Impact Of Trade Liberalization Research Articles

The Impact of Trade Openness on the Industry Reality in Iraq for the Period (2004-2022)

Iraq is one of the prominent countries that used to have important industries and enjoyed consumer acceptance, competitiveness, and presence in regional and global markets. However, after 2003 and due to trade liberalization, there needed to be more in the structure of the Iraqi economy. This directly affected the reality of the Iraqi industrial sector, leading to the entry of goods and products from all over the world. With the increase in population and government expenditures, which relied on commodity imports to meet local needs, all aspects of industry in the country were eliminated. The importance of research lies in shedding light on the role of international trade (import and export) in global economies, highlighting the shortcomings in trade policy management, demonstrating the impact of trade openness on the industrial sector's contribution to economic development, and the need for realistic measures to rescue this vital sector from deterioration in Iraq. Moreover, the research problem is based on the direct negative impact of trade liberalization policy on the reality of the industrial sector in the country. Increased reliance on foreign sources to meet local economic needs is attributed to the production apparatus's deficiencies, backwardness, and stagnation, rendering it unable to meet total domestic demand. The research aims to shed light on the role of foreign trade in global economies and to clarify the shortcomings in trade policy management, as well as the extent of the impact of trade liberalization on the reality of the industrial sector in achieving economic development. The research found that the industrial sector in Iraq was negatively affected throughout the period (2004-2022) due to the compulsory trade liberalization policy, which led to the shutdown of factories and plants because of the low prices of imported goods. Paper type Research paper.

The Impact of Trade Openness on the Reality Industry in Iraq for the Period (2004-2022)

Iraq is one of the prominent countries that used to have important industries and enjoyed consumer acceptance, as well as competitiveness and presence in regional and global markets. However, after 2003 and due to trade liberalization, there was a general weakness in the structure of the Iraqi economy. This directly affected the reality of the Iraqi industrial sector, leading to the entry of goods and products from all over the world. With the increase in population and government expenditures, which relied on commodity imports to meet local needs, all aspects of industry in the country were eliminated. The importance of research lies in shedding light on the role of international trade (import and export) in global economies, highlighting the shortcomings in trade policy management, demonstrating the impact of trade openness on the industrial sector's contribution to economic development, and the need for realistic measures to rescue this vital sector from deterioration in Iraq. And the problem of the research is based on the direct negative impact of trade liberalization policy on the reality of the industrial sector in the country. Increased reliance on foreign sources to meet local economic needs is attributed to the deficiencies, backwardness, and stagnation of the production apparatus, rendering it unable to meet total domestic demand. The aim of the research is to shed light on the role of foreign trade in global economies and to clarify the shortcomings in trade policy management, as well as the extent of the impact of trade liberalization on the reality of the industrial sector in achieving economic development. The research found that the industrial sector in Iraq was negatively affected throughout the period (2004-2022) due to the compulsory trade liberalization policy, which led to the shutdown of factories and plants as a result of the low prices of imported goods. Paper type Research paper.

Embracing the African continental Free trade Area: Unpacking Malawi’s economy response to trade liberalization

The impact of trade liberalization on Malawi’s economy has been a hotly debated topic. To shed light on the subject, a study was conducted using the PEP-1–1 CGE model and the latest Malawi’s Social Accounting Matrix (SAM) from 2019. The results were eye-opening, revealing the potential effects of the African Continental Free Trade Area (AfCFTA) on various sectors of the economy. The removal of trade tariffs is predicted to have a significant impact on prices, with a decrease of 26.31% in the agricultural sector alone, services (−7.88%), public administration (−9.92%), and manufacturing and industry (−11.23%) imposing hopes of improving food affordability and food security. However, it is expected to have adverse impacts on wage rates in the agricultural sectors (−18.78%), manufacturing and construction (−19.01%), services (−2.79%) and public administration (−15.81%). Additionally, while exports are expected to increase, the country’s balance of payments may suffer as imports are likely to outweigh foreign earnings. This could also lead to a decrease in government revenue from taxes. To mitigate these effects, the study suggests implementing export restructuring strategies, particularly in industries like manufacturing and construction, and promoting diversification of local production to boost competitiveness and improve wage rates. With these measures in place, the government will not only offset potential losses but also tap into new sources of taxable income.

Trade liberalization, labor market power, and misallocation across firms: Evidence from China's WTO accession

This paper studies the impact of trade liberalization on the heterogeneity of labor market power among manufacturing firms, which is a potential source of misallocation. The model shows that heterogeneity of labor market power distorts the allocation of the factors of production, and the variance in the natural log of the markdown serves as a sufficient statistic to infer its negative impact on overall production efficiency. Using China's accession to the World Trade Organization (WTO) as a natural experiment, the empirical results suggest that lower input tariffs decrease the variance in the natural log of the markdown, which reflects the improvement in misallocation. In contrast, reductions in output tariffs have no significant effects.

Quantifying the impact of trade liberalization on Lao imports (evidence from product-level data)

In pursuing economic development after market-oriented reforms, Lao PDR has actively liberalized imports through engagement in regional and multilateral trade agreements. However, a substantial research gap exists in assessing the impact of this liberalization, especially in terms of ex-post empirical studies, which are essential for nuanced policy evaluation. This study aims to thoroughly quantify the impact of tariff liberalization on Lao imports, specifically examining how the elimination of tariffs under regional trade and multilateral trade schemes affects Lao imports. In this study, a balanced gravity panel dataset at a product level from 2013 to 2022 was constructed using data from the Lao Official Import Management Database for a standard gravity model analysis. Results of this analysis reveal that tariff liberalization has significantly boosted Lao imports with an elasticity of -0.327. Counterfactual analysis strengthens this finding, indicating an approximate 6.7% increase in the average value of imports from 2018 to 2022.

The impact of trade liberalization on firms’ product and labor market power

Abstract This paper examines the impact of trade liberalization on firms’ product and labor market power. We estimate the prevalence and intensity of price-cost markups and either wage markups or wage markdowns, taking the dependence between these model-consistent measures of product and labor market power into account. Exploiting reductions in tariffs upon China’s World Trade Organization accession, we find that trade liberalization has not switched firms away from exercising product and labor market power. Reducing input tariffs has widened price-cost markups, narrowed wage markdowns, and widened wage markups at the firm level. We reveal heterogeneous trade liberalization effects on the intensity of firms’ product and labor market power.

Municipality manufacturing agglomerations unveiled: Exploring spatial structural transformation in Mexico under import substitution and trade liberalisation

This paper conducts a comprehensive long-run analysis of the global spatial concentration and locational dynamics of manufacturing agglomerations in Mexico. While prior research on Mexico has examined the impact of trade liberalisation on processes of regional convergence or divergence, effects on the scale, location and dynamics of agglomerations and local specialisation remain underexplored. To address this gap in the literature, we use a newly-collated municipality-level dataset containing more granular data distinct from more frequently used state-level data. Our analysis spans the period 1950–2019, capturing the full extent of the growing importance of the manufacturing sector and providing a nuanced perspective on the evolution of agglomerations and local specialisation patterns. We investigate shifts in agglomeration during import substitution and following the introduction of trade liberalisation, examining whether new agglomerations emerged or existing ones attracted further economic activity and how these changes impacted local specialisation. In extension, we also examine recent trends, assessing the persistence or alteration of agglomeration dominance in the north of the country. In doing so, our analysis provides valuable insights into the intricate dynamics of agglomerations and local specialisation and their significance in shaping regional disparities.

Soybean overweight shock (SOS): The impact of trade liberalization in China on overweight prevalence

This study investigates the overweight effect of the soybean import shock (referred to as the soybean overweight shock or “SOS”) on China, the largest importer of soybeans worldwide. By using China's soybean import liberalization in 1996 as a natural experiment, which involved the removal of soybean tariff rate quota (TRQ) policy and a reduction in soybean import tariffs from 114% to 3%, we found significant SOS effects. The soybean import shock can account for 10.76% of the observed increase in overweight probability between 1989 and 2006. Mechanism analysis finds that the exposure to the soybean import shock leads to a significant decrease in the market price of soybean oil and an increase in soybean oil consumption, it also increases the likelihood of being overweight through dining out, eating food prepared outside, and eating fried foods. Additionally, we discovered stronger SOS effects in urban residents, females and individuals with relatively lower family income.

Does opening up change customs? Evidence from trade liberalization and marriage payments in China

AbstractThere is widespread concern about whether opening up changes cultural customs. However, empirical evidence remains limited. In this paper, we provide new evidence on this issue by examining the impact of trade liberalization on marriage payment customs in China. We first provide a conceptual framework based on a labor market perspective to illustrate how trade liberalization has driven changes in marriage payment customs. Then, using China's World Trade Organization accession as a quasi‐natural experiment, this paper uses the difference‐in‐differences strategy and China's large‐scale household survey data to conduct an empirical study. Our results suggest that trade liberalization has reduced marriage payments in China, especially the bride price but not the dowry. Evidence from industry and census surveys suggests that the declining earning ability of marriageable men and the increasing relative economic status of women have driven down the bride price from the supply and demand sides, respectively. We also find that the impact of trade liberalization has been concentrated on southern and rural households. In addition to the decline in the bride price, the bad practice of child marriage in China has also been alleviated as a result.

Impact of Trade Liberalization on Economic Growth in Developing Countries

In order to investigate the impact of trade liberalisation on economic growth, this paper analyses the existing research on trade liberalisation and growth, revises the well-used Sachs and Warner (1995) trade liberalisation index for 193 countries up to 2010, and applies a dynamic growth model to a substantial panel data set covering the years 1985 to 2010. The results suggest that the impact of trade liberalisation on economic growth differs depending on the industrial development level of a country. Lower-middle-income countries, on average, experience a minimum 3% greater advantage from the liberalisation of trade compared to other growing nations. This finding provides a persuasive rationale for altering the conventional "Washington Consensus" methodology and taking into account the economic development phase while suggesting trade policy modifications.

The impact of trade liberalisation and exchange rate undervaluation on exports, imports, and trade balance of Latin American countries (1970-2019)

The impact of trade liberalisation and exchange rate undervaluation on exports, imports, and trade balance of Latin American countries (1970-2019)

Impact of Trade Liberalisation and MSME Classification on Productivity of Indian Manufacturing Firms

This article examines the effects of tariff and non-tariff reductions on firm-level productivity of large as well as Micro, Small and Medium Enterprises (MSMEs) in India’s manufacturing sector for the 1999–2009 period. We calculate input and final goods tariffs, effective rates of protection and non-tariff barriers (NTBs) for broad product groups using information from India’s Exim Policy of 1997–2003 and 2004–2009 to examine this impact. We use a balanced as well as unbalanced firm-level panel data set, while accounting for firm, industry, state and time-specific factors. By using fixed effect models and Heckman’s two-step estimation procedure, we find that trade liberalisation is associated with improved firm-level productivity for large firms but not in the case of MSMEs. We posit that this might be due to the relative disadvantages that Indian MSMEs face which prevent them from benefiting from trade liberalisation. We also find that productivity gains arising from the sourcing of imported inputs have been greater than those arising from increased product competition and that NTB liberalisation has had a greater impact compared to tariff liberalisation on firm-level productivity. Changes in MSME legislation and the classification of firms are also found to have a bearing on firm performance. Our study contributes to the literature by confirming the need to focus specifically on constraints faced by MSMEs if they are to benefit from trade liberalisation. It highlights the importance of liberalising trade in intermediates as well as the role of MSME classification in enabling productivity gains. JEL Codes: L6, D24, L1, F13

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.

The tax revenue implication of trade liberalisation in sub‐Saharan Africa: Some new evidence

AbstractDespite the advent of trade liberalisation, trade taxes still remain a key source of tax revenues in sub‐Saharan Africa. Further trade reforms in the form of the African Continental Free Trade Area could, however, hinder output growth in the region if these reforms lead to a decline in total tax revenues. Motivated by this conundrum, this paper investigates the impact of trade liberalisation on tax revenues across a panel of sub‐Saharan African countries. The results indicate that trade liberalisation is associated with an increase in total tax revenues. Also, the reduction of import and export duties significantly increases and decreases domestic and trade tax revenues, respectively. In addition, greater urbanisation is associated with an increase in total tax revenues, while inflation decreases tax revenues.

Trade liberalisation and manufacturing employment in developing countries

The manufacturing sector has played an important role in the structural transformation process in the developing world by providing jobs and income opportunities. Using data from 131 developing countries from 1991 to 2020, we estimate the impact of trade liberalisation on manufacturing employment using panel fixed-effects and instrumental variable regression approaches. We find that trade liberalisation – on average – has harmed manufacturing employment in developing countries. There are considerable differences at the regional level; the impact has been most substantial in sub-Saharan African and Latin American countries. At least in these regions, trade liberalisation has contributed to deindustrialisation. Policies that improve labour productivity in manufacturing will increase the competitiveness of manufacturing firms in these countries in the face of growing trade globalisation.

The impact of capital goods trade liberalization on regional labor market in China

The impact of trade liberalization on regional employment dynamics remains a topic of ongoing debate and scrutiny. This study aims to provide a nuanced understanding by focusing specifically on the effects of imported capital goods trade. Our study analysis reveals that capital goods trade liberalization predominantly leads to a substitution effect between capital and labor, resulting in a reduction in overall regional employment levels. However, we also find complementary effects between capital and high-skilled labor, alongside substitution effects on low-skilled labor, which collectively influence the regional labor market's skill structure. Furthermore, our study identifies the heterogeneous spillover effects of capital goods trade liberalization on regional labor markets, varying across different regions and city scales. We argue that investing in region skill development resources can help align the workforce with global factors, fostering positive interaction between regions.

The Impact of Trade Liberalization on FDI Inflows and Economic Development

This paper investigates the impact of trade liberalization on foreign direct investment (FDI) inflows and economic development in the Czech Republic. Utilizing a mixed-methods approach, the study combines quantitative econometric analysis with qualitative case studies and interviews. The empirical results demonstrate a significant positive correlation between trade openness and FDI inflows, indicating that a 1% increase in trade openness is associated with a 0.5% increase in FDI inflows. Furthermore, the structural equation modeling (SEM) results reveal that a 1% increase in FDI inflows is associated with a 0.3% increase in GDP growth and a 0.2% increase in employment rates. These findings underscore the critical role of an open trade environment in attracting foreign investment and fostering economic development. The study also highlights the importance of other factors such as institutional quality, political stability, and infrastructure development in creating a conducive environment for FDI. Policy implications suggest that maintaining open trade policies, improving institutional frameworks, and investing in infrastructure and innovation are essential strategies for achieving long-term economic development in the Czech Republic and similar transition economies.

Implikasi Agreement on Agriculture (Aoa/Wto) Terhadap Pengaturan Perdagangan Produk Pertanian Indonesia

The aim of this scientific writing is to find out the legal implications of the AoA/WTO for trade in the Indonesian agricultural sector, as well as to find out how Indonesia provides legal protection for trade in agricultural products due to the liberalization of world trade. This scientific research uses normative juridical research methods, and the data collected will be analyzed juridically qualitatively, then the results of this research will be described descriptively analytically. From the research results, the author obtained data that to implement the AoA/WTO provisions, Indonesia updated its legal provisions in the agricultural sector through several national provisions. However, this implementation has implications that have a negative impact on farmers, as a result trade in the Indonesian agricultural sector decreases, such as imports of food products increasing, farmers' income decreasing, there are no subsidies for farmers, food insecurity and hunger, Bulog becomes a company, and etc. To anticipate the negative impact of trade liberalization on the agricultural sector, the Indonesian government has made such efforts, such as enacting Law No. 29 of 2000, concerning the protection of plant varieties, Presidential Decree No. 77 of 2005, concerning the procurement and distribution of subsidized fertilizers, at the beginning of September 2007, The Decree of the Coordinating Minister for the Economy gave full authority to Bulog, in May 2007, the government issued a Draft Government Regulation (RPP) concerning the National Agrarian Reform Program (PPAN) / Landreform, and at the international level, Indonesia created the SP (Special Product) and SSM (Special Product) programs. Safeguard Mechanism) which is still being fought for in the WTO forum to get its ratification.

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.