Measures Of Trade Openness Research Articles

Impact of industrial intelligence on income inequality of urban residents in China

We construct a theoretical model based on the task-based approach to study how industrial intelligence affects the residents’ income gap through employment substitution and creation effect on different skilled labor, compensation effect on industries and industrial structure upgrading effect on industrial sectors. Subsequently, we present the benchmark regression analysis elucidating the impact of industrial intelligence on income inequality among urban residents in China. We employ a comprehensive set of control variables including economic development indicators, financial metrics, trade openness measures, government intervention variables, and other relevant factors to ensure the robustness of our findings. Furthermore, we explore heterogeneous effects to uncover how industrial intelligence affects income inequality differently across various demographic groups and regions. Based on our empirical analysis, we discover several key findings. Firstly, the advancement of industrial intelligence has notably exacerbated the income disparity among urban residents in China. This conclusion remains true even after conducting robustness test and endogenous treatment. Secondly, the impact of industrial intelligence on income inequality operates through distinct mechanisms. While it widens the income gap through employment substitution and creation effect as well as industrial upgrading effects, it also narrows the gap via the compensation effect. Lastly, industrial intelligence disproportionately affects certain demographic groups and regions. Specifically, it exacerbates income inequality among middle-aged and elderly individuals and in areas with weaker employment protection measures in China. The insights derived from our research can inform policymakers about striking a balance between economic growth and the well-being of the population, ultimately guiding the formulation of effective and inclusive policies in response to technological advancements.

Does trade openness improve or worsen public governance in sub-Saharan Africa?

The literature on the effect of trade openness on public governance shows contrasting results. Using a renewed empirical strategy, we contribute to the understanding of this indeterminacy by studying the influence of trade openness on public governance in Sub-Saharan Africa. We also examine how this effect varies with structural characteristics that may be subject to reforms. In this respect, we use an original measure of trade openness. We consider public governance and its three dimensions, namely economic governance, political governance, and institutional governance. Overall, we find that trade openness improves public governance, political governance, and economic governance. On the other hand, it worsens institutional governance. Moreover, these effects of trade openness on the dimensions of public governance depend on the defined levels of technology transfer, foreign direct investment, and natural resources. Our results are robust to different openness and governance indicators, alternative specifications, study periods, endogeneity, and cross-sectional dependence. Above all, they highlight the interest of dissociating public governance to understand the contrast observed in the empirical literature.

Structural transformation and inequality: Does trade openness matter?

AbstractThe purpose of this paper is to examine income inequality in the process of economic growth and structural transformation with emphasis on the role of economic openness using a new measure of trade openness (the price convergence index [PCI]), which is an alternative measure to the widely used trade‐to‐GDP ratio. The analysis is based on a multi‐country panel data covering 48 countries for the period from 1960 to 2010. The results suggest that an increase in the share of employment in manufacturing is associated with a reduction in income inequality. This inequality‐reducing effect is significantly greater for countries with more open trade regimes. In addition, the Kuznets‐type relationship exists between services employment share and income inequality, with inequality first increasing with the movement of workers from agriculture to services and then decreasing. This inequality‐increasing effect of services employment share is also larger for countries with more open trade regimes. The findings withstand the inclusion of relevant explanatory variables, an alternative measure of income inequality, and alternative estimator to address possible endogeneity.

Diminishing gains from trade across countries: Interaction between trade elasticity and openness

This paper theoretically shows that when the trade elasticity is allowed to be country specific and it increases with trade openness across countries, it is possible for the gains from trade to decrease with trade openness across countries under certain conditions, which we call as the diminishing gains from trade. In order to empirically test this possibility, country-specific trade elasticity measures are estimated by using quarterly time-series data for 40 countries, where the model-implied macroeconomic relationship between the home expenditure share and the real income per capita is employed. The average trade elasticity is estimated about 2.7, with a range between 0.3 and 11.9 across countries, which corresponds to the gains from trade of about 30% for the average country. Instead, when a common trade elasticity of 2.7 is used for all countries, the gains from trade are underestimated by about 8% for the average country, showing the importance of using country-specific trade elasticity measures. In a secondary cross-country analysis, the country-specific trade elasticity estimates are shown to increase and the gains from trade are shown to decrease with trade openness measures. It is implied that there are diminishing gains from trade across countries with respect to their trade openness.

Độ mở thương mại và nền kinh tế bóng tối ở các nước BRICS: Bộ đôi song hành hay đối nghịch?

This paper examines the impact of trade openness on the shadow economy in the BRICS countries from 1996 to 2018, using Bayesian panel regression. The results indicate that trade openness is effective in reducing the expansion of the shadow economy. Furthermore, when we replaced the measure of trade openness with the trade globalization index from the KOF Globalization Index, the findings remained consistent. Therefore, policies aimed at reducing trade barriers may benefit countries seeking to curb shadow economy activities. Additionally, our findings suggest that per capita income, internet penetration rate, and government effectiveness are also factors that can help reduce shadow economy activities in the BRICS countries.

The asymmetric effect of technological innovation on CO2 emissions in South Africa: New evidence from the QARDL approach

The asymmetric impact of technological innovation on carbon dioxide (CO2) emissions in South Africa from 1960 to 2020 is evaluated in this study. We apply the newly established quantile autoregressive distributed lag (QARDL) methodology to deal with distributional asymmetry based on the location of CO2 emissions within its own distribution. This distinguishes our analysis from earlier studies in the following way. In contrast to other studies, this research uses the QARDL technique to assess the long-term stability across the quantiles, resulting in a more adaptable econometric analysis than the traditional frameworks. In order to capture the trade share in South Africa’s GDP and the quantity of trade compared to world trade, we employ a novel measure of trade openness. We find that 1) technological innovation helps reduce CO2 emissions in the short term and over the long term; 2) the scale effect worsens CO2 emissions, whereas the technique effect enhances it, supporting the existence of an environmental Kuznets curve (EKC) hypothesis; 3) energy consumption, foreign direct investment (FDI), and industrial added value degrade environmental quality; and 4) increasing trade openness is glaringly harmful to the environment over the long term, despite being beneficial in the short term; 5) there are long-term, asymmetric linkages between CO2 emissions, scale effect, technique effect, technological innovation, energy use, FDI, and trade openness; 6) industrial value-added, scale effect, technique effect, technical innovation, energy usage, FDI, and trade openness Granger-cause CO2 emissions over the medium, long, and short terms indicate the significance of these variables in determining CO2 emissions. Based on our empirical findings, this study makes the case that South Africa’s government and policymakers should consider the importance of innovative technologies as a sustainable source of advancements in attaining energy security and promoting ecological integrity in the nation.

Impact of Trade Openness on Unemployment: East, South and Southeast Asian Countries (2006 – 2016)

Recent statistics have shown how trade has grown quickly over the last decades in East, South, and Southeast Asian countries. East and Southeast Asian countries have been among the most dynamic participants in international trade. It strongly implies estimating how trade openness effects unemployment in East, South, and Southeast Asian economies. This paper empirically investigates the impacts of measures of trade openness on the unemployment rate in an unbalanced panel context for the period 2006-2016. The analysis focuses on the 16 east, south, and Southeast Asian countries, which are highly ranked in terms of their trade openness: Philippines, Singapore, Vietnam, Thailand, Malaysia, Indonesia, Timor-laste, China, Hong Kong, Korea, Japan, India, Pakistan, Sri Lanka, Bangladesh, and Maldives. The results illustrate the negative relationship between trade openness and the unemployment rate. It has been found that trade openness reduces the unemployment rate significantly.

Trade Openness, Income Levels, Economic Growth, and Current Account Balances

The aim of this study is to investigate if the trade openness has an effect on the income levels, growth rates, and on the current account balances together for the first time in the literature. Two different trade openness measures are used. 134 countries are added in four income groups between 1990 and 2019. There is a negative and statistically significant association between trade openness and current account balances for the group of low-income and lower middle-income countries. For upper middle-income and high-income countries, it is not identified any significant associations between trade openness and current account balances. Trade openness increases the growth for all groups except the upper middle-income countries. Results show trade openness widen the current account deficits of many of the low-income and lower middle-income countries. Sustainability of the current account deficits and external debts might be potentially an issue for many low-income, lower middle-income, and some of the middle-income countries especially if the growth rates decrease.

Trade openness, green finance and natural resources: A literature review

Green finance has recently begun to receive increased significance in environmental and business studies due to its importance in combating climate change and the production of excessive greenhouse gases. China is a highly industrial country that is indexed high on the production of pollution. trade openness of this country is also a major contributor to its increased levels of industrialization and pollution. it is believed that if appropriate measures of trade openness are carried out to regulate the flow and trade of natural resources between countries, and by the application of the green finance theories, the level of harmful environmental footprints can be reduced and the and the overall environmental quality and sustainability can be enhanced. Hence, in this paper, u sing a vector autoregression (VAR) model, based on data from 1981 to 2020, this study found that that trade openness and green finance levels are dependent on the use of natural resources significantly. Moreover, it is found that the use of coal and oil has strong negative impacts on green finance implying that the use of coal, oil, and such pollution-causing fuels can lower green finance. Similarly, it was found that gas and oil consumption were strong predictors of trade openness in the country. It is suggested that the use of gas should be increased as it produces the least pollution and can lead trade towards a more sustainable direction.

TRADE, FINANCIAL LIBERALISATION AND CURRENT ACCOUNT BALANCE IN NIGERIA

This paper examines the individual and interactive impacts of trade and financial liberalization on Nigeria’s current account balance between 1986 and 2019. An autoregressive distributed lag technique is used to investigate the short- and long-run effects of the de facto measure of trade openness and the de jure measure of financial openness by Chinn-Ito on the current account. The finding suggests that financial liberalization, in particular, has an insignificant negative effect on the current account, whereas trade has a non-significant positive impact in the long-run. The interaction of the variables in the long-run produces significant positive influence on the account. The short-run effects show a positive impact of financial liberalization, whereas the interplay of the variables has a negative impact on the current account. The study concludes that the interaction of trade and financial liberalization is critical in improving the current account balance in Nigeria.

Threshold effects of openness on real and nominal effective exchange rates in emerging and developing economies

AbstractIn this paper, we assess the direct and indirect effects of the degree of openness in emerging and developing economies on exchange rate movements. Using threshold regression analysis for twenty‐five economies for the period of 2000–2017, we find that changes in inflation, interest rate differentials and government debt have a more sizable and significant effect on real effective exchange rates in less open economies, which is not detected in countries with openness above the threshold value. In more open economies, nominal effective exchange rate movements are driven by interest rate differentials and real GDP growth. However, the exchange rate response is still smaller than in less open economies. Lastly, the measure of openness matters. Evidence of threshold effects is most significant when considering overall openness with the KOF Globalisation Index, rather than the traditional measure of trade openness alone.

The Dynamic Link Between Financial Development, Trade Openness and Foreign Direct Investment: Empirical Evidence from Ethiopia

Foreign direct investment (FDI) is an important source of external financing and an important factor for the economic development of a country. FDI is highly important especially for developing countries as it brings modern technologies and management skills in addition to narrowing the financial gaps. In this sense the knowledge of what determines FDI will have a tremendous significance. With the objective of empirically determining the long-run and short-run relationships between financial development, trade openness and FDI inflows in Ethiopia this study employed the ARDL model. The findings indicated that private sector credit, M2 and trade openness have a positive and significant influence on FDI inflows in the long-run while M2, and trade openness has a positive and significant influence on FDI in the short-run too. Current period private sector credit had no impact on FDI while the one period lag of it has a positive significant effect on FDI. Likewise, the causality test results disclose the presence of bi-directional causal relationships between private sector credit and FDI, and between M2 and trade openness. Furthermore, the findings indicate a one direction Granger cause from M2 to FDI. Policy makers are advised to consider trade openness and financial development measures in their quest for more FDI inflow. Keywords: FDI, trade openness, financial development, ARDL, Ethiopia

IS TRADE AGAINST OR IN FAVOR OF WOMEN? EMPIRICAL EVIDENCE FROM MANUFACTURING SECTOR IN TURKEY

This paper studies the effect of trade openness on relative wage earnings of female workers in Turkey’s manufacturing sector. We compute the export intensity of a sector by dividing the export value to production value as our measure of trade openness. Using Structure of Earnings Survey data for 2010 and 2014, we estimate the impact of export intensity on the gender wage gap. Our results indicate that a onepercentage point increase in the export intensity of a sector leads to a 0.17 percent higher gender wage gap. We further investigate the trade-gender wage gap link by grouping the sectors into four quartiles according to their export intensities. Our estimations for each quartile reinforce our finding of a negative impact of trade on the male-female wage inequality. Lastly, we analyze how the wage gap between men and women change according to skill levels. In line with the previous findings in the literature, we estimate a higher wage discrimination against high-skill women.

Revisiting the link between trade openness and economic growth using panel methods

The link between trade openness and economic growth remains an open question due to the inconclusive findings provided by empirical studies. We argue that the primary reasons for such disagreement are the differences between previous studies regarding their methodologies, sample selection, measures of trade openness, and duration of analyses. Based on this argument, we reinvestigate the trade–growth nexus by applying newly developed methodologies on a robust sample of 82 countries for the period 1960–2019. Also, this study integrates five region-wise subsamples and use different measures of trade openness. Our econometric results corroborate the view that trade openness induces economic growth. These results emerge after employing a variety of panel methods to data, including common correlated effects mean group (CCEMG) estimator and a system generalized method of moments (system-GMM) estimator, which accounts for cross-sectional dependence, structural breaks and endogeneity between trade and growth. Based on our robust results, we can safely claim that trade openness may contribute to economic growth. The findings of the study question the validity of the empirical results of previous studies which argue that trade restrictions promote economic growth.

WITHDRAWN: Analyzing and measuring the impact of trade openness on the gross domestic product growth of the Iraqi economy after 2003

Abstract Foreign trade and trade openness has an active and important role in a wide range of macroeconomic variables, especially gross domestic product GDP and its growth rates. This effect is demonstrated practically and clearly through knowledge of measures of trade and trade openness for the case study for this research (Iraq), and the correlation between measures of openness and GDP growth rates, and through the use of the standard method in the analysis, a long-term and short-term relationship was found between GDP growth and trade openness through the use of ARDL and ECM tests. Among the findings of the research is that the trade openness in Iraq after 2003, whether with or without regulatory restrictions, does not fulfill its economic purpose unless there is a competitive production capacity that has the ability to face this challenge, consequently, the problem of the external sector in Iraq is a structural rather than an organizational problem, and therefore there is a need for an open trade policy coupled with support and development of the agricultural and industrial sectors producing goods and services with sufficient quality and quantity to meet the local need, which would contribute to mitigating the shocks emanating from the outer sector.

Trade openness and political distortions

AbstractIn this paper, we explore the relationship between international trade openness and two major political distortions, political uncertainty, and political polarization. We consider two measures of trade openness, the trade expenditures and the number of trade partners, as well as their volatility. As political distortions and trade characteristics of the country are endogenously related, we instrument the political uncertainty by the standard deviation of the effective political leaders’ ages of a country and the minimum age of the political leaders of a country's neighbors. We find that political uncertainty reduces the level of trade openness and increases the volatility of trade openness while political polarization negatively affects both the level and the volatility of trade openness. We propose a simple theoretical model that provides the intuition on the relationship between political distortions and trade openness.

Short and long-term impact of trade openness on financial development in Sub-Saharan Africa

The finance–openness debate has remained a complex one to date. Some studies argue that trade and capital account openness may promote financial development by enhancing foreign direct and portfolio investments. Other studies argue that financial development may improve trade policy and openness. Yet, one challenge faced by researchers in their quest to unravel the finance–openness debate is the lack of measures of trade openness that take a country's global interaction and interconnectedness into account. Our study addresses this challenge by extending a recently proposed index of trade openness to a panel data setting, and by examining the short- and long-term impact of trade openness on financial development for a panel of 43 sub-Saharan African (SSA) countries over the period 1996 to 2014. We test the performance of the pooled mean group (PMG) estimator against the dynamic fixed-effects (DFE) and the mean group (MG) estimators using the standard Hausman test, in order to ensure that the most appropriate estimator is used to estimate our dynamic, distributed lag model. We use the new measure of openness for the SSA countries to measure their interaction and interconnectedness with each other and find that openness is associated with significant financial development in the long term. In the short term, the effect of openness on financial development is not clear, but the results suggest that it may be negative. We then divide the sample into low- and middle-income countries and find that openness enhances financial development in the low-income countries. By contrast, openness is detrimental to financial development in the middle-income countries. This finding suggests a non-linear relationship between financial development and openness. We take the analysis a step further by examining the role of governance, human capital development, and infrastructural development, as these are major issues in SSA countries. We find that governance, human capital development, and infrastructure development are critical to financial development, particularly in the long term. In other words, these factors help to better explain the openness–finance relationship. Besides, they are important factors that policymakers should take into account when pursuing openness, financial development and a growth agenda.

Free trade and renewable energy: A cross-income levels empirical investigation using two trade openness measures

Existing research shows that the short-term impact of free trade on renewable energy development is clear, whereas the long-term influence of free trade on renewable energy development is an open question. To fill the research gap, this work investigates the effects of free trade on the renewable energy considering the effect of population, economy and technology in 186 countries from 1990 to 2015. Free trade is measured by two broad categories: trade volumes and trade taxes. The results show that the influences of free trade on renewable energy in different income levels are heterogeneous: for countries at high and upper-middle income countries, free trade has a positive effect on renewable energy development, but the effect is negative on countries at lower-middle-income countries. Additionally, population increase, economic development and technological progress can promote renewable energy development in 186 countries.

BEYOND CONVENTIONAL TRADE: TRADE OPENNESS IMPLICATIONS OF TRADE IN VALUE ADDED

This study compares the impacts of gross trade openness measures with trade openness in value-added measures on economic growth for the years 1995–2014 by employing a dynamic panel data estimation. Our findings suggest that although gross trade shares promote growth, using value-added trade shares magnifies this positive effect. Compared with gross terms, estimates also imply that while exports in value-added terms have much larger growth effect, imports in value-added terms have no significant impact. We then evaluate the impacts of tariffs on growth in terms of gross trade and trade in value added separately. Although our results imply the negative growth effects of gross import tariffs, this negative impact disappears for tariffs in value-added terms. These results reaffirm that trade protectionism has potential to lower global growth through reducing exports because it is clear that export shares regardless of their measurements and disaggregation levels promote growth. Our results indicate that countries should support not only exports of final products but also exports of intermediates. However, given the necessity of imports for exports, our results do not lend any evidence to discourage overall imports.

Same Trade Openness Yet Different Environmental Quality — But Why?

This paper re-studies the relationship between trade openness and environmental pollution. Through the theoretical framework, there is a non-uniform effect of trade openness on environmental pollution. Utilizing four alternative measures of trade openness as threshold variables, this paper examines the effect of trade openness on environmental pollution. We adopt a regression with nonlinearity, in which our nonlinear model includes two regressions — a threshold model and an interaction-term model. Utilizing four alternative measures of trade openness, our threshold test shows a single-threshold effect on pollutant emissions, implying that there are two regimes: low- and high-corruption. Our empirical results show that for countries with high-corruption, increases in trade openness significantly reduce pollutants emissions whatever CO2 emissions or SO2 emissions, and the larger effects of trade openness on environmental quality. However, the impact of trade openness on pollution was not found in countries with low-corruption. This study suggests that further trade openness and reduced environmental degradation (i.e., decline in CO2 and SO2 emissions) are compatible rather than competing objectives, especially in high-corruption countries. Furthermore, our results also show that in low-corruption countries, the negative effects of income on CO2 emissions are statistically significant, but in high-corruption countries it is not so.