Trade Policy Reforms Research Articles

Sino–Africa Trade Flows: Effect of Interaction Between Africa’s Population Density and Governance

Investigating the determinants of trade flows has been the focus of extensive literature in international economics. Early studies focus on the effect of the distance between countries. However, answers to many important economic questions depend largely on the extent to which market size and stability affect supply and consumption. This paper augments the gravity model with the interaction between population density and governance. It uses a panel dataset of 51 African countries from 2000 to 2019 to investigate the impact of the interaction between Africa’s population density and governance on Sino–Africa trade flows. The main results reveal that China’s exports to Africa and Africa’s openness with China are directly proportional to the interaction between Africa’s population density and governance. However, China’s imports from Africa are inversely proportional to the interaction between Africa’s population density and governance. Also, results reveal the polarization of Sino–Africa trade flows, causing the revaluation of the Chinese Yuan. All other things being equal, concurrent improvement in Africa’s population density and governance is a significant factor leading Africa to depend more on imports from China and reduce Africa’s exports to China. This paper suggests that the effectiveness of international trade policy reforms is conditional on implementing efficient mechanisms to balance global population density with improvement in good governance.

A Traditional and Non-traditional Export Performance Assessment: An empirical examination of factors enhancing the competitiveness of Zambia's Exports

This study examined the performance of traditional and non-traditional exports and further analyzed the factors that determine their performance in Zambia using a time series analysis (1960 and 2021). With the aid of the Vector error correction model, the study found that increases in the Real GDP, and Foreign Direct Investment of Zambia positively and significantly affected the volume of exports. In the analysis of aggregate exports, the non-significance of the relative price elasticity (Foreign Exchange rate) suggests that trade policies that concentrate overly on expenditure switching such as tariff and non-tariff restrictions or devaluations do not effectively assist trade policy reform efforts. The study thus recommends the need to promote inclusiveness, diversification and growth in investment towards the production of export commodities, particularly through the Multi-Facility Economic Zones by providing incentives to expand export diversification and growth at the local level through revising the Fiscal and non-Fiscal incentive thresholds in MFEZs to reflect the financing capacity of local investors.

Trade policy reform, retail food prices and access to healthy diets worldwide

Recent use of least-cost diets as a measure of global food security revealed that over 3 billion people are unable to afford sufficient nutritious food for an active and healthy life, driving demand for policy changes to improve access and affordability. This study quantifies the role of imports in consumer prices, matching retail prices in 144 countries to imports by origin of the item or its main ingredient, resulting in a total of 13,846 pairs of a retail price and its import cost in 2017. We find that 55% of retail items had some active imports supplementing domestic production, and of those around 48% have nonzero tariffs whose average effective rate is around 6.7% of the imported commodity price. Over all countries for which data are available, the share of consumer prices for least-cost healthy diets that is attributable to tariffs and non-tariff measures averages 0.67% and 2.45% globally. The highest restrictions are on nutrient-rich vegetables, fruits and animal-sourced foods. Access to bulk commodities from diverse origins is essential for food and nutrition security, providing a greater diversity of foods and food ingredients at lower and more stable prices than can be grown at any one location. On average over all food products that are imported, 83% of the retail price is domestic value added after arrival. We conclude that food imports are best understood as inputs to the domestic production and distribution of retail items, with consumer prices and growth of the food sector dependent on the cost levels, infrastructure and institutions underlying each product’s entire value chain.

Assessing the Impact of Trade Policies on Growth and Development of the Manufacturing and Agricultural Sectors in Nigeria

This article examines the impact of trade policies in Nigeria (1960–2022) on the manufacturing and agricultural sectors. To set the context, I have grouped the trade policy periods into two categories: (a) the pre–structural adjustment programme (SAP) era (1960–1985) and (b) the post-SAP era (1986–2022). I have then examined economic data and all the existing literature to understand the pattern of manufacturing and agricultural outputs during these policy periods. Pre-SAP and post-SAP trade policies show a shift from protectionism to liberalisation, moderately improving agricultural and industrial sectors but still facing obstacles. Despite policies and agreements to improve trade, economic development remains unrealised. This study demonstrated that trade policies have led to erratic progress in both the agricultural and manufacturing sectors, consequently making a lesser contribution to the overall Nigerian development. Within this debate, three different schools of thought can be distinguished. The first school of thought holds that trade policy reforms benefit the growth of Nigerian manufacturing and agricultural sectors. The second school of thought contends that trade policy reforms (such as trade liberalisation) have a detrimental effect on industrial and agricultural sectors. The third school of thought argues that there is no proof or substantial linkage between trade policy reforms and the productivity and growth of manufacturing and agricultural sectors. Nevertheless, to benefit from trade liberalisation, this article identifies the need to revise the Nigerian trade policy as well as stabilise foreign exchange rates to advance and boost local manufacturing and agricultural sectors and promote active participation in trade agreements and policies.

Exporting, investing and productivity dynamics in African manufacturing

Abstract Trade shocks generated by trade policy reform are important for firm productivity. In particular, export opportunities and access to imported intermediate inputs and capital goods can encourage firms to simultaneously export and invest. Using a panel dataset for manufacturing firms in Ghana, Kenya, Nigeria and Tanzania, I find strong and robust evidence for learning-by-exporting effect. I also find that firms that simultaneously export and invest have the highest returns to these activities compared with firms that export without investing, or firms that invest without exporting, or firms that do neither activity. The superior productivity performance of firms that engage in both activities is consistent with the idea that exporting and investing have complementary effects on a firm’s productivity: investing facilitates a firm’s ability to absorb export-related technology. Finally, I find that firm heterogeneity has important influence on the productivity gains associated with exporting and investing.

The Progression of Trade Policy Reforms within the Context of National Economic Reforms

The primary goal of this chapter is to outline the key points of the trade policy reforms that have taken place in India since 1991, focusing on the changes that have occurred both before and after the reforms. Specifically, a comprehensive analysis that aims to comprehend the key components of the trade policy reform initiatives. Using the many metrics of India's international trade performance throughout the Reform years, as well as the direction and makeup of India's imports and exports, the movements in India's external sector have been examined in depth.

EVALUATING THE IMPACT OF BILATERAL TRADE AGREEMENTS ON SRI LANKA'S EXPORT PERFORMANCE: GRAVITY MODEL

Export is an important indicator used to assess the economic state of a nation. Sri Lanka has started a few trade policy reforms aimed at supporting the export industry. Sri Lanka's contribution to global exports is still a very small percentage, nonetheless. It was important to determine how bilateral trade agreements affected export flows between Sri Lanka and its trading partners given the importance of exports in the economy. Thus, using the gravity model of trade, this research investigates the determinants influencing Sri Lanka's exports. The panel dataset used ranged from 2012 to 2021. The results suggest that Sri Lanka’s GDP and Sri Lanka’s trading partner’s GDP had a positive and statistically significant effect on Sri Lanka’s export performance. The geographical distance between the two countries and Sri Lanka’s GDP per capita had a negative and statistically significant effect on export performance in Sri Lanka. The study further showed that Sri Lanka's export performance significantly improved once trade agreements were formed. These findings have significance for the creation of trade policies to make sure Sri Lanka's export potential is utilized to boost economic growth.

Analyzing the Determining Factors for Export-Oriented Growth Strategy in East Africa: A Comprehensive Empirical Research

International trade mainly Exports have a substantial impact on the country’s economy, employment, and balance of payments. Despite trade policy reforms, East African nations have a limited share in global exports. The region’s trade balance has been in deficit for multiple years, and its export-driven growth remains poor. This study analyzed data from selected East African countries over a twenty-year period using a panel-autoregressive distributive lag (ARDL) econometric model. The descriptive findings show that exports have been weak with a persistent trade deficit, industrial items dominated imports while primary items were overlooked in the export basket. The results from the empirical study (pooled mean group-PMG) reveal those determining factors such as foreign direct investment, per capita gross domestic product, inflation rate, real effective exchange rate, terms of trade, and industrialization have a significant influence on export performance in the long run. Further to this, the study suggests that the exchange rate, inflation rate, and foreign direct investment inflows negatively affect the performance of exports in the region. To this end, the outcomes of the study highlight the need to revise export-oriented strategies so as to boost export and overall economic development in East Africa.

The Bank, the Fund, and the GATT: Which Institution Most Supported Developing-Country Trade Reform?

AbstractThe 1980s and 1990s saw a policy revolution in developing countries in which many highly protected (if not closed) economies were opened to world trade. These reforms were largely undertaken unilaterally, but international economic institutions such as the World Bank, the International Monetary Fund, and the General Agreement on Tariffs and Trade/World Trade Organization supported these efforts. This paper examines the ways in which these institutions promoted, or failed to promote, trade policy reform during this pivotal period.

Trade reform, oligopsony, and labor market distortion: Theory and evidence

In a heterogeneous-firm model with oligopsonistic local labor markets, this paper shows that opening up to trade can affect distortion in such markets. The distortion arises because firms are large and able to exercise market power over their local workers. Using a panel dataset of Chinese manufacturing firms from 1998 to 2007, I measure firm-level labor market distortion and examine their evolution following China's trade policy reform in 2001. I find that labor market distortion is pervasive and the trade policy reform has led to a net reduction of the distortion in China's manufacturing sector, with a larger and significant effect working through the liberalization of input tariffs.

Trade policy in a ‘double‐landlocked’ transition economy: Kyrgyzstan

AbstractThis paper examines trade and commercial policy in Kyrgyzstan in the context of that country's distinctive historical and geographical characteristics, drawing on the World Trade Organisation's latest Trade Policy Review. A former Soviet republic, it is a geographically isolated, effectively a ‘double‐landlocked’, transition economy. The country was an early liberalizer, both economically and politically, among the former Soviet republics, and it is now a broadly open economy. After a catastrophic economic decline in the immediate transition era it also achieved macroeconomic stabilisation relatively quickly. However the growth dividend from these major policy reforms has been modest, and the country has become one of the most remittance‐dependent economies in the world. While its geographical handicaps are immutable, we argue that key explanations for the slow economic growth are the limited ‘behind‐the‐border’ reforms, the dualistic economic structure, and misdirected fiscal allocations. We also draw out some of the broader implications for trade policy reform in other transition economies.

Externally funded trade policy reforms and firm productivity: Evidence from a world database of reforms funded by foreign aid agencies

AbstractThis paper examines the impact of externally funded trade policy reforms on firm productivity by combining data from the International Aid Transparency Initiative and World Bank Enterprise Surveys. By specifying baseline and end‐line surveys based on the 2006 to 2020 World Bank Enterprise Surveys, we find that 70 of 83 countries received external funds for trade policy reforms, and primarily use records based on 45,886 firms with data on productivity across these countries. Applying difference‐in‐differences and triple‐difference techniques, this paper finds that the impact of externally funded trade policy reforms is significant, accounting for 12% of firms' average productivity growth in the recipient countries relative to firms in non‐recipient countries. We also show that externally funded trade policy reforms improve firms' international‐trade‐climate in the recipient countries by 0.17 standard deviations, which translates into a 27% increase in the average productivity of firms with a good international‐trade‐climate in recipient countries over that of firms in non‐recipient countries and firms with poor international trade climate in recipient countries. These results suggest that interventions should focus on financing trade policy reforms that are more likely to improve the international‐trade‐climate of firms in the recipient countries.

Protectionism in a Green Suit? Market Power and Carbon-based Trade Policy Reform

Protectionism in a Green Suit? Market Power and Carbon-based Trade Policy Reform

Efficiency of Large-scale Manufacturing in Pakistan: A Production Frontier Approach

The large scale manufacturing sector in Pakistan has gained increasing prominence over the years with its share in output rising to about 13 percent in 2005-06 from 5.67 percent in 1959-60.1 The sector has operated amid varying policy environments ranging from outright import substitution in the early years to a more deregulated and liberal environment in the recent years driven largely by concerns to improve the efficiency of the industrial sector which is critical for attaining greater competitiveness. While industrial and trade policy reforms in recent years have exposed domestic enterprises to greater internal and external competition, most of these enterprises continue to seek state patronage and have yet to reposition themselves to compete effectively in the global market place. Furthermore, the trade policy still has an import substitution bias for certain critical sectors whose imports are subject to tariff peaks and this raises concerns on their efficiency. This study aims to assess the efficiency of large scale manufacturing sector in Pakistan using the production frontier approach. Section 2 reviews the literature while Section 3 sets out the methodology and discusses data employed in the study. Section 4 analyses empirical findings, and Section 5 concludes the discussion.

External trade and foreign investment policy reforms in economic growth of Sri Lanka

Sri Lanka Journal of Social Sciences (SLJSS) publishes social science articles on topics relevant to Sri Lanka in particular and South Asia in general. The journal also has a website at http://www.nsf.gov.lk/.

EU aid for trade as contested trade policy intervention: The case of the EU-MUTRAP project in Vietnam

Abstract This paper explains the EU's Aid for Trade (AfT) and trade relations with Vietnam, and examines how EU AfT influences Vietnam's trade policy reform. It provides an analysis of EU AfT as a contested trade policy intervention by using the results of the EU-MUTRAP project in Vietnam. The finding is that EU AfT can interfere as an “external impacts” on Vietnam's trade policy reform. Based on the priorities of EU trade policies towards Vietnam, the EU uses AfT projects to support and change the Vietnamese trade environment. The paper partially proves the contribution of the EU-MUTRAP on the EU-Vietnam Free Trade Agreement negotiations and implementation.

The Dynamism of Trade Balance in Ghana

Developing economies have frequently employed macroeconomic factors such as the currency rate, inflation, investment, and so on to manage trade flow; yet, there are often chronic deficits in the balance of trade and payments due to a structural imbalance between the amounts of exports and imports. As most rich countries intentionally used the benefits of international trade to improve their trade balance position, many developing countries signed up for numerous unilateral and multilateral trade policy reforms that provided little to no economic benefit. As a result, this study employs cointegration and an error correction model based on the Autoregressive Distributed Lag (ARDL) framework to analyse and estimate the effect of macroeconomic factors on Ghana's trade balance and how Ghana's trade balance has changed from 2000 to 2018. Quarterly time series data covering a period of 19 years, from 2000 to 2019 was collected on all dependent and independent variables such as exchange rate, inflation rate, interest rate and GDP per capita. The results indicate that exchange rate and interest rate significantly affect trade balance while GDP per capita and inflation insignificantly affect trade balance. The study recommended that the government should put in more measures to stabilise the currency and local manufacturers should be motivated by giving subsidies and tax exceptions.

Assessment of the Factors Impacting on Export-led Growth Policy Performance of East African Countries: The Panel-Autoregressive Distributed Lag Model

Exports play a crucial function in a country's economy and financial system, figuring out the extent of employment economic growth, along with the balance of payments. East African Countries have installed numerous trade coverage or policy reforms to promote and improve the export sectors. However, their proportion in general world exports continues to be very low. Despite its massive resource potential, the region's balance of trade stability for multiple years is in deficit; its export-led growth performance persisted poor notwithstanding governments' promotion and support. Hence, it's worthy of looking at the fundamental factors impacting East African countries' export performance. The present study dominantly applied the data of Africa and the Global development indicator of 20 years (2001 to 2020) for 9 East African countries, using a panel-ARDL econometric model. The descriptive outcomes of the research depict that in East Africa, the exports were low; the external trades denoted a continuous deficit in the business, industrial items dominated in the import basket, and primary items were overlooked in the export basket. The pooled mean group (PMG) estimation result also suggests that all the macroeconomic factors (independent variables) FDI, GDP, REER, INF, TOT, and IND are notably affected export in East Africa in the long run. Whereas GDP is the single variable that substantially influences export from East African nations in the short run. The results advise that inflation rate, foreign direct investment inflows, and the effective actual exchange rate had statistically detrimental or negative impacts on export performance in the study countries. To this end, the outcomes stand important for redesigning export trade policies/strategies to boost the performance of exports and the overall ultimate economic growth in East Africa. Keywords: East Africa, Export performance, Export-led growth policy, Macroeconomic factors, Panel data, PMG/ARDL DOI: 10.7176/DCS/12-4-01 Publication date: April 30 th 2022

FRENCH PRESIDENCY IN THE COUNCIL OF THE EU: EUROPEAN OR NATIONAL PRIORITIES?

This article presents an analysis of the EU’s policy priorities over the next six months in the three areas. On the basis of the French Presidency Programme, the speeches of President Macron and his ministers, the author aims to identify peculiarities of the French approach to European issues and areas of convergence between national and supranational interests in the run-up to the presidential elections in the country. The focus is on Schengen reform, the promotion of the Pact on Migration and Asylum, «EU strategic autonomy» and the adoption of the «EU Strategic Compass», France’s foreign policy priorities, in particular, relations with Africa, the Western Balkans and Russia. The French Presidency’s plans for a «new model for growth», including fiscal and trade policy reform, are also explored. The author turns to the controversial proposal to include protectionist «mirror clauses» on environmental standards in EU trade agreements with third countries in order to protect the interests of European farmers. In the section «A humane Europe» the author highlights Macron's intention to promote the use of the French language in EU institutions. The author concludes that the coincidence of the presidential campaign and the Presidency of the Council offers Macron opportunities, but also brings risks.

Diplomatic Realisation of the EU’s “Geoeconomic Pivot”: Sanctions, Trade, and Development Policy Reform

At a time when policymakers of the European Union (EU) are pivoting towards a more assertive use of economic power in external relations, this article discusses the merits of situating the much-debated use of economic sanctions and other economic power-based instruments in the broader terminology of EU diplomatic capabilities. Pointing out a number of shortcomings in traditional literature on geoeconomics and economic statecraft, the article applies the concept of “geoeconomic diplomacy” to demonstrate how the EU’s geoeconomic success will heavily depend on the abilities of diplomats and civil servants from institutions and member states to engage in viable relationships with relevant public and private actors in the state-market realm. Based hereon, it identifies institutional and context-specific challenges that could affect the comprehensive realisation of recent EU policy reforms relevant to the geoeconomic agenda: (a) institutional measures to ensure a more robust enforcement of sanctions, (b) a new anti-coercion instrument to counter coercive trade practices by third countries, and (c) a more efficient, focused, and strategic utilisation of EU development funds for purposes of stability and peace. The article concludes by discussing the prospects for bringing such instruments closer together at the level of practical implementation through the establishment of stronger relationships between practitioners working across the EU’s various geoeconomic intervention areas.