Market Liberalization Research Articles

Impacts of Regional Integration and Market Liberalization on Bilateral Trade Balances of Selected East African Countries: Potential Implications of the African Continental Free Trade Area

This study examined the effect of free trade on intra-African bilateral trade balances for Kenya, Rwanda, Uganda, and Tanzania to assess the potential implications of the African Continental Free Trade area. The four countries have experienced persistent trade deficits. Whether free trade within Africa can improve the national trade balances, and the drivers of bilateral trade balances are important questions for policy and strategic programmes for the countries to make the most gains from free trade area. The econometric model estimated for each country is an extension of the standard Keynesian model of trade balance to include determinants of bilateral trade flows from the gravity model. Quantitative analysis using panel regression was augmented with qualitative data from interviews with trade policy experts and trade officials from various African countries and focus group discussions with small-scale cross-border traders at the Busia and Namanga border posts in East Africa. Findings show that complete tariff elimination on intra–African trade may not impact the bilateral trade balances of Kenya, Rwanda, and Tanzania but could improve bilateral trade balances for Uganda by 6 percent. Within the free trade areas, Uganda’s bilateral trade balances were higher within the Common Market for Eastern and Southern Africa but lower within the East African Community, than outside these areas. Kenya’s trade balances were lower in the Common Market for Eastern and Southern Africa, than otherwise. On the contrary, no significant difference in trade balances is established for the membership of Kenya, Rwanda, and Tanzania in the East African Community; Rwanda in the Common Market for Eastern and Southern Africa; and Tanzania in the Southern African Development Community, when compared to trade balances with non-members. The importance of macroeconomic factors is demonstrated by the increase in bilateral trade balances with higher relative price levels of trade partners; the reduction with increase in relative production and expenditure capacities of trade partners; and improvements following a depreciation of home currency for Tanzania and Uganda, yet a worsening of trade balances in Kenya. A lack of harmony in documents required for cross-border movements within the free trade areas is reported as counterproductive. All African countries should therefore fully implement protocols and cooperate in the harmonization of trade procedures for the free movement of people and goods across borders. Country policies and trade programmes should pursue increased productivity in the leading intra-African export sectors and diversify exports via foreign direct investment in strategic sectors to substitute imports from outside Africa; reduce costs of production; increase the quality of products; and improve transport infrastructure.

Connectivity throughout ASEAN Following the Establishment of the ASEAN Single Aviation Market (ASAM)

The establishment of the ASEAN Single Aviation Market (ASAM) by ASEAN is aimed at promoting connectivity and liberalization of the single aviation market in ASEAN. The restrictions imposed by Indonesia imply on the policy of ASAM in increasing the connectivity of air services. This paper examines the implications of the ASAM restriction policy on civil aviation in Indonesia. This writing uses a juris-normative approach. The success of ASAM in facilitating air connectivity between ASEAN member states should be enhanced through a careful and informed approach through comprehensive and collaborative adjustments among ASEAN members. This adjustment can be a very valuable part in evaluating the impact of ASAM implementation on each ASEAN Member State, identifying potential barriers, and formulating more effective strategies to enhance connectiveness in the region.

Capital market opening and share repurchases: Evidence from China's listed companies absorbed in the MSCI Emerging Markets Index

The inclusion of Chinas A-shares in the MSCI Emerging Markets Index (hereafter referred to as the MSCI index) represents a significant milestone in the opening of China's capital market. Using this inclusion as a quasi-natural experiment, this study examines the impact of capital market liberalisation on share repurchases. Our findings indicate that the opening of the capital market has a significantly positive effect on share repurchases, a conclusion that remains robust across a series of robustness tests. Mechanism analysis reveals that capital market liberalisation increases the risk of a stock price crash and encourages firms to repurchase shares as a signalling mechanism.

Does stock market liberalization increase company TFP? Evidence from the Shanghai-Shenzhen-Hong Kong stock connect program in China

This paper studies the impact of the liberalization of the Chinese stock market on company total factor productivity (TFP) and its mechanism of action by using the "Shanghai-Hong Kong Stock Connect" program. The benchmark regression results based on the multi-period difference-in-difference (DID) model show that the implementation of the “Shanghai-Hong Kong Stock Connect” program significantly increases the TFP of target companies, a conclusion that is still valid after a series of robustness tests. Further mechanism analyses shows that the program increases company TFP by both increasing a company's stock liquidity and information transparency and reducing the degree of financing constraints.

Factors affecting the cessation of commercial air services at English regional airports

Although much of the existing research on regional airports focuses on their contribution to regional economic development, regional airports in England, as in other deregulated markets, operate in a highly competitive market and not all have been able to sustain commercial flights. This paper examines the factors that have led to the cessation of commercial air services at English regional airports following liberalisation of the European air transport market in 1992. Six factors which have contributed to air service cessation are identified and potential futures for smaller regional airports discussed.

A construção da sociedade neoliberal brasileira: qual o lugar da democracia?

Abstract The paper aims to analyze how democracy is structured within the neoliberal capitalist system in the Brazilian context. While neoliberalism requires market liberalization, reduction of the social state, and financialization of life, democracy presupposes political and economic equality, public apparatus, and inclusion; thus, it is necessary to discuss this conflicting relationship. The first session of the work discusses the economic, political, and social system of neoliberalism, understanding its requirements and characteristics, as opposed to democratic pretensions, to enter into Brazilian particularities. The second topic analyzes the construction of a neoliberal society in the country, establishing the investigation through the clash between social development and neoliberal advancement in Brazil. Finally, it examines the presence of neoliberal capitalism from the Partido dos Trabalhadores (PT) governments to the first two years of the Bolsonaro government, questioning the place of democracy. For this, the research used the deductive approach method and type of bibliographical and documentary research with a qualitative approach. In conclusion, we highlight the obstacle that neoliberalism imposes to realize a substantial, egalitarian, and plural democracy, marginalizing its power and restricting it to the electoral sphere.

FinTech and financial development: the role of traditional financial institutions

PurposeThis paper employs data from the World Bank to examine the effect of traditional banks on FinTech and financial development in the Southern African Development Community (SADC) region.Design/methodology/approachThe study employs the Generalized Method of Moments (GMM) as the primary data analysis method.FindingsThe findings of the study demonstrate a bi-directional relationship between traditional financial institutions and FinTech. Traditional financial institutions are observed to facilitate the adoption of FinTech solutions, whilst the disruptive effects of FinTech incentivize traditional banks to adapt to the changing financial landscape and tailor their service and product offerings to reflect recent technological advancements. Consequently, there exists a positive relationship between traditional financial institutions and financial development in the SADC region.Practical implicationsOur findings suggest the need for market liberalization and enhanced institutional quality controls for policymakers. Traditional banks must adapt their business models and incorporate FinTech solutions to remain competitive and relevant. Collaborative partnerships between traditional banks and FinTech firms have emerged as a practical approach to leverage the strengths of both sectors.Originality/valueThis is one of the first studies to examine the role of traditional financial institutions in FinTech and financial development using GMM in the SADC region.

China's Response to Capital Market Liberalization

Looking back at the Asian financial crisis of that year, although the outbreak of the crisis is closely related to the Asian countries' own inherent defects in institutional mechanisms, it is also related to the opening of the capital market, but the opening of the capital market is not an important factor that led to the financial crisis in China, so China should not close the capital market, but rather should be free to open up the scenarios, and the content of my research is to explore the Chinese response to the issue of the opening of the capital market. Through analysis, this paper argues that China cannot face the opening of the capital market overnight; it still needs to carefully consider the opening of the capital market and take many factors into account. It should be gradual rather than faster, and a more thorough opening up is better. To make a comprehensive judgment on the opening up of the capital and financial markets in the light of China's current national conditions. The following aspects should be considered: keep an eye on China's real economy situation and launch more pragmatic initiatives; strengthen the risk prevention capability; improve the various mechanisms of the capital market.

From securitisation to martialisation: Logistics of humanitarian protection in Brazil’s Amazon

The association between logistics and militarised humanitarianism is expanding as a strategy for managing migrants' productive and reproductive lives. In Brazil, despite a progressive humanitarian visa policy, the national army remains responsible for the logistics of a severely underfunded humanitarian operation in Brazil’s Amazon. This study, based on participatory action research with 300 migrants, introduces the notion of martialisation to show political and socioeconomic dimensions that are juxtaposed in the military logistics of humanitarian zones and subsequently experienced as a dominant structuring process of exploitation. These are securitization of migration linked to at once the deepening of market liberalism and the normalisation of military intervention within productive and reproductive processes. Findings show that the military leadership in Brazil’s humanitarian response reveals a multi-scalar phenomenon of military rule that contributes to sustaining the repressive labour regime in Brazil’s Amazon. It articulates the structures of labour subordination with the micromanagement of reproductive measures by which migrants are controlled, exploited, and dispossessed of their rights. The conclusion makes the case for the collective organization of migrants in pursuit of transformative action.

Neighbourhood watch: the future of Asian LNG demand growth

The global liquefied natural gas (LNG) market has returned to a semblance of calm after a tumultuous 2022. European and Chinese demand is on the path to a slow recovery, while a nuclear power renaissance is underway in Japan and South Korea. This paper will detail our expectations for LNG demand growth, discuss demand drivers and market development opportunities for Australian LNG between the late 2020s to early 2030s. We see LNG demand in the region increasing from 260 Mtpa in 2023 to 479 Mtpa by 2035. The largest source of growth continues to be China with demand growing from 68 to 150 Mtpa, driven by uptake of LNG in the industrial and buildings sectors. We will also see South Asian demand growing from 33 to 100 Mtpa, and Southeast Asian demand from 24 to 103 Mtpa. Even in legacy markets of Japan and Korea where we see demand declining in this timeframe, we will see the emergence of new buyers and the impact of market liberalisation measures. The expiry of legacy contracts and the rising influence of US LNG is set to complicate market dynamics further. We discuss the challenges of the energy transition in a region that must balance emissions considerations with energy demand. We conclude that Australian projects with their proximate location and legacy relationships will remain an attractive proposition for Asian buyers. Ullage at existing LNG plants will support backfill economics, with decarbonisation measures taken under the Safeguard Mechanism demonstrating genuine emissions reduction action.

International Trade Liberalization and Domestic Institutional Reform: Effects of WTO Accession on Chinese Internal Migration Policy

Abstract Economic institutions that impede factor mobility become more costly when an economy experiences substantial transitions such as trade liberalization. I study how trade triggers changes in labor institutions that regulate internal migration in the context of China’s Hukou system. Using a newly collected dataset on prefecture-level migration policies, I document an increase in promigrant regulations following WTO entry and estimate the impact of prefecture-level tariffs on exports on migration regulations from 2001 to 2007. I find that regions facing more export market liberalization enacted more migrant-friendly regulations.

The impacts of exporting to China: assessing the productivity gains of developing countries using an instrumental variable approach

ABSTRACT Developing countries have taken substantial measures to liberalize protected domestic markets to facilitate international trade. However, market liberalization often depends on policies of export expansion and innovations, raising the question: Is export expansion sufficient for productivity gains of developing countries? How does export expansion mediate the relationship between innovations and productivity gains? Are further policy interventions necessary? Hence, this study examines the impacts of developing countries’ exports to China on productivity gains from 1992-2022. Further, it investigates how innovations mediate the relationship between export expansion and productivity gains. The 2SLS method is applied for estimation, which addresses the endogeneity by using export expansion to China from other developing countries. The findings reveal that exports positively impact productivity driven by China’s rise. Innovations and learning by exporting significantly mediate the association between key variables. It highlights how developing countries benefit from China’s growth, contributing insights to trade and economic growth literature.

Can operational efficiency in the Portuguese electricity sector be improved? Yes, but...

Efficiency has long been an issue of concern in the electricity sector. Most existing studies relate technical efficiency in electricity generation to policy factors while that in transmission and distribution is associated with environmental factors. Although firm operation is also a relevant perspective on this topic, its explicit impact upon technical efficiency has rarely been studied. In order to analyze the evolution and operational determinants of productive and cost efficiency in the Portuguese electricity sector (including generation from different sources, trade, transmission and distribution), this study estimates Stochastic Frontier models using firm-level panel data from 2006 to 2019, covering the period of liberalization of the Portuguese electricity market. The evidence indicates efficiency improvement through time, which is likely to slow down and needs to be consolidated. Results on the inefficiency determinants suggest that it is possible to improve productive technical efficiency by encouraging investment in fixed assets, higher average hourly wage and moderate average working hours. In addition, based on the results, we advocate deepening the integration of the Iberian electricity market and stimulating competition in the renewable energy sector.

The politics of agro-industrial greening: policy processes, market institutions and local power relations in the sugarcane sector of French overseas departments

ABSTRACT In France, the agenda of agro-industrial greening has resulted in limited progress towards environmentally sustainable agriculture, while the prevailing productivist model remains dominant across agro-industrial systems. This article deploys an interdisciplinary analytical framework focused on two key explanatory variables – market and policy incentives – to explain the emergence or absence of agro-industrial greening initiatives. Additionally, it introduces a crucial intervening variable, power relations along the value chain, to understand the success or failure of such initiatives. Applying this framework empirically, a comparative analysis of greening dynamics within the sugarcane agro-industry across three French overseas departments is conducted. Following the liberalization of the European sugar market, private greening initiatives emerged in some of these territories but not others. I first demonstrate that policy processes did not play a determining role in instigating greening initiatives. Rather, local representations of market opportunities proved decisive. However, the ultimate outcomes of these initiatives were intricately tied to local power dynamics within territorially embedded agro-industrial value chains. Therefore, territorialized political economies not only impose structural constraints on greening initiatives, but also offer localized opportunities for eco-innovation through shifting discourses, representations and practices.

Capital market liberalization and accounting quality: Evidence from China

Introducing the Shanghai-Shenzhen-Hong Kong Stock Connects (the Connects) as an exogenous shock, we find that capital market liberalization significantly reduces real earnings management, accrual earnings management, earnings smoothing, and promotes information disclosure evaluation grades for A-share companies. Heterogeneity analysis indicates that this favorable impact is more significant for companies with poorer information environments, higher auditor reputation risks, higher corporate governance quality, and stronger executive compensation incentives. This study further contributes to the literature on the impacts of capital market liberalization on accounting quality by providing new empirical evidence from China.

Efficiency and Mergers and Acquisitions of Electric Utility Companies

Since the 1990s, market liberalization of the electricity industry has advanced all around the world. To survive in the drastically changing business environment, incumbent electric utility companies have conducted operational reforms, including Mergers and Acquisitions (M&As), to enhance and/or complement existing business capabilities. The purpose of this study was to measure the operational efficiencies of 31 of the world’s largest electric utility companies using data from 2010 to 2020 and examine regional differences in and the impacts of M&As on the efficiencies. For this purpose, we applied a new type of Data Envelopment Analysis (DEA) and Tobit model regression. We provide findings from the empirical analyses and discuss the business implications of M&As for electric utility companies. The operational efficiency measures were different among regions, but did not show statistically significant changes over the study period from 2010 to 2020. Furthermore, the results of regression analyses indicate that the increasing number of M&A buying transactions and M&A total transactions has a negative marginal impact on the operational efficiency or leads to a lower operational efficiency for utility companies. Since electricity utility companies have not received gains in operational efficiency from increasing the number of M&A transactions, they need to be more cautious about whether M&A transactions can provide value to the operation and technology management.

ACTUALIZING THE VENTURING MODEL IN UKRAINE

The financing of innovations is the driving driver of the innovative model of development of any country, and Ukraine in particular. In modern conditions, the importance of venture capital for the economy of Ukraine is growing against the background of reducing alternatives to raising capital for the development of small and high-tech businesses. The reasons for the current state of decline in the innovation and investment process in Ukraine are analyzed and identified. Peculiarities of venture investment in Ukraine are studied. It is determined that the vast majority of venture capital institutions, regardless of their field of activity, are used mainly by large industrial and financial groups to preserve assets and minimize taxation, rather than to finance innovation. The obtained results give grounds for the conclusion that the essence of venture entrepreneurship in Ukraine does not correspond to the American and European models. The current conditions turn venture funds in Ukraine from an instrument of innovative development into a means of making a profit for large financial and industrial groups, which is a hidden reason for slowing down the innovation and investment process. An updated Ukrainian venture model is proposed, taking into account the peculiarities of the economy and a thorough rethinking of the existing structure of venture capital. The introduction of a rational combination of public, private, and research components of the investment process is proposed, i.e. the need to involve universities, scientists, and the scientific elite in the venture industry. It is determined that this model is only one of the components of a comprehensive program to stimulate investment demand, which also includes: ensuring macroeconomic stability; ensuring economic freedom; ensuring economic security; an increase of investment resource; impact on investment propensity; liberalization and development of the financial market; stimulating investment activities through the mechanism of state support for business and science partnerships.

How do firms react to capital market liberalization? Evidence from ESG reporting greenwashing

AbstractBased on catering theory, this study employs a difference‐in‐differences model to investigate the impact of capital market liberalization on environmental, social, and governance (ESG) reporting greenwashing using mainland Hong Kong Connection Programs as a quasinatural experiment. Our findings indicate that corporate management increasingly engages in ESG reporting greenwashing in capital market liberalization to cater to foreign investors. This conclusion remains valid after controlling for endogeneity. Mechanistic analysis indicates that investor sentiment increases with capital market liberalization. In response, corporate management intensifies ESG reporting greenwashing to cater to foreign investors, and analysts' focus does not serve as a supervisory mechanism for restraining ESG reports greenwashing. Heterogeneity tests demonstrate that ESG reports greenwashing within the capital market diminishes for mandatory disclosure and state‐owned firms. However, ESG reports greenwashing intensifies among firms facing high financing constraints amid capital market liberalization. Overall, we identify a significant catering effect on ESG reporting amid capital market liberalization, offering a novel theoretical framework on greenwashing in ESG disclosures.

The capital market consequences of stock market liberalisation: Evidence from Mainland‐Hong Kong Stock Connect Programs in China

AbstractWe analyse the capital market consequences of stock market liberalisation in a quasi‐natural experiment setting, where Mainland‐Hong Kong Stock Connect Programs allow foreign investors to trade in the Chinese stock market. Utilising difference‐in‐differences estimations, we observe improved stock liquidity, driven by direct liquidity provision and indirect signals to domestic investors. Particularly notable are the effects on eligible stocks without previous exposure to foreign investors, characterised by high corporate transparency and investor protection. The resulting liquidity enhancements reduce equity costs, ultimately elevating firm value. In short, our study highlights the positive influence of stock market liberalisation on the capital market.

Can Foreign Institutional Investors Stimulate Environmental Innovation? Evidence From China’s Stock Market Liberalization

In this paper, the Mainland-Hong Kong Stock (MHKS) Connect Program is used as a quasi-natural experience to study the relationship between foreign institutional investors and environmental innovation. Using the sample of the Chinese mainland A-Share market industrial firms from 2012 to 2019 and Difference-In-Difference model, we find a promoting effect of the foreign institutional investors on the mainland firms’ environmental innovation. The mediating effect tests prove that foreign institutional investors inspire environmental innovation through monitoring channel (supervising the environmental innovation), insurance channel (tolerating innovation failures) and knowledge spillover channel. It is noteworthy that only firms in the regions of high innovation capacity benefit from the knowledge spillover channel. Our study implies that environmental innovation can benefit from the opening-up of the stock market if it can attract foreign institutional investors who fulfill the roles of monitoring, insurance and knowledge spillover.