Trade Slowdown Research Articles

From Firm-Level Imports to Aggregate Productivity: Evidence from Korean Manufacturing Firms Data

Using the Korean manufacturing firm-level data, this paper confirms that three stylized facts on importing hold in Korea: the ratio of imported inputs in total inputs tends to be pro-cyclical; the use of imported inputs increases productivity; and larger firms are more likely to use imported inputs. As a result, we find that firm-level import decisions explain a non-trivial fraction of aggregate productivity fluctuations in Korea over the period between 2006 and 2012. Main findings of this paper suggest a possible link between the recent global productivity slowdown and the global trade slowdown.

China and Asia in Global Trade Slowdown

China and Asia in Global Trade Slowdown

From Firm-Level Imports to Aggregate Productivity: Evidence from Korean Manufacturing Firms Data

Using the Korean manufacturing firm-level data, this paper confirms that three stylized facts on importing hold in Korea: the ratio of imported inputs in total inputs tends to be procyclical; the use of imported inputs increases productivity; and larger firms are more likely to use imported inputs. As a result, we find that firm-level import decisions explain a non-trivial fraction of aggregate productivity fluctuations in Korea over the period between 2006 and 2012. Main findings of this paper suggest a possible link between the recent global productivity slowdown and the global trade slowdown.

China and Asia in Global Trade Slowdown

Asia and China made disproportionate contributions to the slowdown of global trade growth in 2015. China’s import growth slowed starkly, driven by both external and domestic factors, including a rebalancing of demand. Econometric results point to weak investment and rebalancing as the main causes of the import slowdown. Spillover effects from China’s rebalancing are estimated for some 60 countries using value-added trade data, and are found to be more negative on Asia and commodity exporters than others.

The Slowdown in Global Trade

The slowdown in trade has received a great deal of attention, and it is sometimes cited as one of the reasons for the sluggishness of global output growth. However, the linkage between the two is not clear-cut.

A Value-Added Trade Perspective on Recent Patterns in World Trade

Our contribution uses trade in value added statistics to assess the causes of the recent world trade slowdown. We conclude that world trade elasticity has fallen due to a combination of regional and cyclical changes during the economic crisis. A cyclical factor is the lower cumulative trade intensity of consumer goods compared to investment goods. We find no evidence for a structural trade slowdown. In contrast, foreign value-added shares in final exports in Europe and East Asia are trending towards new peaks. The regional changes are caused by an increase of the total import share for regions with a low trade elasticity and decreased import elasticities in some regions.

The Global Trade Slowdown: Cyclical or Structural?

This paper focuses on the sluggish growth of world trade relative to income growth in recent years. The analysis uses an empirical strategy based on an error correction model to assess whether the global trade slowdown is structural or cyclical. An estimate of the relationship between trade and income in the past four decades reveals that the long-term trade elasticity rose sharply in the 1990s, but declined significantly in the 2000s even before the global financial crisis. These results suggest that trade is growing slowly not only because of slow growth of Gross Domestic Product (GDP), but also because of a structural change in the trade-GDP relationship in recent years. The available evidence suggests that the explanation may lie in the slowing pace of international vertical specialization rather than increasing protection or the changing composition of trade and GDP.

The Global Trade Slowdown: Cyclical or Structural?

This paper focuses on the sluggish growth of world trade relative to income growth in recent years. The analysis uses an empirical strategy based on an error correction model to assess whether the global trade slowdown is structural or cyclical. An estimate of the relationship between trade and income in the past four decades reveals that the long-term trade elasticity rose sharply in the 1990s, but declined significantly in the 2000s even before the global financial crisis. These results suggest that trade is growing slowly not only because of slow growth of Gross Domestic Product (GDP), but also because of a structural change in the trade-GDP relationship in recent years. The available evidence suggests that the explanation may lie in the slowing pace of international vertical specialization rather than increasing protection or the changing composition of trade and GDP.

Is the European integration speeding up the economic convergence process of the Central and South-Eastern European countries? A shock perspective

In the current context of continuous reassessment of the sustainability of the single currency and gradual enlargement of the euro area during the last decade, the objective of this research is to obtain new insights into the factors that determine the synchronisation of shocks in the Central and South-Eastern European countries vis-a-vis the euro area. The research contributes to the previous work by making a novel use of error correction model in a dynamic panel context which is extended by adding several important omitted variables related to the trade structure and policy coordination. We find that an increase in trade intensity, intra-industry trade and financial integration leads to less frequent asymmetric shocks. On the other hand, divergent fiscal policies are estimated in some model specifications to increase the shock divergence process, although the estimated impact is rather small to counteract the positive effects associated with trade and financial integration. The identified relationships in this research are affected by the significant trade and growth slowdown in the crisis period; while the global economic turmoil has boosted a demand shock convergence, its impact on the supply shocks is in the opposite (diverging) direction.

Global financial crisis and trade slowdown in Sub-Sahara Africa: panel VAR analysis for growth and poverty outcomes

The global financial crisis hit the economies of most commodities exporting countries of Sub-Sahara Africa (SSA) mainly through trade and commodities prices collapse. Theoretical and empirical literature postulates debilitating effects of these on growth, poverty and sustainable development outcomes. This study utilised aggregate data on selected SSA countries and panel vector autoregressions method to obtain an empirical gauge of these effects. This study documents a positive influence of trade on growth rates, while both trade and growth indicate potentials for poverty reduction in SSA. These findings raise important policy concerns for sustainable development, growth and poverty outcomes in SSA countries. For policy, this study recommends efforts directed at a pro-poor trade expansionist policies, diversification of the export base and spending programmes that create jobs, ensure the delivery of core services and provide safety nets at country levels, while at global level, efforts to support trade fin...

Appropriateness of Inflation Indices for an Open Emerging Economy

Appropriateness of Inflation Indices for an Open Emerging Economy

The World Economy

The outlook for world growth this year has deteriorated since April, due to a sharp contraction in world trade in the first quarter of the year and failure to sustain the revival in private sector investment seen in the fourth quarter of 2002. We have as a consequence revised our projections for world growth this year down by ¼ percentage point. This reflects sharp downward revisions of ½–¾ percentage points in the Euro Area and Canada, both of whose exchange rates have continued to appreciate in effective terms, while the outlook for the US and Japan is broadly unchanged. Growth in Japan and the Euro Area stagnated in the first half of 2003, with recessions in Germany, Italy, the Netherlands and Austria appearing likely. The US and Canada, on the other hand, continued to expand, albeit more slowly than in the second half of 2002. Following two years of exceptional weakness, Latin American growth has started to revive, although Venezuela is still suffering from the 2 month stoppage in the oil industry earlier this year and Argentina has lost competitiveness due to a strong appreciation against the dollar. Growth has slowed in several Asian economies, notably South Korea, but China continues to expand rapidly, spurred by the competitiveness impact of the dollar depreciation and infrastructure preparations for the 2008 Olympics. This has helped sustain export growth from the rest of Asia despite the more widespread slowdown in world trade.

The World Economy

Prospects for the world economy now appear bleaker than they have for more than five years, with the growth of output and trade having begun to slow in all regions. GDP growth in the OECD area is expected to slow particularly strongly this year. During the emerging markets crises of 1997 and 1998 the downturn in the world economy was driven by events outside the major industrialised economies, and a combination of the automatic stabilisers of the market mechanism and the prompt action of the monetary authorities ensured that the phase of strong growth was not interrupted. The current conjuncture is different, in that the origins of the slowdown appear to be within the OECD region, and they are difficult to offset with policy and hard for market-based stabilisers to absorb. The slowdown in production, trade and investment in information technology related industries is at the core of the problems facing policy makers, and their tools are not well adapted for dealing with cycles driven by specific industries.

Slowdown in trade with north America

Slowdown in trade with north America

Un certain décalage. Perspectives 1999-2000 pour l'économie mondiale

Expected Growth Swings. Forecasts for 1999-2000 for the world economy Forecasts for 1999-2000 for the world economy Division Economie internationale The Asian turmoil seems to be over Spring 1999. Recovery is taking place in Asian NICs, whereas the Brazilian crisis leads Latin America to fall into recession. Growth would slow in Eastern European economies, while GDP would decline in Russia. Oil prices would slowly recover. Expansionary fiscal policy would allow a Japanese GDP growth of 0.5% this year and 2.5 in 2000. The US GDP, still boosted by internal demand, would rise by 3.5% in 1999 and by 2.6 in 2000. According to the Mimosa model, a fall of 20% in equity prices would have a negative impact of 0.7% on the US GDP. Industrial activity has strongly decelerated in the euro area as a consequence of world trade slowdown. Owing to internal demand, world trade acceleration and higher dollar, GDP would rise by 2.1% in 1999 and 2.7% in 2000. JEL Code : FO1

Real wages, quantity constraints and equilibrium unemployment: Belgium, 1955?1988

This paper examines the determinants of equilibrium wage and unemployment rates in Belgium within the framework of a quantity rationing, right-to-manage model with decentralised wage-setting. Empirical results are obtained by first using the Johansen maximum-likelihood procedure for the analysis of cointegration among the variables of interest. The information from this stage is then used to estimate a three equation econometric model explaining the wage share, the unemployment rate and the capital gap. The slowdown in world trade is depicted as the most important factor explaining the rise in unemployment in Belgium, with dampening effects due to wage control policies imposed in the eighties. Because we obtain only two cointegrating relations, for three endogenous variables, our results are compatible with the hypothesis of path dependency and multiple equilibria.

Chemical Trade Surplus Falls In First Quarter, But Recovery Predicted

In 1995, the U.S. enjoyed another year of chemical trade surplus with its world partners, despite faster growth in chemical imports and a further rise in the total U.S. trade deficit. But in the first quarter of 1996, the U.S/s chemical trade surplus fell dramatically. Whether this signals a trend toward growing chemical imports and slower growth in exports isn't clear. The value of U.S. chemical exports totaled $15 billion in first-quarter 1996, compared with $14.8 billion in last year's first quarter. However, because of rising imports, the surplus for the quarter was $3.9 billion, down considerably from $4.9 billion a year earlier. Chemical imports in the quarter were $11.1 billion, up 12.5% from a year earlier. 'Tart of the slowdown in chemical trade is related to the recent strengthening of the dollar, particularly against the yen and the deutsche mark, says Duncan H. Meldrum, corporate economist for Air Products & Chemicals. Other factors are ...

PRODUCTS LIABILITY AND THE CONTROL OF PRODUCT RISK IN THE EUROPEAN COMMUNITY

When deflated by export unit values, world-trade growth has fallen recently; when deflated by dollarized G7 GDP deflators, it has been stagnating since 1980. The ratio of aggregate nominal exports to nominal GDP for developed countries peaked in 1980, and has retreated since. Changes in geographical composition, and oil trade, account for only some of this. The paper argues that the trade slowdown may owe something to the belief that free trade is best only under perfect competition. A simple model of trade under imperfect competition is set up to demonstrate that: (1) tariff and quota barriers dominate laissez-faire as Nash strategies, and (2) that first-best policy involves free trade and industrial policies to correct the distortions at source. The paper ends by assessing the European Union's economic policies, and proposing some improvements. Copyright 1994 by Oxford University Press.

Ocean shipping: delicate balance in maritime freight markets

The slowdown in world trade had less impact on the maritime freight markets in 1991 than had been expected. Because of the effects of the Middle East crisis, and of the rapid change in the USSR, shipping demand and freight rates took a more owner-friendly turn than could have been foreseen at the end of 1990. There was strong demand for shipping space in the bulk trades, especially for Russian grain imports which had been held over from the preceding year, and the sharp fall of freight rates came to an end. The tanker markets received a considerable boost from the war requirements; they were soon depressed again, however, by the latent oversupply of tonnage. The liner trades showed diverging trends, with sustained high growth rates in the Europe-Far Eastern trades.

Corporate capital structure and taxes in the Korean manufacturing sector

The Korean securities market is one of the fastest growing emerging capital markets in the world. It is also remarkable for its reliance on debt financing. The bond market accounts for 91.5 percent of the total fund raising activity, while the stock market accounts for only 8.5 percent. The emphasis on debt financing represents one of the major issues related to corporate financial poIicy in Korea. Factors suclt as persistently high international interest rates, foreign exchange rate fluctuations, inflation, international competition and indications of a slowdown in the world trade have led to increased pressure on the liquidity of many growth-oriented Korean firms, especially in the manufacturing sector. Demand for capital to finance rapid expansion needs has forced the leveraged firms to prefer short-term bank borrowing. The excessive use of short-term leverage and the need for improvements in capital structure of firms in Korea has led both researchers and policy makers to insist on reforms in the existing tax legislation. This study examines capita1 structure trends in Korean manufacturing firms with respect to taxes, inflation and interest rates. One aspect of this study is to extend IvEller’s (241 framework into the Korean tax and financial en~ronment, where there are several types of taxes that have implications on the corporate capital structure decisions. Another aspect of this study is the explicit consideration of the dual interest rates associated with corporate debt structures: one, the reguIated rate applied on special loans from the government agency banks; and the other, market interest rate applied to corporate bonds determined by market forces. The study also provides insight into some of the fundamental aspects of corporate capital structure for United States investors considering investment opportunities in the Korean manufacturing sector.