Trade Liberalization Research Articles

Factors Influencing Export of Soya Bean Oil from India: A Panel Gravity Model Analysis

Soya bean, the ‘miracle bean’, belongs to the family Leguminoceae, subfamily Papilionoidea. Soya bean oil is one of the most widely consumed cooking oils and is rich in linolenic acid. In the past 20 years the export of soya bean oil from India was mainly focused on Bhutan, Jordan, Canada, Singapore and Myanmar. The data was collected from 2002-03 to2021-22. The sources of data were Food and Agriculture Organization Statistics (FAOSTAT), Directorate General of Commercial Intelligence and Statistics (DGCIS), International Monetary Fund (IMF), Statista and Trade map. The panel data was estimated by the Feasible Generalized Least Squares (FGLS) method. For soya bean oil the per capita GDP of India's trading partners, distance, trade openness, and exchange rates are the most significant factors affecting bilateral trade. While partner countries' prosperity and liberal trade policies boost trade, greater distances and unfavorable exchange rates hinder it. India's GDP and domestic inflation show minimal impact on trade flows. Wooldridge test indicated no first-order auto-correlation.

Trade Liberalization, Foreign Investment and Economic Growth: Experience from Non-Oil Producing Countries in Africa

This study focuses on trade liberalization, foreign investment and economic growth in non-oil-producing countries of Africa using the panel autoregressive distributed lag (ARDL) model. Annual time series data spanning from 2000 to 2023. The study reveals a strong long-term relationship between trade liberalization, foreign direct investment (FDI), and economic growth in non-oil-producing African countries. This finding is evidenced by the rejection of the “no long-run relationship” hypothesis, indicating a solid and enduring connection among these factors, which aligns with previous research. Most variables conform to theoretical expectations, supporting the hypothesis that trade liberalization and FDI contribute positively to economic growth. However, FDI and exchange rates exhibit unexpected deviations, likely reflecting structural challenges common in non-oil African economies, such as barriers that limit stable FDI inflows and hinder sustainable growth. The error correction term (ECT) further suggests that these economies adjust quickly from deviations, with respective short-run adjustment rates of 90%, 10%, and 50% in different model specifications. This high responsiveness indicates that, despite short-term disruptions, these economies tend to revert swiftly to their long-term growth trajectories. Based on the findings, we recommend that policies should be directed towards the pursuit of consistent and sustainable trade liberalization by reducing trade barriers, and reduction of obstacles to foreign investment to improve economic growth in non-oil-producing countries of Africa.

Addressing Negative Effects of Trade Liberalization: Unilateral and Mutually Agreed Flanking Policies

AbstractThe conventional approach to trade liberalization has been to liberalize trade through international agreement and address subsequent domestic fallout and spillovers through domestic policies. In consequence, international obligations in trade liberalization are not legally connected with ‘flanking’ measures to address their negative effects. We discuss the shortcomings of this conventional approach with respect to labor adjustment and environmental protection: for political reasons, trade liberalization requires today the simultaneous regulation of labor and environmental spillovers. We suggest a novel approach to trade liberalization that includes the necessary flanking policies as part of, or linked to, the international agreement itself. This novel approach seeks to achieve the best of both worlds: reaping the benefits of international trade while making sure that negative spillovers are effectively addressed. To illustrate the intricacies of this approach, we introduce a new conceptual framework covering the negative effects of trade liberalization and flanking or mitigating policies, and a proposed novel approach in the form of trade liberalization packages and package treaties. Trade liberalization packages and package treaties are currently emerging around the world (e.g. sustainable palm oil in EFTA–Indonesia) and deserve our close attention.

Second-Generation Flanking Policies: Addressing Extraterritorial and Non-Economic Costs of Trade Liberalization

AbstractFlanking policies – policies that aim to address potential negative effects of trade liberalization, and/or the concerns of domestic stakeholders regarding those negative effects, and that are either legally or factually linked to trade liberalization – have been a critical component of international trade policy since at least 1962. Over the years, however, flanking policies have changed. This Article argues that there is a heretofore unnoticed distinction between what I term first-generation flanking policies and second-generation flanking policies. Specifically, first-generation flanking policies target negative economic effects, or costs, of trade liberalization experienced within the enacting country. Trade adjustment assistance is the paradigmatic example. By contrast, second-generation flanking policies target non-economic costs that arise outside of the enacting country. Examples include the European Union's Carbon Border Adjustment Mechanism, Deforestation-free Products Regulation, and the United States' Uyghur Forced Labor Prevention Act. Because second-generation flanking policies directly target foreign activity, they often employ more trade-distorting policies – tariffs, imports bans, and associated administrative hurdles for imports – than first-generation flanking policies, which more often relied on domestic subsidies. Moreover, they reflect a significant reorientation of the limits of state authority in international trade law. Whereas authority to tax and regulate production in international economic law has historically been based primarily on a territorial link to productive activity, second-generation flanking policies target production but rely on a territorial nexus with consumption of goods and services.

Pathways to China's Carbon Neutrality and Clean Energy Transition: Evidence from the Three Decades Long Stricter Environmental regulations

This study highlights the ongoing debate surrounding China's slow low-carbon transition despite a rapid shift towards clean energy. However, this debate is crucial for finding pathways to China's pledge to carbon neutrality. Using Auto-Regression Distributed Lag model over the time series data spanning 1990-2020, study attempts to add to the literature by exploring the nexus betwixt environmental regulations, renewable energy transition, and carbon dioxide emissions along with incumbent macroeconomic factors i.e., economic growth and trade. The findings conclude that stringent environmental regulations spur renewable energy transition and combat carbon dioxide emissions. However, energy intensive growth suggests China's priority for development targets ˗ leading to continued increase in fossil fuels despite the remarkable increase in renewable energy resources in country's total energy mix. Moreover, trade remains the crucial component of economic growth but found helping for renewable energy transition in the short-run. The two-way causality between these factors validate the regression results. Whereas the inelastic and insignificant relationship between stringent environmental regulations, renewables, and carbon dioxide emissions in the long run – highlights prospective challenges in terms of efficiency, management, and subsidy-related issues. Thus, the study suggest that trade liberalization helps the country to achieve its carbon abatement goals. However, further market based policy reforms toward stricter environmental regulations are needed for innovation driven efficiency in the energy sector.

The pro-competitive consequences of trade in frictional labor markets

What are the pro-competitive consequences of trade in frictional labor markets? This paper develops and estimates a dynamic general equilibrium trade model to show that the interplay between endogenously variable markups in product markets and frictions in labor markets has important implications for aggregate as well as distributional consequences of trade. In particular, I show that once markups are allowed to respond to trade liberalization, unemployment and residual wage inequality rise almost three times more than in a model with constant markups (in the steady state). The presence of labor market frictions makes the pro-competitive gains from trade liberalization negative.

A Domestic Political Economy of Package Treaties

AbstractThe post-World War II liberal international order coupled trade liberalization with a range of flanking measures, both outward-looking and inward-looking. This system, coupling domestic-level compensation with international-level flexibility, no longer functions as effectively as it once did. To consider how a renewed set of flanking policies might address, or even prevent, a backlash against trade liberalization, we explore why the earlier system (embedded liberalism plus temporarily tolerated relief) did not always function effectively. We note the challenges associated with generous domestic compensation schemes, especially in the face of capital mobility and fiscal pressures. We discuss the interstate tensions generated by the use of temporary relief measures, such as escape clauses and safeguards, and we also discuss how the expansion in membership of the multilateral trade system (and particularly the inclusion of countries with a greater array of economic institutions and factor endowments) exacerbates these challenges. Finally, we consider how the domestic politics of flanking policies could differ from those used in an earlier era.

Identifying Spillovers of Trade Agreements through Impact Assessments: A New Database

AbstractIn the past decades, a backlash against globalization has been brewing, especially in advanced economies. Despite this backlash being only partly determined by trade, we observe an increasing demand for transparency on procedures, methodologies, and results. Impact assessments (IAs) aim at identifying expected effects of trade agreements and at highlighting policymakers' concerns, thus representing an important tool to foster public acceptance. To help us identify spillovers of trade liberalization, we construct a country and sector-specific database of impact assessments. This database provides an overview of the evolution of the coverage and methodological approaches taken by the EU and US for their IAs. We rely on official EU and US sources over the period 1990–2023. We first observe differences in terms of methodology and institutional framework within and between the two regions. Secondly, the coverage of non-trade outcomes has evolved over time both for the EU and the US, with the inclusion of more labour, environmental, and human rights indicators as well as cross-cutting issues. We observe that the depth of the evaluation is correlated with the partner country's social protection and environmental performance. Lastly, we find that the inclusion of a sector in the analysis is driven by economic reasons in the EU but by political reasons in the US.

Operationalizing Package Treaties: A US Case Study

AbstractThis article studies the incorporation of package treaties in domestic law and administrative practice, including the functions these treaties serve once in force. This sketch of the domestic operationalization offers a window into the institutional design choices that shape how lawmakers craft the regulatory ecosystem in which flanking policies are carried out. The typology for understanding how governments situate package treaties in their domestic regulatory spaces is introduced, arguing that the ‘package’ of legally binding trade liberalization commitments and mutually agreed flanking policies is shaped by both legislative and regulatory choices that are often underestimated and overlooked. DUS trade agreements are used as a case study, finding that the US government's treatment of each of its trade agreements tends to follow a common pattern: only a small part of the agreement is transposed into domestic law; complex and robust institutions are built around the agreement to embed it deeply into the trade policy work of the executive branch; and, the entrenchment of US trade agreements has a significant enabling effect across a wide range of cross-border regulatory engagements that US agencies think of as ‘monitoring’ or ‘enforcing’, among other labels. Finally, the policy choices against the goals laid out by proponents of package treaties are assessed.

Pull Factors and Capital Inflows: Empirical insights from Transformative Dynamics in Southeast Europe

Abstract This study seeks to examine pull factors of capital inflows, offering an empirical analysis based on a panel study of eleven Southeast European countries (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Greece, Montenegro, North Macedonia, Kosovo, Romania, Serbia, and Türkiye) over the period of 2004 – 2021. Methodologically, the study utilizes a fixed effects (FE) regression model with robust Driscoll-Kraay standard errors to address issues of heteroskedasticity, autocorrelation, and potential cross-country correlation. The study finds that several pull factors can be relevant in driving capital inflows as follows: market size, inflation, financial and trade openness. The empirical analysis confirms that the forces of trade liberalization, financial liberalization, market size, real interest rates and inflation stability are the elements that encourage capital inflows. On the other hand, the estimated effects of current account balance and real economic growth are not very convincing. Finally, we stress that more study is required to fully understand the pull variables' ultimate macroeconomic implications at the national level. The overall influence of these positive (or negative) inflows may be moderated by several characteristics, even if certain countries may be extremely susceptible to these factors.

Globalization and Its Impact on Poverty Reduction in Nigeria

This paper examined the impact of globalisation on poverty reduction in developing countries with a focus on Nigeria. The increased interactions between different countries led to situations where the economy and development of most countries were no longer only in the hands of the ruling government but highly influenced by international organisations where international rules and legislation reign. This situation made globalisation to be perceived as a highly controversial process. It remains in the domain of academic exercise as to whether globalisation and its components can bring about a reduction in poverty in developing economies. The researcher gathered data from secondary sources to conduct a qualitative study based on documentary evidence. The findings of this study showed that despite the interactions of the Nigerian government with the global community which are evident in the flow of Foreign Direct Investments, trade liberalization, as well as the implementation of economic policies like deregulation and privatization, Nigerians have hardly felt the positive impact of these economic decisions especially as it concerns the reduction of poverty. It was recommended, amongst others, that the government should implement policies that encourage the diversification of the economy thereby expanding the production and manufacturing sectors to discourage the monoeconomy we are running. This is the only way that FDIs and other capital flows can be put into proper use.

The dynamics of trade liberalization, export performance, and economic growth in Tanzania: a time series analysis 1980–2020

The dynamics of trade liberalization, export performance, and economic growth in Tanzania: a time series analysis 1980–2020

Prospects the Democracy in Ukraine - Based on Changes in Economic Conditions Since the Russian Invasion

The article aims to clarify the deep relevance and dependence of economic basis and democracy level, which includes how does the former play a role in the formation, the maintenance and the future development of the latter. Economic prosperity, the leader of production activities, power of the middle class, diversification of Economic sector and trade liberalization is the object focus on in this study. It will focus on noteworthy oneUkraine. The aggression from Russia has caused huge macroeconomic changes in Ukraine. Therefore, this article examines the current economic influence of such drastic external factors as a military invasion. This paper will combine the theory of how the economic situation affects the level of democracy with specific economic data and practical research in Ukraine. Then look at the positive and negative aspects, some changes can improve the level of democracy, while others will harm the level of democracy in Ukraine.

Rules of Origin Within ASEAN and RCEP: Has It Been Resolved?

As a well-established trading bloc, rules of origin (ROO) for ASEAN are expected to benefit member states’ businesses by providing preferential tariff treatment which is the fundamental purpose of trade liberalization. However, these rules are prevented from being applied thoroughly due to the lack of government trust in certain member states in business actors and targets of duty collection for customs authorities. The self-certification by business actors has proven to be a solution to the problem but ASEAN A-X Formula may be counterproductive to ROO, eliminating the foundation of regionalization and potentially causing trade deflection. The First Protocol of ASEAN Trade in Goods Agreement (ATIGA) amendment simplifies the procedure of operational certification for ROO. Furthermore, the Regional Comprehensive Economic Partnership (RCEP) as a significant trading pact including ASEAN members and five major trading partners has adopted proof of origin allowing self-certification applied earlier in the European Union and NAFTA. Alternative solutions should also be explored since distrust and national financial interests have not been resolved. Recently, blockchain embedded with smart contracts has been applied in various business sectors which should be further applied in free trade area (FTA) applications. Blockchain’s characteristics as an immutable ledger originating from the hashing process and cryptography would address the problem of ASEAN ROO application. Therefore, this study aimed to analyze the effectiveness of ROO within ASEAN and RCEP. A literature review and doctrinal study methodology were applied in this analysis.

Trade liberalization and export performance in China: Export-margin approach with firm-level data in 1995–2019

A key challenge facing developing countries is how to promote export performance through trade liberalization (TL). Using large and highly disaggregate firm-level data with 6-digit HS categories for 1995–2019, we investigate the issue for China based on the recent literature of export margins (XM). Export growth is decomposed into extensive and intensive margins (EM and IM), and IM further into price and quantity margins (PM and QM). We develop three empirical hypotheses based on a theoretical model that includes external economies of scale (EES) and industrial agglomeration (IA) as well as TL-XM links. Then we take China's entry to World Trade Organization (WTO) in 2001 as a quasi-natural experiment in difference-in-difference (DID) regressions. The estimate results suggest that TL increases both EM and IM (and QM) but reduces PM after China's entry to TWO in 2001. The finding is robust to various specifications of the empirical model and measurements of the variables. The further estimations show significantly positive effects of EES, IA, and their interactive terms with TL on EM, IM, and QM. The positive effects are larger for medium-tech industries than low-tech and high-tech industries.

Dampak Perdagangan Bebas AFTA Terhadap Transformasi Ekonomi Indonesia

Free trade plays a crucial role in global economic development, especially in the era of globalization, and the ASEAN Free Trade Area (AFTA) aims to create a single market within the ASEAN region through the liberalization of trade in goods. This study examines the impact of AFTA on Indonesia's economic transformation, including increased export and import volumes as well as regional economic integration, highlighting benefits such as the growth of exports in manufacturing, agriculture, and consumer goods, alongside strengthening domestic industries. However, free trade poses risks, such as competition from imported products that could pressure local producers. Using a qualitative approach through literature studies, the findings show a significant increase in export and import volumes following AFTA implementation, although regional development disparities remain a challenge. This study emphasizes the need for strategies to improve product quality, enhance infrastructure, and build sectoral synergy to ensure inclusive economic integration and drive Indonesia's overall economic progress.

THE IMPACT OF ENVIRONMENTAL STANDARDS AND REQUIREMENTS ON TRADE LIBERALIZATION: EMPIRICAL EVIDENCE FROM OECD COUNTRIES

Objective: This study aims to measure the impact of environmental standards and requirements on trade liberalization in the OECD countries from 1990 to 2021. Theoretical Framework: The study utilizes economic and environmental theories to examine the relationship between regulatory policies and trade liberalization, utilizing key frameworks such as environmental economics, the Kuznets curve, and global trade models to analyze this interaction. Method: We used unconditional quantile regression methods to examine the relationship between environmental regulations and trade liberalization. The model includes variables such as environmental policy stringency, environmental taxes, carbon emissions, and renewable energy production. Results and Discussion: The study concluded that stringent environmental policies increased freedom of trade at different levels of trade liberalization. The results also confirm that environmental tax policies are particularly effective in promoting trade liberalization in countries with weak or low levels of trade liberalization. The results further suggest that in the case of countries where trade liberalization is weak or below average, carbon emissions are associated with increased trade liberalization. Furthermore, renewable energies contribute to deepening levels of trade liberalization in countries characterized by higher-than-average levels of trade liberalization. Research Implications: This study provides insights into how environmental policies can be strategically used to promote trade liberalization. The findings may influence policy-making in areas such as environmental taxation, energy transition, and international trade. Originality/Value: This study explores the impact of environmental regulations on trade liberalization, highlighting how different policies can either promote or hinder trade freedom, especially in economies at different stages of liberalization.

The effect of trade liberalization on marriage and fertility: evidence from Indian census

Abstract Using a district-level panel constructed from five waves of decennial Indian censuses covering 1971–2011, we examine the medium-term (1991–2001) and long-term (1991–2011) impacts of the 1991 Indian trade liberalization on marriage and fertility rates among young women aged 15–34. We exploit the fact that countrywide tariff reductions varied across industries creating exogenous local labor market shocks based on the initial employment composition of the district. We find heterogeneous results across urban and rural areas. We find that urban areas of the districts that experienced larger tariff cuts experienced relative increases in marriage rates compared to the districts that experienced smaller tariff cuts. Tariff cuts positively affect workforce participation among both young men and women in urban areas. However, there is no impact of tariff cuts on the marriage rate or workforce participation among young population (15–34) in rural areas. In contrast, tariff cuts reduced fertility rates mostly in rural areas.

Trade Liberalization and Mortality Rates: Evidence of Pro-Cyclical Mortality From Brazil.

We trace the evolution of all-cause mortality rates in Brazilian regions with varying exposure to trade-induced economic shocks before, during, and after liberalization reforms in the 1990s. We find consistent evidence of pro-cyclical mortality, with areas more exposed to tariff reductions experiencing larger declines in mortality across varying time horizons. The observed decline in mortality rates is evident across sex, age groups, and for both internal and external causes of mortality. We falsify the observed relationship between mortality and tariff reductions with analyses of causes of death that are plausibly unrelated to economic activity. Concerning proximate mechanisms involved in our finding of pro-cyclical mortality, we show that healthcare infrastructure expanded in local economies more affected by the trade-induced economic shock. This expansion was characterized by the increased capital-intensity of care, facilitated by the import of diagnostic technologies that reduce mortality from internal causes. We also find supporting evidence for the idea that pro-cyclical mortality is partially caused by a decrease in transport and non-transport-related accidents. Overall, our findings highlight an underappreciated dimension of trade policy effects, namely public health.

Has Trade Liberalization Promoted Energy Efficiency in Enterprises?

Improving energy efficiency is a way for China’s economy to achieve sustainable development. Using data on listed industrial enterprises in China from 2000 to 2022, we investigate the impact of trade liberalization on the energy efficiency of Chinese firms and its mechanism of action at the micro-firm level. Our findings suggest that trade liberalization has greatly contributed to firms’ energy efficiency and the main conclusions in this paper still hold after a series of robustness tests. Further research shows that two channels that contribute to the improvement of firms’ energy efficiency are the expansion of the firm’s size and the improvement of production efficiency induced by trade liberalization. Another significant route according to which trade liberalization influences energy efficiency improvements by firms is the dynamic decomposition of industrial energy efficiency, which shows that 70.07% of industrial energy efficiency enhancement is due to structural adjustments. The heterogeneity analysis results show that the energy saving impact of trade liberalization is stronger for non-exporting, foreign-funded, growth-oriented enterprises that are based in the eastern region. Our study presents new ideas for the realization of energy conservation and emissions reduction from the perspective of trade liberalization, which is instructive in regard to the improvement of sustainable development of enterprises.