Trade Productivity Research Articles

The Effects of Economic Competitiveness, Economic Freedom, Financial Development and Gender Equality on International Trade in ASEAN Countries

International trade plays a strategic position towards the success of the economic structure and is one of the crucial topics that can attract the attention of many countries, including ASEAN member states. This research study aims to explore, analyze and predict the effect of economic competitiveness, economic freedom, financial development, and gender equality on international trade in ASEAN countries. The study used panel-based secondary data with the Structural Least Squares analysis model. Research findings are known that economic competitiveness, economic freedom, financial development and gender equality are significantly able to increase the productivity of international trade in ASEAN countries. The results of the research can be used as evaluation and reference material for the government, business people and individuals in formulating regulations, policies, and taking steps to achieve economic goals.

Trade, Technology, and Agricultural Productivity

Trade, Technology, and Agricultural Productivity

Wild relatives of fruit trees in Syria: Genetic resources threatened by conflict

Wild relatives of fruit trees (WRFT) are highly valued for food and tradable products by rural communities, especially in low-income countries and as such are a vital resource for tree improvement. During periods of conflict, a lack of support and protection by national authorities may make WRFT vulnerable. In Syria, WRFT are at risk of extinction due to the ongoing crisis, which has limited efforts to conserve and propagate these unique genetic resources. We collected information about the current status and key threats to WRFT in northwest Syria from 50 agricultural experts using structured interviews. Our results show that many sites have experienced erosion, overgrazing and drought. To initiate in situ and ex situ conservation, the locations of WRFT exposed to deterioration were identified and mapped using GPS, and seeds from five genotypes per species were collected from each of ten species to be used for the establishment of an in situ and ex situ WRFT collection.

Influence of Net Working Capital on Trade Profitability in Serbia

The problem of managing working capital, i.e. net working capital in trade, is very specific, challenging, current, significant and complex. In order to achieve the target financial performance, it is necessary to manage working capital as efficiently as possible. Based on that, this paper analyses the dynamics of size and the impact of net working capital on the profitability of trade in Serbia. In the period 2013 - 2021, in the trade of Serbia, the maximum amount of net working capital was achieved in 2021, the maximum percentage of net working capital from assets was achieved in 2021, the maximum percentage of net working capital from sales was achieved in 2021, and the maximum profitability was achieved in 2021. In the specific case, there is a strong correlation between profitability and net working capital of trade in Serbia. The coefficient of determination is high (Adjusted R Square .941; Sig. F Change .000). The influence of net working capital on the profitability of trade in Serbia is very significant (Sig. .000). This means, in other words, that more efficient management of net working capital can have a significant impact on the profitability of trade in Serbia. Observed dynamically, the amount of net working capital of trade in Serbia has increased recently. This had a positive impact on its liquidity, solvency, efficiency and profitability. Recently, the productivity of trade in Serbia has also increased. The factors that influenced it were: favourable economic climate, foreign retail chains, application of new business models, new concepts of management of costs, income, profit, customers, product categories, application of the concept of sustainable development and digitization of the entire business.

Accounting for Mexican business cycles

AbstractThe Mexican economy experienced two large crises: in 1995 and in 2008. The dynamics and origins of the episodes are very different; nevertheless, is there a common underlying mechanism? First, by applying the Business Cycle Accounting method, we find that the efficiency wedge is the main driver of output during both episodes. We present an equivalence between the neoclassical growth model with distortions and a small open economy with imported intermediate goods inputs, in which relative price changes manifest themselves as changes on the efficiency wedge. This result proposes a solution for the theoretical puzzle regarding the relationship between terms of trade shocks and productivity. Finally, the model is able to reproduce both the intensities and velocities of the crises in Mexico.

Does Service Trade Liberalization Promote Service Productivity? Evidence from China

This paper investigates the effects of service trade liberalization on service productivity. Based on a city-level database from 2006 to 2019, we estimate the labor productivity of the service industry and show the varying trends of productivity growth. Additionally, by exploiting the cross-city, cross-time variation at the time of China’s innovation pilot city policy of service trade liberalization, we employ a difference-in-difference strategy to estimate the effects. The empirical evidence suggests that liberalizing the service trade has a positive effect on service productivity. In addition, the evidence indicates that service trade liberalization could increase the productivity of the service industry in cities located in the eastern and central parts of China, as well as in those cities with a higher degree of marketization. The main influencing channels of service trade liberalization on productivity predominantly occur through the increase in technology spillover, market competition, and human capital. China’s evidence highlights the positive relationship between trade liberalization and productivity in the service industry and provides implications for realizing the sustainable development of services in developing countries; therefore, China and other developing countries are suggested to continuously formulate and deepen their service trade liberalization strategy.

Low tariff on dirty goods—Environmental negligence or environmental concern?

AbstractShapiro (Quarterly Journal of Economics, 2021) conducts an in‐depth empirical analysis to show that dirtier upstream goods face lower import tariffs than cleaner downstream goods. Inspired by that paper, we examine how the welfare maximizing tariffs on the final goods will differ depending on the dirtiness and the extent of cross border pollution. We show that countries concerned about controlling pollution but maximizing own welfare would be encouraged toward relatively unfettered import of dirtier final goods if pollution is mainly generated through domestic production. We discuss the implications of global welfare maximizing tariff protection, pollution taxes, and multiple tradable products.

Can agricultural trade improve total factor productivity? Empirical evidence from G20 countries

Improving agricultural total factor productivity is essential to achieving the high-quality and sustainable development of agriculture. As major global agricultural producers, the G20 countries play an important role in agricultural product trade and development. As such, it is well-positioned to play a positive role in improving agricultural total factor productivity. This paper uses the DEA-Malmquist index method to measure agricultural total factor productivity (TFP) in G20 countries from 2010 to 2019, and analyzes the impact of agricultural trade on TFP using the two-way fixed effects model. It finds that (1) the main source of agricultural TFP growth in G20 countries is technical progress, while the effect of technical efficiency on agricultural TFP is not obvious. (2) Agricultural trade can significantly improve agricultural TFP growth in G20 countries, and the effect is more obvious in developed countries. From the perspective of trade flow, the positive effect of export trade on agricultural TFP is stronger. (3) The institutional environment strengthens the improvement effect of agricultural trade on agricultural TFP. Thus, this study not only provides valuable insight into the relationship between agricultural trade and agricultural productivity, but also offers a strong argument in favor of the formulation of relevant policies to improve agricultural productivity and promote a more sustainable agricultural sector.

Dynamics of Large Multinationals

Abstract Multinational enterprises are very large multi-product firms. To capture salient features of the data, we develop a model of large multinational enterprises, each one producing a continuum of products. These outsized firms compete as oligopolists in domestic and foreign markets, facing competitive pressure from monopolistically competitive single-product firms. The multinational enterprises engage in foreign direct investment (FDI) in order to expand the product scope of their foreign affiliates, and they invest in research and development (R&D) in order to invent new products. We study the dynamic evolution of these enterprises and characterize transition dynamics and steady states. We also characterize the evolution of prices, markups, market shares, and exports relative to subsidiary sales. Furthermore, we study comparative dynamics that result from changes in trade costs, R&D costs, FDI costs, and productivity. Finally, we illustrate the use of our model for an analysis of mergers.

Trade opening, productivity and employment in Brazil

RESUMO O presente artigo propõe uma reavaliação do efeito da abertura comercial na década de 1990 sobre a produtividade do trabalho e emprego no Brasil. A discussão é ancorada em um exercício de decomposição da produtividade no período anterior e posterior à abertura comercial, o qual permite avaliar a participação da realocação intersetorial do emprego e dos ganhos de eficiência intrasetoriais na produtividade agregada. A principal contribuição do estudo está na inclusão do setor de desocupados no exercício, o que permite mensurar o efeito do aumento do número de desempregados e de inativos sobre a produtividade média da força de trabalho. Os resultados sugerem que embora a abertura comercial tenha contribuído para elevar a produtividade intrasetorial média, ela está associada tanto a um aumento da desocupação e do desemprego, como a uma realocação do trabalho em setores de menor produtividade. O estudo mostra que estes efeitos negativos sobre o mercado de trabalho tendem a ser dominantes, resultando na redução do crescimento da produtividade média dos trabalhadores quando comparada ao período pré-abertura.

The Role of Endogenous Technology in Making Sustained Economic Growth in Sub‒Saharan Africa: Panel GMM and VECM Approaches

This study examines the role of endogenous technology in making sustained economic growth in a panel of 36 Sub-Saharan Africa (SSA) countries over the period 1990-2020. We derive total physical capital, total employment productivity (TEP), total factor productivity (TFP) and terms of trade (TOT) growth rates using various concepts. In this sense, the panel of short-run vector error correction model (VECM) and panel of long–run generalized method of moments (GMM) are applied and the estimation results are obtained. The empirical results reveal that there are significantly positive impacts of the growth rates of TFP, TEP and terms of trade (TOT) on real GDP growth rate in the long -run. These are profoundly important indicators for SSA today that timely using endogenous technology can play the central role in succeeding economic growth. And hence, without a greater supply of home–grown talent in the areas of the economic sector, it may be hard to break down the vicious circle of poverty, build prosperous, inclusive and resilient economies that can be feeding the people and enabling the countries to compete with trade globally.

Macroeconomic determinants and potential markets for Pakistani textile-clothing and apparel industries: evidence from gravity model analysis

Pakistan ranks among the top leading textile exporters in the World, which is its major tradable product with more than 56% contribution to total export receipts. This study investigates determinant and potential export markets for textile-clothing and apparel exports of Pakistan across 58 global trading partners, 26 from Asia and Africa and 32 from Europe, America, and Oceania. The augmented versions of the gravity model are estimated by employing contemporary panel econometric to explore the effects of selected macroeconomic and policy variables on export flow. The findings urge Pakistan to address domestic supply-side constraints that have a significant positive effect of higher intensity of export flow. The results of core variables are consistent with the theory of gravity model and augmented variables reveal that relative prices have a significant positive impact of lower elasticity; whereas binary variables urge Pakistan to enhance its regional trade with regional and border for shared prosperity. The free trade agreements with Malaysia, China, and the USA along with GPS plus status are significantly creating exports from the textile sector; therefore, attempts should be taken to expand them. Moreover, the findings of the export potential show untapped potential markets for the textile sector.

The first compliance cycle of China’s National Emissions Trading Scheme: insights and implications

China’s national Emissions Trading Scheme (ETS), the largest ETS in terms of the amount of CO2 regulated, was launched on the trading platform operated by the Shanghai Environment and Energy Exchange (SEEE) on July 16th 2021, and has successfully completed its first compliance cycle on December 30th, 2021. During the operation of its first cycle, China’s national ETS differs from other international ETSs in many aspects, including trading products and participants, allowance allocation method, compliance term, and offset mechanism, leading to certain unique trading patterns. Some unique settings are worth noticing including key emitters dominated by state-owned enterprises (SOEs) who also dominate transactions, large-scale power groups’ carbon strategies, allowances for 2 years of 2019 and 2020 being processed in one compliance period and allowed inter-year banking of allowances. All these have led to trading patterns characterized by cyclical demand-driven trading, insufficient trading capabilities of regulated entities, stable allowance price and an increased price of CCER. Nonetheless, the successful running of its first compliance cycle offers invaluable experience for future ETS development in operational mechanism improvement, sector coverage expansion, allocation optimization, and introduction of different types of market players and tradable products, and provides a good reference for future international expansion.

Energy transition, trade and green productivity in advanced economies

Despite the global economy has gained rapid development, there are severe environmental and energy challenges, which should be paid sufficient attention. The proposal of the concept of green productivity and the promotion of clean energy consumption are both conducive to ecological environmental protection. This paper uses nonparametric approach to assess the green productivity of 36 advanced countries from 1990 to 2019 and the possible energy transition based on existing technologies. Green growth in most developed countries is positive, while the efficiency change is negative and the technological progress is the main driving force for economic and environmental development. Moreover, our empirical results demonstrate that international trade promotes green productivity in advanced countries. The average possible energy transition rate of developed countries is 4.78%. This indicates that 4.78% of the total energy consumption of each advanced country can be converted from dirty energy to clean energy on average.

Nexus Between Trading Non-Green Products and Environment: Introducing Non-Green Trade Openness Index

Trade is a significant parameter that may impact environment positively or negatively. However, there is no consensus on this issue among the researchers. It seems likely that tradable products will affect the environmental quality level. However, this requires the separation of the international trade basket. Thus, this research asks whether trade in non-green products affects the level of environmental degradation in the 25 European Union (EU) member states? To answer this question, we develop an index of trade openness in non-green products and empirically investigate whether this index influences the ecological footprint. Non-green trade openness index represents the ratio of the total export and import of non-green products in a country’s international trade basket to that country’s Gross Domestic Product. Advanced panel estimation techniques are employed for a sample of 25 EU countries over the period between 2003 and 2016. The core finding–supporting the Pollution Haven Hypothesis–is that non-green trade openness reduces environmental degradation. We discuss several implications of this result for recent environmental policies, particularly for the EU climate policy.

The nexus between consumption-based carbon emissions, trade, eco-innovation, and energy productivity: empirical evidence from N-11 economies.

Unlike previous studies, this study attempts to fill the research gap in the area of consumption-based carbon emissions by introducing the role of energy productivity and eco-innovation along with international trade. To fill the mentioned research gap, the present study aims to evaluate the impact of eco-innovation and energy productivity on trade-adjusted consumption-based carbon emissions for the Next Eleven (N-11) economies using updated available data from 1995-2019. Further, on the methodological aspect, this study employed novel advanced panel data econometric techniques such as cross-sectional autoregressive distributed lags model (CS-ARDL), Westerlund cointegration test, and augmented mean group approach, which helps to tackle the problem of cross-section dependency and heterogeneity. The empirical outcomes confirm the long-run cointegrating relationship for consumption-based carbon emissions with exports, imports, gross domestic product, energy productivity, and eco-innovation. The results from CS-ARDL indicate that energy productivity, eco-innovation, and exports decrease carbon emissions by - 0.181%, - 0.0148%, and - 0.292%, respectively. However, economic growth and imports cause carbon emissions to increase by 1.201% and 0.225%, respectively. Moreover, the results also confirmed that any policy targeting energy productivity, exports, imports, gross domestic product, and eco-innovation should help to achieve equilibrium in approximately more than 1year. This study recommends that the role of energy productivity and environment-related innovation is crucial for achieving the carbon neutrality target of the Next Eleven economies.

Foreign exchange intervention for commodity booms and busts

While the conventional policy prescription for dealing with commodity price shocks is the adoption of a flexible exchange rate regime, a view popularized by Friedman (1953), in practice many emerging economies decide to intervene in the foreign exchange market. In this paper, we evaluate the optimal exchange rate policy response to commodity price shocks in a small open economy model with learning-by-doing (LBD) externalities. We find that the optimal policy response to a commodity boom involves a large and sustained increase in the stock of foreign exchange reserves aimed at stabilizing the real exchange rate and tradable production. Moreover, the optimal policy resembles the actual dynamics of foreign exchange reserves observed in many emerging commodity-exporting economies during recent episodes of commodity booms. We also show that solely relying on monetary policy for dealing with commodity price shocks provides limited macroeconomic stabilization gains, as the policy rate is an ineffective instrument for addressing LBD externalities.

An Application of Decision Trees Algorithm to Project Hourly Electricity Spot Price as Support for Decision Making on Electricity Trading in Brazil

Estimating the price of a financial asset or any tradable product is a complex task that depends on the availability of a reasonable amount of data samples. In the Brazilian electricity market environment, where spot prices are centrally calculated by computational models, the projection of hourly energy prices at the spot market is essential for decision-making, and with the particularities of this sector, this task becomes even more complex due to the stochastic behavior of some variables, such as the inflow to hydroelectric power plants and the correlation between variables that affect electricity generation, traditional statistical techniques of time series forecasting present an additional complexity when one tries to project scenarios of spot prices on different time horizons. To address these complexities of traditional forecasting methods, this study presents a new approach based on Machine Learning methodology applied to the electricity spot prices forecasting process. The model’s Learning Base is obtained from public information provided by the Brazilian official computational models: NEWAVE, DECOMP, and DESSEM. The application of the methodology to real cases, using back-testing with actual information from the Brazilian electricity sector demonstrates that the research is promising, as the adherence of the projections with the realized values is significant.

Trade Imbalances and Productivity with Gravity: Measuring the Delocation E⁄Ect

Trade Imbalances and Productivity with Gravity: Measuring the Delocation E⁄Ect

Rethinking the Africa-China Trade: Some Policy Considerations and Implications

As many countries in Sub-Saharan Africa (SSA) struggle against severe food insecurity, unemployment and poverty, their heavy reliance on the export of raw materials as sources of revenue to solve these problems has long been put into question. The trade between China and SSA is characterized by China’s importing mining and extraction from SSA and SSA’s importing manufactured goods from China. We analyse the asymmetric SSA-China trade and focus on how trade policy and productivity shocks will reduce SSA’s dependency on raw material export to China. We perform accounting and simulation exercises using the General Equilibrium GTAP model. The main innovation in our study is the inclusion of estimates of different labor productivity growth rates across regions and across sectors in the model. These labor productivity growth estimates show that the gaps between China and SSA especially in manufacturing are huge; ignoring these gaps would have biased any estimation. The other innovation is the simulation that the imports from China would yield some technology spillover on productivity in SSA. We examine several scenarios that include tariff elimination by China, common external tariff in SSA, and free regional trade in SSA. We find that with its current low labor productivity growth rates especially in manufacturing sectors, SSA continues to lose in the global trade, including in its trade with China. More important, manoeuvring room for trade policies is limited. China tariffs on imports from Africa are already low and bringing these tariffs down to zero will lead only to a modest increases in welfare and employment for SSA without altering SSA’s dependence on raw material export. Raising the tariffs on manufactured goods from China will reduce SSA’s welfare and employment by harming consumers and the agriculture sectors dependent on intermediate goods from China. Increases in labor productivity and technical progress in SSA’s manufacturing sectors are welfare improving, but will not alter the high share of mining and extraction export to China unless such increases in productivity are accompanied by a voluntary restriction on these raw material exports. As such a voluntary restriction is being practically hard to apply and sustain, SSA shall continue to liberalize internal markets and pursue higher growth rates in labor productivity to cut the losses in international trade. Our simulations show that freer intra-African trade with small and steady increase in productivity can have significant impacts on welfare and employment.