the long-run relationship between exports and gross domestic product and the export-led growth hypothesis in a two-variable regression framework. Findings: It is evident from the long-run coefficient of dynamic ordinary least squared that a 1.0 percent increase in real exports increases the real gross domestic product by 0.53 percent. The long-run coefficient of real exports for the Global South (0.55) is found higher than that of the Global North (0.51), which indicates that in the wave of globalization, the evidence of export-led growth hypothesis is stronger for comparatively poor Global South than the richer Global North. Practical Implications: The results indicate implications for export promotion policy in the Global South countries to accelerate economic growth and increase real gross domestic product. Originality: The study is the first to explore the ELG hypothesis using a big pool of 107 countries, including the global north-south divide.

Determinants of trade flow of some selected non-traditional agricultural export commodities in Nigeria

This study analysed the determinants of trade flow of some selected non-traditional agricultural export commodities in Nigeria, for the period 2007 to 2017. The objective of the study was to analyse the factors that determine the export of these commodities. The study used trade data of thirty-six importing countries of these commodities around the world. The secondary data used was sourced from various institutions’ databases. A balanced panel data from 36 countries for the years 2007-2017 were used with one dependent variable and ten explanatory variables (a total of n=396, N=36, and T=11); all variables were expressed in natural logarithm. The gravity estimation model was used in data analysis. The Hausman test was used in model selection and the test rejected the null hypothesis (random effects were efficient). Therefore, the fixed effects model was used in the gravity model results’ interpretation. The gravity model results indicate that Nigeria’s export of non-traditional commodities (classified as HS12 in the United Nations International Trade Statistics) follows the basic gravity model apriori expectations, implying that bilateral trade flows will increase in proportion to the trading partner’s Gross Domestic Product (GDP) and decrease in proportion to the distance involved.The level of openness of Nigeria’s economy and that of the importing countries were major determinants of trade flow of Nigeria’s HS12 commodity exports. This variable carried the expected positive sign for both Nigeria and its trading Partners and was also statistically significant at the 5% level. However, the real exchange rate variable was not a major determinant of HS12 commodity trade. The distance variable was statistically significant indicating the need for regional trade expansion. The dummy variable of the trading partner being an African country was positive and a significant factor in the determinants of the HS12 commodities. However, colonial or official language ties were negatively signed and significant, implying that this was not a major contributor to trade in these commodities. The study recommends that favorable import and export promotion policies and trade openness to boost growth in the quantity of non-traditional exports should form part of government trade policies; and Nigeria should also take advantage of the proposed African Free Trade Area considering the gains she stands to make through proximity in distance.

How information and communication technologies affect intensive and extensive margins of firm exports: Evidence with micro data of South Asian manufacturing firms.

International trade plays a pivotal role in growth and development. The use of ICT is profoundly changing the landscape for international trade and expands opportunities especially for developing countries. The key objective of this study is to investigate the effects of different ICT capacities on the extensive and intensive margins of firm-level exports using micro-data of manufacturing firms operating in selected South Asian countries. We employ the Probit and fractional response models as estimation techniques. Findings of the study reveal that different ICT capacities are positively associated with both the extensive and intensive margins of firm-level exports, and our results are robust to the alternative empirical specifications. These results have important implications for designing the export promotion policies in selected South Asian countries. Hence, policy practitioners in these countries should encourage firms to invest in ICT capacities to boost their export performance.

Creative industries as interest groups in services export promotion policy-making in Chile

The objective of this article is to identify Chilean interest groups related to the export promotion in creative services industries, and understand their perception on their participation in policymaking. This analysis aims to identify and analyze the mechanisms in which these groups influence the design of export promotion policies in Chile. This understanding will allow the strengthening of institution-building and transparency associated with it, thus improving the process by which public policies are generated in Chile, and contributing to the development of the national export sector. The working hypothesis is that creative industries’ interest groups perceive that they have been able to position their interests through joint action between related businesses, professionals and governmental organizations (productive subsectors), supporting their positions in non-economic considerations to strengthen creative industries interests.

재생에너지기업의 수출시장 선택 영향요인 분석

The study investigates the question of how firms’ external factors affect their selection of export market using survey-based data for 252 renewable energy technology firms in Korea. Considering the situation and reality where each country, including Korea, employs policy mix to promote renewable energy technology industry, firms are actual beneficiaries and core economic entities of export, and renewable energy technology market is growing, we established a binary logistic regression model to test the effects of public policies(renewable energy industrial policy, environmental policy, and export promotion policy), social acceptance, trade association support, market attractiveness, and inter-firm competition on firm-level export. After confirming the reliability and validity of the items to measure each construct, we test the relationships between the variables to be examined. This study shows the Korean renewable energy technology firms’ export is affected mainly by two public policies and industry factor, environmental policy, export promotion policy, and supports of trade association. However, renewable energy industrial policy, social and market factors(social acceptance, market attractiveness, inter-firm competition) do not significantly affect firm-level export. We propose policy implications based on the results of the study, and list the limitations that should be addressed in future research.

Determinants of Domestic Value Added in Exports: Empirical Evidence from India’s Manufacturing Sectors

Over the last decade, trade policy reforms have significantly influenced the internationalization of Indian manufacturing firms, leading to deeper participation of the country in global value chains (GVCs) and international production networks (IPNs). With the growing participation of foreign firms in the value chain, the domestic value-added (DVA) content embodied in Indian exports have displayed a declining trend. Recently, in 2020, India has decided to launch the ‘Atmanirbhar (self-reliant) Bharat Abhiyan’, which, in principle, aims to consolidate the manufacturing sector, leading to increasing DVA embodied in exports (DVA-content), apart from employment generation. The current article attempts to analyse the drivers of India’s DVA in exports for select manufacturing industries over 2000–15 by using the OECD trade in value added (TiVA) database. The empirical results reveal that sectoral DVA content is positively influenced by both domestic capital and foreign direct investment (FDI), and labour skill intensity, but negatively influenced by the presence of unskilled workers. Moreover, FDI inflows in sectors characterized by high skill-intensity and high-relative growth rate play a crucial role in influencing DVA content. Finally, the presence of larger and more capital-intensive firms is found to be a major driver of DVA. On the policy front, therefore, the empirical results underline that export promotion policies alone will not be able to resolve employment worries, a major concern in India, as vast numbers of unskilled and low-skilled workers trapped in the agricultural sector or working in unorganized and micro-industries fail to figure in the country’s export value addition. A concerted effort towards labour skill enhancement as well as technology transfer is necessary for exports to play a more positive role.