Changes In International Prices Research Articles

Trends In India’s Exports: A Comparative Study Of Pre And Post Reform Period

This paper analyzes the trends in India' s exports using the time series data for the period 1980-81 to 2010-11. Govt. of India introduced economic reforms since 1991 especially in the trade sector, therefore, in order to see the impact of economic reforms on India's export behavior, the whole time period has been divided into two sub-periods 1980-81 to 1991-92 (pre- reform period) and 1992-93 to 2010-11 (post-reform period). study shows that India's exports performance improved significantly during the post -reform period and there has been a perceptible change in the value, composition and direction of India's exports. Though the volume and value of exports has increased manifold, India's share in the world exports is still not up -to the expectation. Keyword: Economic Reforms, Economic Growth, India's Exp orts, Liberalization, Openness. I. Introduction Exports have acquired added significance in the wake of liberalization wave sweeping across the world. trend towards market economy in almost all the countries of world has increased the role of exports in developmental efforts. Therefore, exports constitute a key factor in economic development of a country. For a developing country, it is essential to build up a sizeable export surplus. rate of economic growth is largely determined by the rate at which a country can expand its export capacity. Higher rates of economic growth tend to be associated with higher rates of export growth. A country that tries to promote growth while ignoring its export performance may succeed in the short -run, but it will be hard- pressed to sustain growth over a long period of time. Thus, it can be concluded that exports are a key factor in the growth process, not one of political astrology but of empirical fact. major concern of the government in the past was restriction o f imports with a view to controlling the trade deficit and protection of domestic industries against foreign competition. Imports were, therefore were very much restricted by prohibition of imports of many few items, import licensing, very high import duties and foreign exchange restrictions. foreign trade policy was characterized by the overtone of negativism. Beginning mid -1991, the Government of India introduced a series of reforms to liberalize and globalize the Indian economy. Reforms in the external sector of India were intended to integrate the Indian economy with rest of the world. In this context, the Ninth five year plan (1997-2002) observed, The process of globalization is a reality which cannot be denied and also should not be avoided. Howe ver, it needs to be managed so that we can derive the maximum advantage from the world markets. Reforms of trade and exchange rate policy were a critical element in the process of structural reforms. Since the initiation of economic reforms, Indias outward orientation has increased considerably. major trade policy changes in the post -1991 period included simplification of procedures, removal of quantitative restrictions and substantial reduction in tariff rates. A significant development in the current account of balance of payments in the 1990s was the remarkable growth in the exports of invisibles to the rest of world. This was made possible by unfrequented growth in information and communication related services like computer software, hardware, internet, e - commerce and telecommunication sector. economic reforms process introduced since 1991 with focus on liberalization, openness, transparency and globalization has enabled increased integration of the Indian economy with the rest of world. growth rate of Indias trade is increasingly dependent on exogenous factors such as world trade growth (especially those of the trading partners), international price changes and development in the competitor countries. Cross currency exchange rates as well as dollar rupee exchange rate movements also get reflected in the performance of Indias trade. Indias approach to openness has been cautious, contingent on achieving certain pre - conditions to ensure an orderly process of liberalization and ensuring macro -economic stability. This approach has been vindicated in recent years with growing incidence of fina ncial crisis in the world economy. Over and above, the entire policy regime in India with regard to liberalization of

Mineral resources and conflicts in DRC: a case of ecological fallacy?

We estimate the impact of geo-located mining concessions on the number of conflict events recorded in the Democratic Republic of the Congo between 1997 and 2007. Instrumenting the variable of interest with historical concessions interacted with changes in international prices of minerals, we unveil an ecological fallacy: Whereas concessions have no effect on the number of conflicts at the territory level (lowest administrative unit), they do foster violence at the district level (higher administrative unit). We develop and validate empirically a theoretical model where the incentives of armed groups to exploit and protect mineral resources explain our empirical findings.

The role of border carbon adjustment in unilateral climate policy: Overview of an Energy Modeling Forum study (EMF 29)

Issues of emission leakage and competitiveness are at the fore of the climate policy debate in all the major economies implementing or proposing to implement substantial emission cap-and-trade programs. Unilateral climate policy cannot directly impose emission prices on foreign sources, but it can complement domestic emission pricing with border carbon adjustment to reduce leakage and increase global cost-effectiveness. While border carbon adjustment has a theoretical efficiency rationale, its practical implementation is subject to serious caveats. This article summarizes the results of an Energy Modeling Forum study (EMF 29) on the efficiency and distributional impacts of border carbon adjustment. We find that border carbon adjustment can effectively reduce leakage and ameliorate adverse impacts on energy-intensive and trade-exposed industries of unilaterally abating countries. However, the scope for global cost savings is small. The main effect of border carbon adjustment is to shift the economic burden of emission reduction to non-abating countries through implicit changes in international prices.

Impacts of the End of the Coffee Export Quota System on International‐to‐Retail Price Transmission

AbstractWe examine the impact of the end of the coffee export quota system (EQS) on international‐to‐retail price transmission in France, Germany and the United States. We take account of the existence of long‐run threshold effects and short‐run price transmission asymmetries (PTAs). We find evidence of threshold effects in both periods (EQS and post‐EQS) in all three countries and the presence of short‐run PTAs during the post‐EQS period in all countries, but not during the EQS period. Our results indicate that the threshold values are smaller in the post‐EQS period, suggesting that retail prices became more responsive to changes in international prices. However, the speed of adjustment towards the long‐run equilibrium decreases during the post‐EQS period in the three countries. In the short run, non‐linear impulse response analyses indicate that a shock in international prices was more persistent during the EQS period than in the post‐EQS period. Moreover, we find evidence of short‐run PTAs in the post‐EQS period, with differences across countries. We find support for the ‘rockets and feathers’ principle in the United States; in contrast, retail prices respond faster when international prices are falling in Germany and France. We explain these differences in terms of market structures.

Commodity Price Changes and Their Impacts on Poverty in Developing Countries: The Brazilian Case

The objective of the paper is to provide an estimative of the impacts that changes in international prices of agricultural commodities will have on income distribution and poverty in Brazil. To do so, a Social Accounting Matrix is constructed and applied, using a Leontief-Miyazawa model framework. The SAM is defined for 40 products, and households are allocated into 10 groups, being 6 agricultural and 4 urban. Demand elasticities (price and income) for the products defined in the SAM are considered, as well as limitations on the supply of agricultural inputs. The results indicate that a 50% reduction in tariffs across the board, by all countries and for all products, will produce minor impacts in Brazil: national GDP would increase by up to 1.6%, and the impacts on poverty and income inequality, although positive, would be very small.

Coping with Rising Food Prices: Policy Dilemmas in the Developing World

Rising food prices cause considerable policy dilemmas for developing country governments. Letting domestic prices adjust to reflect the full change in international prices generates inflationary pressures and causes severe hardship for poor households lacking access to social safety nets. Alternatively, governments can use food subsidies or export restrictions to stabilize domestic prices, yet this exacerbates global food price increases and undermines a rules-based trading system. The recent episode shows that many countries chose to shift the burden of adjustment back to international markets. The use of corn and oilseed for the production of biofuel will result in a recurrence of such episodes in the foreseeable future.

Energy intensities and the impact of high energy prices on producing and consuming sectors in Malaysia

The increase in oil prices has put pressure on the global economy. Even economies that have a high degree of self-sufficiency concerning oil products are experiencing rising production costs and price increases for households energy use. Therefore, changes in energy policies are under consideration for countries highly dependent on imported energy as well as countries with a high degree of self-sufficiency. Examination of dependence on cheap energy sources for economic growth in different economic sectors is becoming more important as countries are trying to promote activities that are less energy intense. Among the policy changes under consideration, the adjustment of domestic energy subsidies is of particular interest. The effect of high energy prices on a fast growing economy, such as in Malaysia, is considerable, as the country will shift from being a net exporter of energy to a net importer in less than 10 years. Malaysia until recently has experienced increasing overall energy intensity and the growth up to 2,000 was quite high, especially for electricity intensity. A continued rise in energy intensity will be quite problematic in this new high oil price regime. This paper investigates the impact of rising energy prices on production costs for the different sectors of the Malaysian economy. Input–output (I–O) calculations demonstrate that the impact on the exporting component of the manufacturing sectors is less than for the average production. Therefore the production cost increase caused by, for example, an adjustment in electricity prices of 25% will result in less than 1/2% increase. As the competing countries in world markets are experiencing the same rise in energy costs, including electricity based on fossil fuels, there is no vital argument for not allowing domestic energy prices to adjust to the international price changes.

Decomposing General Equilibrium Effects of Policy Intervention in Multi-Regional Trade Models

Policy interventions in large open economies do not only affect the allocation of domestic resources but change international market prices. The change in international prices implies an indirect secondary burden or benefit for all trading countries. This secondary terms of trade effect may have important welfare implications: Countries without change in domestic policies may nevertheless gain or suffer from the action of other countries; in turn, the primary welfare effect of countries interfering domestically may be substantially enhanced or weakened due to international spill-overs. Obviously, policy makers of economies that are integrated into international markets have an essential interest to gain insights about the different sources of welfare changes associated with domestic policy changes. In this paper, we present a decomposition that splits the overall welfare effect into a domestic market effect holding international prices constant and an international market effect as a result of changes in international prices (terms of trade effect). We demonstrate the usefulness of our decomposition approach in the context of an empirical welfare analysis of international carbon abatement policies.

Carbon Abatement and International Spillovers

Carbon abatement policies in large open economies affect both the allocation of domestic resources and international market prices. A change in international prices implies an indirect secondary burden or benefit for all trading countries. Based on simulations with a large-scale computable general equilibrium model of global trade and energy use, we show that international spillovers have important welfare implications for carbon abatement policies designed to meet exogenous emission reduction targets. We present a decomposition of the total welfare effect of carbon abatement policies into a primary domestic market effect (at constant international prices) and a secondary international spillover impact as a result of changes in international prices. This decomposition reveals the extent to which domestic abatement costs are increased or decreased as a result of the impact of carbon abatement on international prices.

The International Competitiveness of CEEC Agriculture

The paper surveys the price competitiveness of agricultural production in Central and East European Countries (CEECs). It draws together empirical work conducted by tje authors and other studies that have estimated domestic resource cost (DRC) ratios for agriculture in various CEECs. The paper identifies that in general CEEC crop production is more internationally competitive than livestock farming. During the mid‐1990s, wheat production in Bulgaria, the Czech Republic, Hungary, Romania and Slovakia was internationally competitive. In contrast, during the same period, milk production was not internationally competitive. However, there is also a considerable degree of variation from country to country; very little of Slovenia's agricultural production is internationally competitive. In the livestock sector the greatest problems lie where large herds have been broken up resulting in fragmented production. This has particularly affected beef and milk production. Considering variations in DRCs by farm type, larger private farms in Hungary and the Czech Republic are more internationally competitive than smaller private farms in crop production. If CEEC producers faced average EU prices for their traded inputs and output, most could be price competitive. However, conclusions should be treated with caution due to sensitivity of DRC ratios to changes in international prices and the choice of the shadow prices for non‐tradeable inputs

Trade flows, relative prices, and effective exchange rates: a VAR on Ethiopian data

The dynamic response of trade flows to price and effective exchange rate changes is examined via VAR using quarerly data from Ethiopia for the period 1973(i)–1985(iv). The results show one-way Granger-causality running from prices and exchange rates to imports and exports without significant feedback. Imports and exports exhibit similar response patterns to unexpected changes in relative prices and exchange rates. The responses of imports and exports are larger and the adjustment takes longer when relative prices rather than exchange rates caused a change in international prices. In the long-run, changes in prices account for a larger percentage of the forecast error variances in imports and exports than exchange rate changes. It is shown that devaluation may have an initial adverse effect on the trade balance.

THE TERMS OF TRADE IN THE PRESENCE OF RE‐EXPORT TRADE: SOME FURTHER DEVELOPMENTS(*)

Abstract. In this paper we examine the measure of terms of trade changes, adjusted to take re‐export trade into account, proposed by Lloyd and Sandilands (1985), and introduce two additional (but very basic) complications: a positive rate of growth and substitutability between imports and the domestic factor(s). We show that in such cases one can no longer establish a precise analogy with the traditional measure, and argue that the very notion of « a terms of trade change » becomes somewhat ambiguous. As an alternative view, we derive a measure of the impact of international price changes on what will be called « trade augmented » productivity; such a measure will be based on the movements of the wage‐rate of profit frontier.

Productivity Change and Dynamic Comparative Advantage

This paper proposes a simple decomposition of the widely used DRC measure of international competitiveness into three distinct elements: (1) changes in international prices, (2) changes in production techniques and (3) total factor productivity change. The decomposition provides a clear analytical link between two largely separate methodologies for assessing economic performance, cost-benefit indicators based on the world price rule and total factor productivity analysis. The methodology is applied to evaluate changes in measured comparative advantage of industries in Thailand for the period 1963-76. The results broadly indicate that changes in price competitiveness and in total factor productivity are the major sources of changes in DRC ratios for Thai industries.

Determinants of international trade flows: The Case of Developing Countries

The question of magnitude and the time path of the trade flows to changes in the exchange rates and to changes in the price level is of emitent practical importance. To assess the above proposition, a distributed lag structure is imposed on the relative prices and on the effective exchange rate as the determinants of trade flows. Then, import and export demand functions are estimated for a sample of developing countries, using the Almon procedure. The empirical findings appeared to sustain Orcutt's early conjecture that trade flows adjust differently to different price stimuli. More precisely, it was found that imports and exports reactions were quicker and the total response time was shorter when an exchange rate, rather than relative prices, caused a change in international prices.

Aspects of Unilateral Trade Policy and Factor Adjustment Costs

OVER the past decade, the post-war United States position in favor of free trade has been strongly attacked by those who have invested in and are employed in industries facing significant competition from imports. Since factors of production are temporarily tied to a particular industry, all factors in contracting industries experience economic losses of a short-run nature. This paper considers to what extent these short-term losses alter the welfare evaluation of free trade policies. A second intent, based on the analytical framework developed to resolve the first point, is to determine when a tariff reduction may be preferable to tariff removal and how such tariff reductions may be effectively carried out over time. In the literature of trade policy, it has been shown that in a two-good general equilibrium model under the assumption that factors of production are immobile, the gains from free trade will be reduced but remain positive if no distortions exist (Haberler, 1950; Johnson, 1965). More recently, studies have focused on the short-run distributional effects of changing international prices. Capital has been postulated to be immobile between the two industries and relative factor prices perfectly flexible (Mayer, 1974; Mussa, 1974). In this paper the analysis is based upon the situation where factor-price rigidities exist in addition to factor immobility. Under these circumstances changes in international prices result in unemployment. The economy is moved inside its long-run production possibilities frontier, and any welfare assessment of a free trade policy must allow for the second-best effect of this factor-market distortion. Because the short-run effect may be negative, the question arises whether the long-run welfare gain for a small country offsets this loss.' This study treats imports and domestic competing goods as imperfect substitutes, and allows for the effects of short-run output price rigidities. Limitations of the analysis are that only unilateral tariff reductions are dealt with empirically, and terms-of-trade effects are ignored.2 The model is used to evaluate the welfare cost of current tariff barriers for five disaggregated industries: industrial chemicals, iron and steel, machine tools, electrical machinery, and motor vehicles. One issue that falls out of this approach is whether an intermediate position between free trade and the current level of restrictions is preferable, given the existence of factor-market distortions. It is shown empirically that complete tariff removal generally will not be optimal in terms of economic efficiency and that phased reductions of tariffs over time will be preferable to a single tariff cut. Section I is concerned with the determination of benefits and social costs from tariff removal. Since United States trade policy often is determined in the context of unilateral policy changes affecting a single disaggregated industry, the empirical calculations presented in