Vulnerable Economies Research Articles

Determinants of Exports in a Small and Vulnerable Economy: Fiji Islands-A Disaggregated Analysis.

The previous studies of exports performance in Fiji were carried out at the aggregate level. We conduct a disaggregated analysis of exports of three major products, namely, sugar, tourism, and gold. This analysis is useful for developing sector-based export promotion policies. The long run as well as dynamic export demand functions are estimated at the aggregate and disaggregate levels. The results identify a number of factors such as trading partner income, relative prices, productivity shocks, natural disasters, political disturbances, and the exchange rate that affect the export demand for sugar, tourism, and gold, though not in the same way. For instance, tourism and sugar enjoy the highest income elasticity. Sugar export is adversely affected by natural calamities and political upheavals. The political upheavals also affect tourism adversely in Fiji. The exchange rate affects the export of sugar more than others. The idea that devaluation will promote exports in Fiji needs careful investigation because results show that this will happen with a high cost, i.e. 5% nominal devaluation will be required to increase real exports by 1%.

ՀՀ տնտեսական ինքնիշխանության հիմնահարցերը՝ արտաքին տնտեսական հարաբերությունների համապատկերում/Issues of the RA Economic Sovereignty in the Context of Foreign Economic Relations

The issues of the economic sovereignty of states are more acute especially in recent decades, due to growing internationalization and globalization in the world economy. To establish favourable economic and trade relations, countries integrate more into the world economy and participate in the process of globalization. This almost inevitably implies a certain reduction in the level of economic sovereignty of the states, which forces the governments of the countries to pursue an adequate policy, on the one hand, not to stay out of the globalization process, and on the other hand, to face possible threats of economic sovereignty. From the viewpoint of confronting the possible threats to economic sovereignty, the structure of the country's economy and economic proportions, which show the degree of self-sufficiency and resilience of the national economy, are essential. In countries that are considered to have vulnerable economies to external influences, economic sovereignty is under constant threat. In that case, countries that have national economies with relatively high resilience are less vulnerable to threats to economic sovereignty. The paper analyzes the main macroeconomic indicators, the economic proportions, the structure of export and import, etc. of the Republic of Armenia, in the context of economic sovereignty and possible threats to it. The external trade indicators were observed in the areas of the integration directions of the RA, such as the membership in the Eurasian Economic Union and relations with the European Union. The relatively strong and weak sides of the RA, in terms of the impact on the economic sovereignty, were presented in those directions.

Energy security as a crucial Pakistan’s foreign policy determinant

Considering many factors that can affect the nation’s foreign policy, one can point out the factor of energy security. The article deals with the place of energy security in Pakistan’s foreign policy. The author puts forward a hypothesis according to which the socio-political development of Pakistan directly depends on the state of its energy sector and the prospects for its development, and therefore the nation’s foreign policy in fact stems from the needs of strengthening energy security. The article discusses the general concepts of energy security, lists the existing threats, the role of the energy sector in the Pakistani economy and the structural problems of the industry are analyzed with an overview of the country’s foreign trade balance having been given. The strategically important tracks of Pakistan’s energy policy include the implementation of the China-Pakistan economic corridor, the development of relations with the Gulf countries, an attempt to agree on the implementation of energy projects with the countries of Central Asia. Among Pakistan’s attempts to counter socio-political threats to energy security, counter-terrorism operations of the nation’s armed forces are considered, and its duality is noted, initiatives to strengthen regional maritime security in the Indian Ocean and in particular - Regional Maritime Security Patrols, as well as Pakistan’s role in the civil war in Afghanistan in the context of the Taliban takeover. The author concludes that energy security will remain one of the key factors in Pakistan’s foreign policy until the burning issues in the areas discussed in the article are resolved. Otherwise, Pakistan will remain a country with an extremely vulnerable economy, which will not allow Islamabad to play the role in world politics it hopes for.

The long reach of COVID-19: multilateral policy priorities to limit persistent divergences.

After a synchronized deep downturn in 2020, an uneven global recovery is underway. Differences in vaccine access and the size of policy support have shaped cross-country divergences in the rebound. The disparities in the strength of recovery are expected to persist into the medium term. A concerted multilateral effort is needed to limit these divergences, including through accelerating global access to vaccines, investing in climate change mitigation and adaptation, and ensuring financially vulnerable economies have access to international liquidity.

Central bank swap arrangements in the COVID-19 crisis

Facing acute strains in the offshore dollar funding markets during the COVID-19 crisis, the Federal Reserve (Fed) provided US dollar liquidity to the global economy by reactivating or enhancing swap arrangements with other central banks and establishing a new repo facility for financial institutions and monetary authorities (FIMA). This paper assesses motivations for the Fed liquidity lines, and the effects and spillovers of US dollar auctions by central banks using these lines. We find that the access to the Fed liquidity arrangements was driven by the recipient economies’ close financial and trade ties with the US. Access to dollar liquidity also reflected global trade exposure. We find that announcements of expansion of Fed liquidity facilities or of auctions using these facilities led to appreciation of partner currencies against the US dollar and reduced these currencies’ deviations from covered interest parity (CIP). Dollar auctions by major central banks (BoE, ECB, BoJ and SNB) had spillovers: they led to temporary appreciation of other currencies against the US dollar, reduced CIP deviations, and persistently reduced sovereign bond yields of other economies. However, dollar auctions done by non-major central banks with access to Fed facilities did not have a meaningful impact on key domestic financial variables. The impact of major central bank auctions does not differ by the economies’ financial or trade links with the US or their balance sheet currency exposure, i.e. the major central bank auctions benefitted even the more vulnerable economies.

The Impact of COVID – 19 on Pakistan’s Export Oriented Economic Growth

This study focuses on the Impact of COVID-19 on export-oriented economic growths of countries. We had tried to get the adjacent picture of the main affected areas of the world and their effects on economic growth. Pakistan also faced the harmful effects of this pandemic. The situation got worst when it was controlled with lockdown policies. It destabilized the vulnerable economy and economy shrinks down due to COVID-19. A mixed approach was conducted for this research study. As I have to see that to what degree the pandemic has affected the Pakistan’s economy and economic growth. The research aims to discover the impacts of COVID-19 on the export-oriented economic growth of Pakistan. The research methodology is based on a descriptive approach and a quantitative data analysis technique will be used to analyze the data. Other than human tragedy, the COVID – 19 has been an unpredicted shock for world economy Global Output estimated by IMF fallen by 3.5% in 2020 and all developed, undeveloped and under developing countries are hit by this wave hardly.

Diversity in the Persistence of El Niño Events Over the Last Millennium

AbstractThe El Niño Southern Oscillation (ENSO) is a mode of internal climate variability with far‐reaching impacts. Here, we consider an important aspect of ENSO behavior: the diversity in the persistence of El Niño events. We examine the occurrence of multi‐year El Niño events in instrumental observations, a suite of global climate model simulations of the last millennium, and paleoclimate archives. We find evidence of multi‐year El Niño events in all data sources considered, with a wide range of variability in the frequency of such events across and within the individual sources. Although scarce over the relatively brief satellite era, multi‐year El Niño events are often associated with the warmest El Niño events in observations and most models. Furthermore, we show that multi‐year El Niño events augment the persistence of associated hydroclimate anomalies, which may compound the impacts on vulnerable economies and ecosystems within and beyond the tropical Pacific sector.

The perception of climate change and the demand for weather-index microinsurance: evidence from a contingent valuation survey in Nepal

ABSTRACT Despite donor assistance and government subsidies, the uptake of microinsurance products to insure against extreme climate events remains low in many climate vulnerable economies. Emerging evidence indicates that various non-price factors such as lack of knowledge, trust in institutions, beliefs, and perceptions about climate change partly explain the low uptake. This study uses the CVM approach to investigate the effect of one such factor – farmers’ climate change perceptions – on the adoption of weather index micro-insurance. We introduce two hypothetical weather index microinsurance products to farming households in Nepal: the first one (basic) insures paddy only, whereas the second one (comprehensive) also insures livestock. We use bivariate probit models with order effects for empirical estimation. We find that households’ ex ante perception of future climate change as well as their ex-post perceptions of past climate change impacts have significant effects on their microinsurance purchase decisions. Mean WTP-values for the basic and comprehensive products are NRs. 3096 and NRs. 13209 respectively. We also find some evidence of crowding-out effects on private risk transfer markets by other public and donor climate adaptation programmes. Our findings suggest that public policies should focus on increasing climate awareness, accountability and the development of competitive microinsurance markets.

Impacts of COVID-19 on the Economy of Pakistan

The deadly coronavirus has affected not only the lives of the people but also the economies of all states of the world. Mainly the lockdown to control the spread of the virus has affected economies. The primary objective of this study was to explore the impacts of novel coronavirus pneumonia on the economy of Pakistan and the government response to it. It has also severely affected the already vulnerable economy of Pakistan by limiting the economic activities, a lot of industrial units and small and medium-sized enterprises either stopped or limited their productions, foreign trade decreased by 40.74 percent, affected the services sector, reduced the tax collection volume, 2.06 million people lost their jobs, increased poverty ratio, tourism industry ruined, and GDP recorded negative for the first time in the history (0.38 percent). The pandemic not only affected the economy of the state but also severely affected the individual economies. The government of Pakistan released some relief packages for industries and poor people but could not control the impacts of a pandemic on the economy. Pakistan is required to formulate and implement comprehensive microeconomic policies to reduce economic losses.

Pandemics (coronavirus disease-2019), experiences, lessons learn, and the future

The coronavirus disease 2019 (COVID-19) pandemic is the defining global health crisis of our time andthe greatest challenge we have faced since World War Two. Since its emergence in Asia in 2019, thevirus has spread everywhere except Antarctica. We have now reached the tragic milestone of more than2 million deaths, and the human family is suffering under an almost intolerable burden of loss. However,the pandemic is much more than a health crisis, it’s also an unprecedented socioeconomic crisis. Stressingevery one in the countries, it has the potential to create devastating social, economic, and political effectsthat will leave deep and long-standing scars. Every day, people are losing jobs and income, with noway of knowing when normality will return. Small island nations, heavily dependent on tourism, haveempty hotels and deserted beaches. We have been supporting countries since the very early stages ofthis crisis, donating essential protective medical equipment. As the response evolves, and after assessingthe immediate, medium- and long-term needs, we are moving into the socioeconomic response. It willrequire all of society to limit the spread of COVID-19 and to cushion the potentially devastating impactit may have vulnerable economies. We must rebuild trust and cooperation, within and among nations, andbetween people and their governments.

Modeling the interplay between demography, social contact patterns, and SARS-CoV-2 transmission in the South West Shewa Zone of Oromia Region, Ethiopia

BackgroundCOVID-19 spread may have a dramatic impact in countries with vulnerable economies and limited availability of, and access to, healthcare resources and infrastructures. However, in sub-Saharan Africa, a low prevalence and mortality have been observed so far.MethodsWe collected data on individuals’ social contacts in the South West Shewa Zone (SWSZ) of Ethiopia across geographical contexts characterized by heterogeneous population density, work and travel opportunities, and access to primary care. We assessed how socio-demographic factors and observed mixing patterns can influence the COVID-19 disease burden, by simulating SARS-CoV-2 transmission in remote settlements, rural villages, and urban neighborhoods, under school closure mandate.ResultsFrom national surveillance data, we estimated a net reproduction number of 1.62 (95% CI 1.55–1.70). We found that, at the end of an epidemic mitigated by school closure alone, 10–15% of the population residing in the SWSZ would have been symptomatic and 0.3–0.4% of the population would require mechanical ventilation and/or possibly result in a fatal outcome. Higher infection attack rates are expected in more urbanized areas, but the highest incidence of critical disease is expected in remote subsistence farming settlements. School closure contributed to reduce the reproduction number by 49% and the attack rate of infections by 28–34%.ConclusionsOur results suggest that the relatively low burden of COVID-19 in Ethiopia observed so far may depend on social mixing patterns, underlying demography, and the enacted school closures. Our findings highlight that socio-demographic factors can also determine marked heterogeneities across different geographical contexts within the same region, and they contribute to understand why sub-Saharan Africa is experiencing a relatively lower attack rate of severe cases compared to high-income countries.

Al Qaeda and Taliban Nexus: Trends in Terrorism in Pakistan

Pakistan is located in a volatile region where non-state actors are involved in sabotage activities at large. For the last four decades, Afghanistan remained the epicenter of militant activities in the region as well as in the rest of the world. Before 9/11, dozens of militant groups have found this land a safe haven for their terrorist activities and threaten the peace of the region at large. Pakistan is the most affected country in the world inter of human and financial loss. Due to the Afghan crisis, thousands of militants shifted their activities towards FATA and the rest of the country. Taliban and Al Qaeda are the two important groups who have martyred thousands of innocent people in Pakistan, especially Pashtun, and damaged the already vulnerable economy further. This paper will analyze the factors responsible for the nexus of the militant group and also their effect on Pakistan.

Sustaining Economic Growth in Sub-Saharan Africa: Do FDI Inflows and External Debt Count?

The quest for the attainment of economic development is sought after by all global economies, which by effect is expected to transcend to improving livelihoods and standard of living. However, several factors hinder the process of achieving sustained economic development, especially in developing countries. In this regard, assessing the extent of economic expansion orchestrated by foreign direct investment (FDI) inflows in vulnerable economies such as Sub-Saharan Africa (SSA), particularly in the face of the significant fall in global FDI inflow, is worthwhile. In essence, this study ascertains the impact of FDI inflows and external debt on economic growth amidst decline in FDI inflows and excessive foreign borrowings. The mixed order of integration from the stationarity test underpins the adoption of autoregressive distributed lag (ARDL) approach for data covering the period 1990 to 2018. The empirical results found FDI inflows play a crucial role in achieving economic expansion in the region. On average, FDI inflows, external debt, and foreign aids are more useful in expanding the economy compared to trade openness and exchange rate. Thus, this study recommends the need for SSA to open its economic borders for external capital, viz. FDI. A peaceful economic and political environment is a pre-condition to attract and maintain potential foreign investors. Stability in exchange rates is critical in achieving growth in FDI and other foreign resources. However, caution is required, especially in administration of external resources. Particularly, contracting external debt must strictly be driven by economic reasons rather than political motivation. Borrowed funds could be injected mainly into productive streams with the highest investment returns to boost economic development.

The COVID-19 experience in the Fiji Islands: some lessons for crisis management for small island developing states of the Pacific region and beyond

The COVID19 global pandemic has seriously disturbed Fiji, its people and the economy. Consequently, crisis management has been highly challenging in this small and vulnerable economy. Although the number of positive cases was low, the economic impact of COVID19 has been significant. In this paper, we identify several crisis management issues to better deal with the pandemic. These discussions can potentially improve Fiji’s response strategies and initiatives to safeguard public health and economic activity. Our evaluation indicates room for learning and innovation in Fiji’s health care services to ensure resilience and effective response mechanisms. The suggestions are not only useful for Fiji but also for other similar economies in the region. These suggestive strategies can work as proactive measures to combat second wave impact yet to come.

Insights on the trend of the Novel Coronavirus 2019 series in some Small Island Developing States: A Thinning-based Modelling Approach

Undeniably, the Novel Coronavirus 2019, (COVID-19), has disrupted the routine functioning of the global economic and social activities. In particular, vulnerable economies such as the Small Island Developing states (SIDs) are facing unprecedented health and financial crisis. In such critical situation, some in-depth statistical models can be helpful for proper planning in terms of identifying factors that can influence significantly the number of infected COVID-19 cases and for forecasting. Modelling the COVID-19 infected series is a statistical challenge since the series are severely over-dispersed with lots of oscillations. This paper attempts a new integer-valued time series model based on the auto-regressive structure (INAR), with an oscillating Weighted Cosine Geometric (WCG) innovation term. The parameters in the proposed model constitute of the regression effects and serial auto-correlation coefficients and are estimated via likelihood and moment-based approaches. Monte Carlo simulation experiments are implemented to assess the performance and consistency of the different resulting estimators. Thereon, the INAR-WCG is applied to the COVID-19 series of various SIDs countries that include Singapore, Cape Verde, Bahrain, Mauritius and Maldives. The findings reveal that factors such as the transmission mode and the Government Stringency Index are the most influential. In terms of model fitting and forecasting, the INAR-WCG provides slightly better RMSEs than the other competing INAR-based processes.

China’s Belt and Road Initiative: Will it Make or Mar Development in the Central and West Africa Subregions?

The West, chiefly Europe, left political footmarks in Africa from the Colonial Era, along with varying economic footprints and surviving engagements in the immediate Post-colonial Era. However, the relationships between Africa and her former colonial masters have hardly yielded much to the former following the wave of independence, leading to the perception of failed relationships. This perception of failure to deliver on their undertakings has left Africa with only one option—China. The latter has been addressing some of Africa’s urgent infrastructure needs in return for natural resources and agricultural products. These engagements on the surface appear to be good business, but on further examination seem questionable notably as it relates to debt distress on vulnerable economies. To increase her footprint within the continent, China extended her Belt and Road Initiative (BRI) to most African nations who have signed a memorandum of understanding for future development projects. Though the commitments usually are unspecified, China’s investments have seen rapid growth since the early 2000s, largely owing to the implementation of the BRI. The memoranda have had the potential to strengthen ties with partner nations. The expansion to include Africa in its economic participation in the BRI has left the West questioning China’s motives while reinforcing suspicions about possible future US-China conflict. The impact of BRI on the African continent is quite visible in all the subregions, especially in their improved gross domestic products. A burning question has been whether these partnerships represent win-win relationships for sustainable growth or debt-growth dynamics.

A los 20 años de la constitución de la República Bolivariana de Venezuela: entre amenazas y “sanciones humanitarias”

Este artículo hace una descripción analítica cronológica de las distintas modalidades de ataques sufridos por la República Bolivariana de Venezuela, desde la aprobación de su Constitución nacional en 1999, dirigidas a producir un perjuicio a la población y el debilitamiento del Estado-nación. Luego de los intentos fallidos de golpes de Estado, sabotajes, guerra económica, creación de instancias de poder paralelas, entre otros, se hace énfasis en las recientes modalidades de amenazas sufridas desde 2014 hasta 2019, como son las medidas coercitivas unilaterales (llamadas sanciones), aplicadas principalmente por USA, y sus aliados, bajo el pretexto de intervención humanitaria. Se concluye que ellas han causado enorme daño a la ya vulnerable economía del país y, en consecuencia, a la salud, alimentación de los venezolanos violando, en definitiva, sus DDHH, derecho al desarrollo y a la paz. El “escudo constitucional” sigue amparando al pueblo venezolano quien se mantiene en resistencia y en batalla.

Export performance, governance, and economic growth: evidence from Fiji - a small and vulnerable economy

This article analyses the nexus between exports, established indicators of governance, and economic growth in Fiji. It finds that exports and governance co-operate to promote economic growth. The i...

СТІЙКІСТЬ ЗОВНІШНЬОЇ ТОРГІВЛІ КРАЇН В УМОВАХ ПАНДЕМІЇ COVID-19

In 2020 the COVID-19 pandemic became the major event affecting the global economy. Both supply- and demand-driven recession and changes in consumption and investment behaviour became a new reality. The purpose of the paper is to estimate foreign trade strength and vulnerability of countries under the shrinking global demand for specific groups of goods and services as a result of the COVID-19 pandemic and the measures to contain it. The proposed foreign trade strength index under pandemic is based on exports of pharmaceutical products, medical equipment, food, IT and audiovisual goods and services etc. (+); tourism and transport services, oil, ores and metals, transport vehicles and most other types of machinery etc. (-); and imports of medical and related products (-) in comparison to a country’s GDP. The ranking is provided for the largest 100 economies. 90% of the countries have absolute trade vulnerability under the pandemic. There are 3 types of economies with relatively better trade soundness: exporters of medical products and ICT services (Ireland and Switzerland), food exporters and closed economies. The most vulnerable economies include small island countries which depend on tourism services exports, oil exporting countries and exporters of machines and equipment. Ukraine ranks 38th and has a standardized value of the index +0.4 mainly because of its food exports which help offsets the weakness due to the metal exports. Vulnerability of large economies is caused by their merchandise export structure, while vulnerability of small economies is due to their services export structure. Key words: foreign trade, economic resilience, demand for goods and services, dependence on global markets, pandemic, quarantine measures.

Impacts of sea level rise on economic growth in developing Asia

Global sea level rise (SLR) variations have undeniably begun to make an impact on highly vulnerable economies. These impacts of SLR are a key component of the projected economic damage of climate change, an important input to climate change policies and adaptive measures. This paper considers SLR projections and its impact on the economy and includes a consolidation of various related studies. Estimated global gross domestic product (GDP) loss by 2100 ranges from 0.3% to as high as of 9.3% (Hinkel et al. 2014; Pycroft, Abrell, and Ciscar 2015). Climate change impact should be addressed at the global level through a locally focused effort where education and acceptance by all stakeholders are crucial and warranted. Further, this paper tackles several adaptive strategies as a response to SLR which include retreat, accommodation, and protection. The retreat strategy simulates that SLR causes the loss of inundated land and incurs planned relocation (migration) costs above a certain sea level. The accommodation strategy allows usage of vulnerable areas or land and limits damage by flood-proofing or raising structures. Finally, the protection strategy projects that land will be protected from SLR damage by sea walls or other barriers of a certain height. On the other hand, Diaz (2016) estimates a median adaptation cost from migration at 16% of GDP under the least-cost strategy by 2050. In general, the education of and the acceptance by the concerned local community will be crucial in the successful implementation of SLR adaptation strategies, notwithstanding parallel mitigation efforts on a global scale.