Trade Liberalization Policies Research Articles

Aid for Trade and Recipient Countries’ Export Structure: Does Trade Policy Liberalisation Matter?

This article investigates the effect of aid-for-trade (AfT) inflows on beneficiary-countries’ export structure. It additionally examines whether this effect depends on recipient-countries’ level of trade policy liberalisation. Export structure is measured by the ratio of exports of low-skilled and technology-intensive manufactures to total primary export products (LOW), the ratio of exports of medium-skilled and technology-intensive manufactures to total primary export products (MEDIUM) and the ratio of exports of high-skilled and technology-intensive manufactures to total primary export products (HIGH). The analysis has been carried out using an unbalanced panel data set of 121 countries (of which 41 least-developed countries [LDCs]) over the period 2002–2015. Using the two-step generalised methods of moments (GMM) approach, the empirical results show that AfT inflows exert a positive and significant impact on recipient countries’ export ratios LOW and HIGH, but not on the MEDIUM export ratio. For LDCs, AfT inflows influence positively LOW and negatively MEDIUM and HIGH. Furthermore, for both the full sample and LDCs, there is a strong positive effect of the cumulative AfT inflows on the three export ratios. Finally, the effect of AfT inflows on export ratios appears to be dependent on the degree of trade policy liberalisation. JEL: F13, F14, F35, O24

COMPARATIVE STUDY ON SOURCES OF GROWTH IN AGRICULTURE OF BANGLADESH UNDER VARIOUS SOCIO-POLITICAL REGIMES FROM 1961-2016 USING GROWTH ACCOUNTING FRAMEWORK

Investigating the determinants of economic transformation has become an important fundamental goal of the development economics. Among the economic sectors, agriculture is considered as the highly challenging area to increase the productivity and efficiency. Yet, it remains the most wide-spread economic activities with immense implications for the economic growths in many developing and least-developed countries. This study has examined the sources of growth in the agriculture sector in Bangladesh over the last five and half decade (1961-2016) under the various socio-political regimes. TFP-based Growth accounting model is used to determine the sources. Results reveal that agricultural growth in Bangladesh has a reasonable relationship with the socio-political factors.  The rate of growth was lowest during the 15 years of the military regime (1975-1990). Under all non-democratic regimes and within some closed economy the growth was mainly led by the input factors. The sustainability in growth led by TFP has come only under the proper democratic environment with liberalized trade policies.

Does Improvement in Trade Openness Facilitate Renewable Energy Transition? Evidence from Selected South Asian Economies

The aim of this article is to empirically shed light on the impacts of trade openness (TO) on facilitation of renewable energy transition (RET) across Bangladesh, India, Pakistan, Sri Lanka and Nepal. Against this backdrop, this article incorporated annual time series data stemming from 2000 to 2017 and employed the two-stage least squares (2SLS) panel data estimation methodology. In addition, the panel Granger causality test was also applied to distinguish the possible long-run causal associations between the variables considered in the regression models. In the light of the estimated results, it is found that an improvement in TO triggers renewable energy consumption, improves the primary energy-use efficiency and elevates the access to clean cooking fuel technology within the selected South Asian economies. However, the results also led to the concerning conclusion regarding the ineffectiveness of the trade liberalization policies in curbing the relative consumption of non-renewable energy resources, thereby marginalizing the prospects of overall RET within these economies. JEL: O13, P2, Q42, D12, F35

Trade space and trade policy: an empirical assessment

PurposeThe purpose of this paper is to examine the behavior of governments in terms of trade policy design when they experience a lack of foreign resources from international trade after ensuring the sustainability of their external debt. To do so, the paper defines two concepts of trade space: “De Facto Trade Space” and “De Jure trade space.”Design/methodology/approachTo conduct this study, the author relies on a panel data set comprising 109 countries over the period 1998–2014. To perform the empirical analysis, the author has mainly used the system generalized methods of moments approach.FindingsThe empirical analysis suggests evidence that trade space matters significantly for trade policy. Indeed, “De Facto Trade Space” is consistently associated with greater trade policy liberalization, with this positive effect being higher, the higher the development level – proxied by the real per capita income – of the concerned country. “De Jure Trade Space” tends to lead to greater trade policy liberalization in less advanced developing countries, but is associated with the adoption of trade restrictive measures in more advanced countries. Additionally, results suggest different impacts on trade policy of “Positive De Jure Trade Space” and “Negative De Jure Trade Space.”Research limitations/implicationsThese findings suggest that the trade space, as defined in this study, plays a key role in trade policy design by policymakers.Practical implicationsThe current study shows that trade space could significantly matter for trade policy design by policymakers.Originality/valueTo the best of the author’s knowledge, this is the study dealing directly with the “trade space” concept as well as its impact on trade policy.

Impact of trade imbalances on domestic trade policy: Does multilateral trade policy matter?

AbstractIt has been well demonstrated in the empirical literature that trade policy liberalization influences trade performance. However, little is known about how trade policy reacts to trade imbalances. This article aims to address this question by investigating the impact of trade imbalances on domestic trade policy liberalization, including in the context of multilateral trade policy liberalization. This analysis is particularly relevant because countries are currently having appetite for trade protectionist measures, which could ultimately undermine multilateral trade liberalization, and hurt domestic economies and the world economy. The analysis has been conducted on a panel dataset of 166 countries over the period 1998 to 2015. The take home message of the analysis is twofold: first, an improvement in trade balance induces greater domestic trade policy liberalization. However, this impact depends on countries’ development level, as the magnitude of this positive impact is higher, the higher the countries’ level of development. Second, an improvement in trade balance leads to greater domestic trade policy liberalization only if multilateral trade policy liberalization reaches a certain level.

Impact of Regional Trade Agreements on India’s Trade Potential: The Case of SAARC and APTA

In view of the growing importance of Regional Trade Agreements (RTAs) in the era of trade liberalization, we examine the impact of two significant RTAs of India, SAARC trading bloc and APTA, on its trade potential. We employ panel data regression on an augmented gravity model using data over the period 1991-2016 for 23 Asian countries which are India’s trading partners. In order to capture the impact of explanatory variables, the study uses fixed effects estimation and Hausman Taylor estimation. Our results show that conventional gravity variables such as GDP of the trading partners and liberal trade policies are significant determinants of India’s trade. The results for variables of interest, APTA and SAPTA (for SAARC) export/import creation indicate that both the trading bloc are facilitating India’s trade flow. The ‘age’ variable for SAARC trading bloc show that India’s imports from SAARC nations has significantly reduced with the passage of time and India’s exports to APTA trading bloc is more or less stagnant since the last decade. While China and Korea are dominating intra-APTA exports but India’s intra-SAARC exports are gaining more strength with passage of time.

Dwarfed Giant: Impact of Trade and Related Policies on SMEs in the Nigerian Textile Industry

This study examines the impact of trade-related policies on SMEs fabric manufacturers operating in the Nigerian textile industry. The Nigerian textile industry was the third largest in Africa and the second largest employer of labour after the government. However, from the 1990s, the industry started experiencing some challenges often linked to trade liberalisation policy under the World Trade Organisation (WTO). This placed SMEs textile fabric manufacturing firms under immense pressure to attain long-term sustainability as the productivity and competitiveness of the domestic industry were being threatened by foreign/external competitors from international markets. In identifying and addressing the issues posed by trade policies as part of achieving the research objective, a qualitative mode of inquiry with a case study approach was employed. Semi-structured In-depth interviews were conducted with the managers of three formally registered SMEs fabric manufacturing firms in Lagos State, Nigeria. The findings were interpreted using thematic analysis. The findings indicate that the challenges faced by SMEs in the Nigerian textile industry are linked to the lack of supportive and measurable policy and regulatory frameworks to accompany the implementation of liberal policy in the country. These findings point to the fact that in order to revive and boost the productivity and competitiveness of SMEs in the Nigerian textile industry, and to reap the full benefits of international trade policy on liberalised markets, the government has to engage in restructuring the business environment through the implementation of effective and stable macroeconomic, trade-related infrastructural and institutional policies.

Upstream Pricing Schemes, Trade Liberalization, Trade and Environmental Policies of Downstream Countries

Trade liberalization has a significant impact on the environment and social welfare of countries. In the real world, almost all industries exist upstream and downstream firms but the existing literature on the impact of trade liberalization rarely discuss the interaction between upstream and downstream firms. The goal of this study is to analyze the effects of trade liberalization on the trade policies, environmental policies and social welfare of downstream exporting countries when different pricing schemes (uniform pricing vs. discriminatory pricing) are implemented by upstream monopoly firms. By constructing a three-stage dynamic game model we found that, regardless of pricing schemes, trade liberalization leads to increase both environmental taxes and import taxes. Trade liberalization increases the social welfare of downstream countries under discriminatory pricing, while trade liberalization first reduces and then increases the social welfare of downstream countries under uniform pricing. The results indicate that the downstream countries always have the incentive to participate in trade agreements that integrate markets when discriminatory pricing schemes will be implemented by upstream firms. This finding is the most significant contribution of this paper which has not been addressed in the previous literature.

Trade Liberalization and Performance of the Nigerian Textile Industry

Nigeria textile industry is characterized by questionable incentives, political uncertainty, acute power shortage, poor infrastructure, smuggling and red-tape bureaucracy, among others. The study modified the endogenous growth model within a time series (1986 and 2015) estimation techniques of Autoregressive Distributed Lagged model (ARDL). Findings revealed that the effect of simple tariff rate on textile industry is negative and statistically significant in the long-run; while trade liberalization policy measure through simple tariff rate has a lag effect before it can be effective in the textile industry. In both short and long run, real effective exchange rate depreciation worsens the performance of the textile industry in Nigeria. In the long run, a 1.0% rise in trade openness would decrease the level of textile industry performance by about 17.49%, while factor affecting textile industry performance in the short run are simple tariff rate, financial development, exchange rate changes, trade openness and labor and capital inputs respectively. The study concluded that Trade liberalization has a lag effect on textile industry performance and a significant effect on the performance of the Nigerian textile industry. It is therefore recommended that government should make concerted efforts toward providing a favorable business environment, reducing inflation and improve the infrastructural facilities for the textile industry to strive.

Trade Liberalization and Performance of the Nigerian Textile Industry

Nigeria textile industry is characterized by questionable incentives, political uncertainty, acute power shortage, poor infrastructure, smuggling and red-tape bureaucracy, among others. The study modified the endogenous growth model within a time series (1986 and 2015) estimation techniques of Autoregressive Distributed Lagged model (ARDL). Findings revealed that the effect of simple tariff rate on textile industry is negative and statistically significant in the long-run; while trade liberalization policy measure through simple tariff rate has a lag effect before it can be effective in the textile industry. In both short and long run, real effective exchange rate depreciation worsens the performance of the textile industry in Nigeria. In the long run, a 1.0% rise in trade openness would decrease the level of textile industry performance by about 17.49%, while factor affecting textile industry performance in the short run are simple tariff rate, financial development, exchange rate changes, trade openness and labor and capital inputs respectively. The study concluded that Trade liberalization has a lag effect on textile industry performance and a significant effect on the performance of the Nigerian textile industry. It is therefore recommended that government should make concerted efforts toward providing a favorable business environment, reducing inflation and improve the infrastructural facilities for the textile industry to strive.

Aid for trade and trade policy in recipient countries

ABSTRACTThis article explores the impact of Aid for Trade (AfT) flows on trade policy in 123 recipient countries over the period of 2002 to 2015. It shows empirical evidence that AfT interventions are conducive to trade policy liberalization. These results apply to both the entire sample and to the sub-sample of least developed countries (LDCs). Additionally, the analysis shows that the lower the development level, the higher the positive impact of AfT inflows on recipient countries’ trade policy liberalization, although above the US$ 4,885.40 threshold of real per capita income, AfT inflows exert no significant impact on trade policy.

The Impact of Trade Liberalization in Africa

Africa is one of the most economic-integrated continents by a number of regional trade agreements in the continent. There are about 30 bilateral and multilateral trade agreements within the continents so that each African country is a member of at least one regional trade agreement. Trade between African countries, however, barely exceeds 10% of the total trade of Africa, which is much lower than other continents' intra-regional trade share. This discrepancy between many regional trade agreements and small intra-continent trade share tells that regional economic integrations in Africa are very unsuccessful trade liberalization policies to promote trade. This paper examines a reason why trade liberalization policies in Africa fail. In particular, we investigate the impact of trade agreements in Africa on trade conditional on financial market development and political instability. An empirical study finds that Africa countries' poor financial market accessibility and political instability are key barriers to trade integration in the region. These two factors can explain most disadvantage of African countries in their intra-regional trade. In a dynamic regression, the two factors depress the long-run growth of trade due to trade liberalization in the region significantly, while African continent dummy variable that captures other unobserved trade obstacles in the region has much less effect on trade compared to the literature on African regional economic integration.

Territorial Governance and Social Innovation: The Cases of San Pedro Capula’s Artisanal Cheese and the Rice (Oryza Sativa) of Morelos, Mexico

Over the last thirty-five years, Mexico has maintained a trade liberalization policy which has depressed food production and has reconstructed the structure of the agri-food sector; this has generated a higher food dependence and insecurity. In order to face this structural change, new organizational and socio-productive dynamics have emerged in communities, which take into consideration food diversity, heritage and cultural conditions of rural areas. In this paper, we use the theoretical approach of Localized Agrifood Systems (LAFS) and the operative concepts of governance and social innovation to analyze and understand the efforts that at the base of society are created to grant development of productive systems. Therefore, we present the results of an investigation based on the exploration of two LAFS cases; in these cases, different strategies to achieve development have been established: the elaboration of artisanal cheese in the state of Hidalgo, and the production of rice in the state of Morelos, Mexico. Research results show the importance of concepts such as Social Innovation (SI) and Governance within the framework of localized agri-food systems in rural studies, this, in order to identify the needs and potentials of family farming and producer’s groups inside the new contexts generated by globalization and market liberation process.

Incorporating Foreign Direct Investment and Trade into Energy-Employment Nexus: Evidence from China

Energy consumption in China has been rapidly increasing due to production and consumption, and the growth varies by regions. Chinese government has been trying to reduce energy intensity in production and energy use among households through several energy efficiency policies since 1980s. However, there has been concern over the employment impact of the change of production and consumption structure. Previous studies on the energy-employment nexus focused primarily on the energy-to-employment link, neglecting the possibility of the reverse. In addition, these studies investigated the direct link between the two, ignoring the channel through which one could affect another. This article seeks to fill up the gap by incorporating FDI and trade into the energy-employment nexus using panel cointegration and Granger causality methods. The major findings suggest that energy efficiency policy can be implemented in FDI-led and trade-led provinces located in the China’s coast without impeding the employment growth. However, performance of trade and FDI should be further enhanced in China’s hinterland to promote employment growth and energy efficiency. This study highlights the importance of devising energy policy and labor market policy alongside trade liberalization and foreign investment policies in China.

Using the forest-transition model and a proximate cause of deforestation to explain long-term forest cover trends in a Caribbean forest

Jamaica experienced net deforestation during the period 2001–2010. Yet, the proximate causes of deforestation and the reasons why a forest transition might be absent, particularly at the local-level, which can explain national scale changes, have been little studied. Long-term changes in socio-economic and land cover data over 68-years, for the moist forest of the Cockpit Country, Jamaica, and predictors of land cover change, were assessed using generalized linear and non-linear regression models. These were used to determine if the classic theorized determinants of a forest transition were present at different spatial scales and to identify the proximate cause(s) of deforestation. Some theorized determinants were present (improvements in national and sub-national economic development, and a decline in agricultural production); however, rural/local scale population density and growth rates were stable. As such, pressure on the unprotected (non-reserves) marginal/agricultural lands in the Cockpit Country was not reduced and this prevented them from reverting to forest. Forest cover for the entire Cockpit Country and the non-reserves therefore fluctuated significantly over time (nonlinear trend), peaking twice (1980 and 2002). The implementation of trade liberalization policies in the 1980s resulted in increased yam cultivation, which was the proximate cause of forest cover change in the non-reserves (a significant non-linear relationship). As a result, deforestation increased significantly during this period and again during the 2000s, at which time it was driven largely by other factors. A forest transition is unlikely to occur via an economic pathway, but it can possibly be achieved via the enforcement of existing forest protection laws and active promotion of forest cover expansion.

The Impact of Foreign Direct Investment on the Nigeria Manufacturing Sector: A Time Series Analysis

The objective of the study reveals that FDI in the Manufacturing sector exacts a positive influence on the manufacturing output and the impact is statistically significant. This result further confirms the effectiveness of economic policy of the federal government of Nigeria through the adoption of liberalized industrial and trade policies. These policies were undertaken with a view to improve efficiency and productivity, as well as to improve the competitiveness of the Nigerian manufacturing industry. The policy implication is that,in order to maintain sustainable economic growth and development, a positive domestic investment is a prerequisite for increasing the flow of foreign investment in the manufacturing sector. Nigeria, while continuing to encourage inward FDI, efforts should be made to channel it into the manufacturing sector so as to accelerate the diversification process. In addition, the implementation of policy of trade liberalization should be reviewed and implemented with caution. The policy that will further make the economy more-import dependent will not augur well for the economy.

National parliaments and the new contentiousness of trade

Rather than becoming obsolete, national parliaments have come back obstinately in the politics of trade. This article develops this proposition and explores its contribution to the idea of twenty first-century trade as contentious market regulation. Contra the Lisbon Treaty, national parliaments’ assertion entrenches the role of domestic actors in the EU trade liberalisation policy, and fleshes out its multi-level parliamentary bases. We discuss the role, drivers, and patterns of parliamentary assertion and explore parliamentary assertion using preliminary survey and case study material. We find that the Transatlantic Trade and Investment Partnership negotiations represented the tipping-point of parliamentary assertion. Through interpretation and political engagement, national parliaments have forged a role for themselves that was unforeseen in the Lisbon Treaty: weighing in on the policy-making and the ratification processes. In Europe, parliamentary assertion reflected the twin impact of a changing global trade agenda and the centralisation of the EU trade policy regime.

The transitional impacts of material and service offshoring

The recent expansion of offshoring intermediate services has given rise to public fears and a possible pullback from a liberal trading system. Modeling and estimating intermediate offshoring is complicated since the shock is further down the production process. This paper incorporates the necessary transmission mechanisms into a data-intensive CGE model for the State of Colorado to estimate the current and future impacts of continuing a liberal trade policy for offshoring intermediates. The results indicate that while the overall effects of offshoring are small and positive, the future directions of service offshoring are projected to cause sizable domestic job destruction and displacement. Policies may have to be implemented to retrain domestic workers who face job loss or even consider curtailing future offshoring opportunities.

Measuring the impact of global tropospheric ozone, carbon dioxide and sulfur dioxide concentrations on biodiversity loss

The aim of this study is to examine the impact of air pollutants, including mono-nitrogen oxides (NOx), nitrous oxide (N2O), sulfur dioxide (SO2), carbon dioxide emissions (CO2), and greenhouse gas (GHG) emissions on ecological footprint, habitat area, food supply, and biodiversity in a panel of thirty-four developed and developing countries, over the period of 1995–2014. The results reveal that NOx and SO2 emissions both have a negative relationship with ecological footprints, while N2O emission and real GDP per capita have a direct relationship with ecological footprints. NOx has a positive relationship with forest area, per capita food supply and biological diversity while CO2 emission and GHG emission have a negative impact on food production. N2O has a positive impact on forest area and biodiversity, while SO2 emissions have a negative relationship with them. SO2 emission has a direct relationship with per capita food production, while GDP per capita significantly affected per capita food production and food supply variability across countries. The overall results reveal that SO2, CO2, and GHG emissions affected potential habitat area, while SO2 and GHG emissions affected the biodiversity index. Trade liberalization policies considerably affected the potential habitat area and biological diversity in a panel of countries.

Marxist elements for the criticism of the neoclassical orthodoxy of international trade

Since the decade of 80’s, trade liberalization policies have become predominant. Such policies are aimed to reach eventually an ideal “free trade”. Neo-Classic orthodoxy may admit that there are initial problems on free trade, assuming them as momentary problems for some sectors. Some contemporary authors have contributed to update the marxist economic theory. Their contributions are important in order to build a theoretic core, based upon the marxist theory of value-labor, due to the potentialities that such analytic frame offers to understand the real current dynamics.Realidad: Revista de Ciencias Sociales y Humanidades No. 115, 2008: 87-108