Pub Date : 2023-09-21DOI: 10.1177/00157325231158846
Mohammad Shaiful Islam, Ahmed Beloucif
A growing body of literature is concerned with the factors that determine the inflows of foreign direct investment (FDI) into a host country. However, hardly any literature has been carried out to provide a systematic literature review (SLR) of the FDI determinants. An SLR methodology underlies this conceptual paper to evaluate and categorise a literature survey of 112 empirical studies published from 2000 to 2018. The result indicates that the size of the host market is the most robust determinant, followed by trade openness, infrastructure quality, labour cost, macroeconomic stability, human capital, and the growth prospect of the host country. Market size is highly significant in virtually all studies. This partly reflects the fact that most of the world’s FDI are market-seeking. This study provides a clear understanding of the scope of the research in the field of FDI determinants as the practical implication for future research. JEL Code: F14
{"title":"Determinants of Foreign Direct Investment: A Systematic Review of the Empirical Studies","authors":"Mohammad Shaiful Islam, Ahmed Beloucif","doi":"10.1177/00157325231158846","DOIUrl":"https://doi.org/10.1177/00157325231158846","url":null,"abstract":"A growing body of literature is concerned with the factors that determine the inflows of foreign direct investment (FDI) into a host country. However, hardly any literature has been carried out to provide a systematic literature review (SLR) of the FDI determinants. An SLR methodology underlies this conceptual paper to evaluate and categorise a literature survey of 112 empirical studies published from 2000 to 2018. The result indicates that the size of the host market is the most robust determinant, followed by trade openness, infrastructure quality, labour cost, macroeconomic stability, human capital, and the growth prospect of the host country. Market size is highly significant in virtually all studies. This partly reflects the fact that most of the world’s FDI are market-seeking. This study provides a clear understanding of the scope of the research in the field of FDI determinants as the practical implication for future research. JEL Code: F14","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136235924","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-09-02DOI: 10.1177/00157325231184669
B. Moyo
The main raison d’être of the Southern African Development Community (SADC) Free Trade Area (FTA) implemented in 2012 was to inter alia boost intra-regional trade and promote regional trade integration. The low levels of growth and mixed trade performance of countries, eight years after, raises questions about the success of the FTA. The success of the recently launched African Continental Free Trade Area (AfCFTA) partly hinges on the performance of the regional FTAs like the SADC FTA. This is because it is unlikely that the African Union through the AfCFTA will achieve continentally what regional economic communities failed to achieve at the regional level. We use a gravity model as well as the difference in difference estimator to evaluate, ex-post, the impact of the SADC FTA on total and sectoral intra-exports. Using data from 2001 to 2019, results show that the full implementation of the SADC FTA did not significantly affect export performance with the export difference between countries that joined the FTA and those that did not being insignificant. These results do not change even when using sectoral exports. JEL Codes: F1, F13, F14, F15
{"title":"Impact of SADC Free Trade Area on Southern Africa’s Intra-Trade Performance: Implications for the African Continental Free Trade Area","authors":"B. Moyo","doi":"10.1177/00157325231184669","DOIUrl":"https://doi.org/10.1177/00157325231184669","url":null,"abstract":"The main raison d’être of the Southern African Development Community (SADC) Free Trade Area (FTA) implemented in 2012 was to inter alia boost intra-regional trade and promote regional trade integration. The low levels of growth and mixed trade performance of countries, eight years after, raises questions about the success of the FTA. The success of the recently launched African Continental Free Trade Area (AfCFTA) partly hinges on the performance of the regional FTAs like the SADC FTA. This is because it is unlikely that the African Union through the AfCFTA will achieve continentally what regional economic communities failed to achieve at the regional level. We use a gravity model as well as the difference in difference estimator to evaluate, ex-post, the impact of the SADC FTA on total and sectoral intra-exports. Using data from 2001 to 2019, results show that the full implementation of the SADC FTA did not significantly affect export performance with the export difference between countries that joined the FTA and those that did not being insignificant. These results do not change even when using sectoral exports. JEL Codes: F1, F13, F14, F15","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"42 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-09-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90541041","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-08-14DOI: 10.1177/00157325231165643
Pousseni Bakouan, M. Diarra, I. Ouedraogo
The article assesses the potential economic implications of tariff elimination and trade facilitation (TF) in the context of the African Continental Free Trade Area (AfCFTA) agreement for East Africa. Using the most recent GTAP database and computable general equilibrium model, the article provides additional evidence on the socio-economic benefits of the ongoing trade integration process. The results show that the elimination of tariffs would improve economic dynamism in most sectors of activity and household consumption. However, the elimination of tariffs alone would not be sufficient to achieve a significant level of trade integration. From a policy perspective, although a gradual implementation of tariff elimination is more beneficial for the zone, the results highlight the relevance of combining tariff elimination with complementary TF reforms. These reforms amplify the socio-economic gain from the AfCFTA. JEL Codes: F13, F14, F15, E23, C68
{"title":"How Can Tariff Elimination and Trade Facilitation Affect East African Economies?","authors":"Pousseni Bakouan, M. Diarra, I. Ouedraogo","doi":"10.1177/00157325231165643","DOIUrl":"https://doi.org/10.1177/00157325231165643","url":null,"abstract":"The article assesses the potential economic implications of tariff elimination and trade facilitation (TF) in the context of the African Continental Free Trade Area (AfCFTA) agreement for East Africa. Using the most recent GTAP database and computable general equilibrium model, the article provides additional evidence on the socio-economic benefits of the ongoing trade integration process. The results show that the elimination of tariffs would improve economic dynamism in most sectors of activity and household consumption. However, the elimination of tariffs alone would not be sufficient to achieve a significant level of trade integration. From a policy perspective, although a gradual implementation of tariff elimination is more beneficial for the zone, the results highlight the relevance of combining tariff elimination with complementary TF reforms. These reforms amplify the socio-economic gain from the AfCFTA. JEL Codes: F13, F14, F15, E23, C68","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"72 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-08-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84059948","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-07-19DOI: 10.1177/00157325231161931
Badri Narayanan G., R. Sen, S. Srivastava
The impact of tariff barriers affecting participation in global value chain (GVC) trade has received attention in recent literature. However, the empirical evidence in the context of mega-regional trade agreements, such as the Regional Comprehensive Economic Partnership (RCEP), from which India opted out recently, remains non-existent. Our study contributes to the empirical literature by undertaking an economy-wide modelling exercise, augmenting it to the automobile sector trade in GVC goods in the Indian context. We conduct two policy simulations with an aim to analyse how India’s auto-industry and auto-parts trade, involving forward and backward linkages in GVCs, have been affected by its decision to opt out of RCEP compared to a hypothetical scenario of not doing so. Our results suggest that a potential RCEP membership would have created net trade in both the finished automobile and intermediate auto-parts sectors, although imports would exceed exports. Further, we infer that both backward linkages and forward linkages in this industry will be adversely affected by opting out of RCEP, as there is export diversion in the auto-parts sectors globally, with India facing terms of trade losses due to higher import prices. This informs policymakers that developing domestic resilience and improving productivity are critical for India to improve its long-run export competitiveness while contemplating future trade agreements, including those with RCEP members. JEL Codes: F15, F61, O53
{"title":"The Potential Impact of Tariff Liberalisation on India’s Automobile Industry Global Value Chain Trade: Evidence From an Economy-Wide Model","authors":"Badri Narayanan G., R. Sen, S. Srivastava","doi":"10.1177/00157325231161931","DOIUrl":"https://doi.org/10.1177/00157325231161931","url":null,"abstract":"The impact of tariff barriers affecting participation in global value chain (GVC) trade has received attention in recent literature. However, the empirical evidence in the context of mega-regional trade agreements, such as the Regional Comprehensive Economic Partnership (RCEP), from which India opted out recently, remains non-existent. Our study contributes to the empirical literature by undertaking an economy-wide modelling exercise, augmenting it to the automobile sector trade in GVC goods in the Indian context. We conduct two policy simulations with an aim to analyse how India’s auto-industry and auto-parts trade, involving forward and backward linkages in GVCs, have been affected by its decision to opt out of RCEP compared to a hypothetical scenario of not doing so. Our results suggest that a potential RCEP membership would have created net trade in both the finished automobile and intermediate auto-parts sectors, although imports would exceed exports. Further, we infer that both backward linkages and forward linkages in this industry will be adversely affected by opting out of RCEP, as there is export diversion in the auto-parts sectors globally, with India facing terms of trade losses due to higher import prices. This informs policymakers that developing domestic resilience and improving productivity are critical for India to improve its long-run export competitiveness while contemplating future trade agreements, including those with RCEP members. JEL Codes: F15, F61, O53","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"184 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85812858","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-07-07DOI: 10.1177/00157325231158848
Sonam Choudhry, Abhinav Narayanan, Anshul
This article uses granular information on trade flows between India and its trading-partners to estimate the impact of price changes on the import basket in general. We first investigate whether a change in world prices at the commodity level triggers a reorganisation of trading partners. Second, we examine the degree of transmission of world prices to Indian import prices. Lastly, we look at whether India imports less from countries that charge a higher markup on a product. Our results indicate that a change in world prices does not significantly change the set of importing countries. Using the country–product level price changes, we find a higher degree of transmission as compared to the world prices. This provides an important policy implication. In order to determine how the transmission of world prices to import prices works, we need to pay attention to the product price changes in the partner countries rather than focusing on the world prices. Lastly, we find that India imports less of a particular product on average from a country that charges a higher markup for that product relative to the average export prices charged by that country. JEL Codes: F14, F60, F02, Q27
{"title":"Dynamics of Price Transmission: Evidence from India’s Import Basket","authors":"Sonam Choudhry, Abhinav Narayanan, Anshul","doi":"10.1177/00157325231158848","DOIUrl":"https://doi.org/10.1177/00157325231158848","url":null,"abstract":"This article uses granular information on trade flows between India and its trading-partners to estimate the impact of price changes on the import basket in general. We first investigate whether a change in world prices at the commodity level triggers a reorganisation of trading partners. Second, we examine the degree of transmission of world prices to Indian import prices. Lastly, we look at whether India imports less from countries that charge a higher markup on a product. Our results indicate that a change in world prices does not significantly change the set of importing countries. Using the country–product level price changes, we find a higher degree of transmission as compared to the world prices. This provides an important policy implication. In order to determine how the transmission of world prices to import prices works, we need to pay attention to the product price changes in the partner countries rather than focusing on the world prices. Lastly, we find that India imports less of a particular product on average from a country that charges a higher markup for that product relative to the average export prices charged by that country. JEL Codes: F14, F60, F02, Q27","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"29 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-07-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74422802","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-26DOI: 10.1177/00157325231166242
Leila Mirtajadini, Shamsollah Shirin Bakhsh, M. Mousavi, Kioumars Heydari, S. Yousefvand
This study aims to predict electricity cross-border trade partners based on the network theory and to investigate the position and importance of West Asia community in the global electricity trade network. For this purpose, the global network is constructed to examine the role of each node in the network for the time period of 2010–2018. Different communities are identified to proceed with the network analysis. The innovative analysis is link prediction to forecast missing links from the network. The results suggest more interconnectedness among community members, especially Iran, Turkey and Russia, which are the prominent nodes in the community. The link prediction outcomes offer the most probable missing links from the community and lead us to select the common neighbour approach as the most efficient method. JEL Codes: D85, Q27
{"title":"Prediction of Electricity Trade Partners Based on the Network Theory: The West Asia Community","authors":"Leila Mirtajadini, Shamsollah Shirin Bakhsh, M. Mousavi, Kioumars Heydari, S. Yousefvand","doi":"10.1177/00157325231166242","DOIUrl":"https://doi.org/10.1177/00157325231166242","url":null,"abstract":"This study aims to predict electricity cross-border trade partners based on the network theory and to investigate the position and importance of West Asia community in the global electricity trade network. For this purpose, the global network is constructed to examine the role of each node in the network for the time period of 2010–2018. Different communities are identified to proceed with the network analysis. The innovative analysis is link prediction to forecast missing links from the network. The results suggest more interconnectedness among community members, especially Iran, Turkey and Russia, which are the prominent nodes in the community. The link prediction outcomes offer the most probable missing links from the community and lead us to select the common neighbour approach as the most efficient method. JEL Codes: D85, Q27","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"9 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-06-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84514429","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-20DOI: 10.1177/00157325231166243
P. Dutta, N. Saha
We consider a small open economy with three sector and four factors. Agricultural sector produces output with unskilled labour and land. Manufacturing sector and skill formation sector produce output with skilled labour and capital. Skill formation sector transforms the unskilled labour into skilled labour. We also consider an extended version of this model where agricultural sector also uses capital. So capital is mobile between all three sectors. Both change in the price of manufacturing sector and capital stock alter skill formation in a similar direction. But change in the price of manufacturing sector leads to change in skilled–unskilled wage inequality in the same direction whereas due to change in capital stock it changes in opposite direction. In our extended study, where capital is mobile between all three sectors, the results of the basic model are unaltered. JEL Codes: F13, J31
{"title":"Impact of Trade Liberalisation on Wage Inequality and Skill Formation: A Theoretical Analysis","authors":"P. Dutta, N. Saha","doi":"10.1177/00157325231166243","DOIUrl":"https://doi.org/10.1177/00157325231166243","url":null,"abstract":"We consider a small open economy with three sector and four factors. Agricultural sector produces output with unskilled labour and land. Manufacturing sector and skill formation sector produce output with skilled labour and capital. Skill formation sector transforms the unskilled labour into skilled labour. We also consider an extended version of this model where agricultural sector also uses capital. So capital is mobile between all three sectors. Both change in the price of manufacturing sector and capital stock alter skill formation in a similar direction. But change in the price of manufacturing sector leads to change in skilled–unskilled wage inequality in the same direction whereas due to change in capital stock it changes in opposite direction. In our extended study, where capital is mobile between all three sectors, the results of the basic model are unaltered. JEL Codes: F13, J31","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"17 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-06-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85152779","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-18DOI: 10.1177/00157325231166237
N. Doan, Thanh Hà Lê
This article uses panel data with 6,743 country-year observations to investigate the effects of participation in the global value chain (GVC) on export survival rate for the period 2005–2014. GVC participation is measured as the value addition embedded in exports, looking both backward and forward from a reference country. The empirical results show that both backward and forward linkages have positive effects on the chance of export survival; these effects are persistent and increasing over time, and they become more pronounced when taking the endogeneity issue into account. On the policy front, the preceding findings suggest that governments should implement policies to upgrade a country to GVC integration in order to enhance the sustainability of exports. JEL Codes: F10, F14, C41
{"title":"The Effects of Global Value Chain on Export Survival","authors":"N. Doan, Thanh Hà Lê","doi":"10.1177/00157325231166237","DOIUrl":"https://doi.org/10.1177/00157325231166237","url":null,"abstract":"This article uses panel data with 6,743 country-year observations to investigate the effects of participation in the global value chain (GVC) on export survival rate for the period 2005–2014. GVC participation is measured as the value addition embedded in exports, looking both backward and forward from a reference country. The empirical results show that both backward and forward linkages have positive effects on the chance of export survival; these effects are persistent and increasing over time, and they become more pronounced when taking the endogeneity issue into account. On the policy front, the preceding findings suggest that governments should implement policies to upgrade a country to GVC integration in order to enhance the sustainability of exports. JEL Codes: F10, F14, C41","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"34 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-06-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81047855","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-13DOI: 10.1177/00157325231166763
Moumita Basu, Rilina Basu, Ranjanendra Narayan Nag
The pandemic crisis and associated lockdown have led to diminution in demand on one hand and different types of supply side bottlenecks on the other. The article makes a theoretical attempt to assess macroeconomic dimensions of COVID-19 along with consequences of such crisis using a two-sector dependent economy model. In particular, the article investigates the implications of unanticipated adverse shock such as COVID-19 and wage cut for the dynamic interaction of Tobin’s q, price of non-traded goods and the exchange rate and sectoral composition of output and level of employment. The effects of expansionary fiscal policy and increase in risk premium are also highlighted as the part of concluding remarks. The results in this article critically depend on the difference in the speeds of adjustments in the Tobin’s q, exchange rate and price of non-traded goods and different types of cross effects emanating from changes in interconnected macroeconomic variables. While the pandemic crisis leads to contraction of all the sectors and decrease in level of employment in the short-run with uncertain medium-run implications, the wage cut somewhat arrests the fall in employment. JEL Codes: E24, F41, G12
{"title":"Understanding Pandemic Crisis in a Dependent Economy: A Structuralist Analysis","authors":"Moumita Basu, Rilina Basu, Ranjanendra Narayan Nag","doi":"10.1177/00157325231166763","DOIUrl":"https://doi.org/10.1177/00157325231166763","url":null,"abstract":"The pandemic crisis and associated lockdown have led to diminution in demand on one hand and different types of supply side bottlenecks on the other. The article makes a theoretical attempt to assess macroeconomic dimensions of COVID-19 along with consequences of such crisis using a two-sector dependent economy model. In particular, the article investigates the implications of unanticipated adverse shock such as COVID-19 and wage cut for the dynamic interaction of Tobin’s q, price of non-traded goods and the exchange rate and sectoral composition of output and level of employment. The effects of expansionary fiscal policy and increase in risk premium are also highlighted as the part of concluding remarks. The results in this article critically depend on the difference in the speeds of adjustments in the Tobin’s q, exchange rate and price of non-traded goods and different types of cross effects emanating from changes in interconnected macroeconomic variables. While the pandemic crisis leads to contraction of all the sectors and decrease in level of employment in the short-run with uncertain medium-run implications, the wage cut somewhat arrests the fall in employment. JEL Codes: E24, F41, G12","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"34 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-06-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78078676","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-11DOI: 10.1177/00157325231173209
Carlos Chavez
This paper studies the effects of financial liberalisation on governability. The dependent variables measure governability in terms of control of corruption, government effectiveness, political stability, rule of law, regulatory quality and free speech for 125 countries from 1996 to 2019. As a variable measuring financial liberalisation, I use the Chinn-Ito index and Fernandez index as capital control measure. I use fixed-effects panel data, quantile regression, system GMM and event study to estimate these effects. The results I find show that the financial liberalisation has strong effects on those governability variables, especially low-income countries tend to have a higher sensitivity to changes in capital controls on governability and social stability, as well as countries in the 0.4–0.6 quantiles of the governability. Finally, I find that these effects take at least one year to become persistent over time. These findings imply that, in times of political turbulence and instability, governments may pursue liberalising policies that increase the dynamism of the economy to alleviate the climate of ungovernability. JEL Codes: F38, D72, P16
{"title":"Estimating the Effects of Financial Liberalisation on Governability and Social Stability","authors":"Carlos Chavez","doi":"10.1177/00157325231173209","DOIUrl":"https://doi.org/10.1177/00157325231173209","url":null,"abstract":"This paper studies the effects of financial liberalisation on governability. The dependent variables measure governability in terms of control of corruption, government effectiveness, political stability, rule of law, regulatory quality and free speech for 125 countries from 1996 to 2019. As a variable measuring financial liberalisation, I use the Chinn-Ito index and Fernandez index as capital control measure. I use fixed-effects panel data, quantile regression, system GMM and event study to estimate these effects. The results I find show that the financial liberalisation has strong effects on those governability variables, especially low-income countries tend to have a higher sensitivity to changes in capital controls on governability and social stability, as well as countries in the 0.4–0.6 quantiles of the governability. Finally, I find that these effects take at least one year to become persistent over time. These findings imply that, in times of political turbulence and instability, governments may pursue liberalising policies that increase the dynamism of the economy to alleviate the climate of ungovernability. JEL Codes: F38, D72, P16","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136369635","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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