Pub Date : 2023-02-24DOI: 10.1177/00157325221145398
Moumita Basu, Rilina Basu, Ranjanendra Narayan Nag
This article develops a full employment monetary framework that deals with the interaction between exchange rate and inflation rate dynamics, emphasising the existence of risk premium. The economy consists of internal and foreign bonds. These are close substitutes since there exists a risk premium that depends on inflation rate, budget deficit and net exports. According to the monetary policy rule, both inflation rate and exchange rate negatively influence money supply. Overtime, changes in inflation rate are proportional to the excess supply in the money market. The dynamic adjustment of exchange rate arises due to discrepancy between home interest rate and world rate of interest and risk premium. Based on this framework, we investigate the implications of increase in exports, technological innovation and policy mix for the interaction between exchange rate and inflation rate. JEL Codes: E31, E63, F32, F41
{"title":"Inflation Adjustment, Endogenous Risk Premium and Exchange Rate: A Theoretical Analysis","authors":"Moumita Basu, Rilina Basu, Ranjanendra Narayan Nag","doi":"10.1177/00157325221145398","DOIUrl":"https://doi.org/10.1177/00157325221145398","url":null,"abstract":"This article develops a full employment monetary framework that deals with the interaction between exchange rate and inflation rate dynamics, emphasising the existence of risk premium. The economy consists of internal and foreign bonds. These are close substitutes since there exists a risk premium that depends on inflation rate, budget deficit and net exports. According to the monetary policy rule, both inflation rate and exchange rate negatively influence money supply. Overtime, changes in inflation rate are proportional to the excess supply in the money market. The dynamic adjustment of exchange rate arises due to discrepancy between home interest rate and world rate of interest and risk premium. Based on this framework, we investigate the implications of increase in exports, technological innovation and policy mix for the interaction between exchange rate and inflation rate. JEL Codes: E31, E63, F32, F41","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"37 24","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-02-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72367298","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 : 2023-02-01DOI: 10.1177/00157325221140154
Suhas Jadhav, Ishita Ghosh
The gravity model of trade (GMoT) has become popular among practitioners and academics lately, essentially because of its power to provide a comprehensive explanation of real-world trade data. Complementing this are Viner’s concepts of trade creation (TC) and trade diversion (TD), which have been crucial in the development of a conceptual framework for evaluating the trade implications of a trade agreement. This article attempts to conduct a bibliometric analysis for estimating TC and TD using the GoMT. It has been observed that the TC and TD estimations following the use of the GoMT are few. Additionally, TC and TD estimations for free trade agreements (FTA) have been conducted, but not so much for regional trade agreements (RTA). As a result, a broad range of research can be conducted, especially given the recent dynamic environment for new RTAs. A bibliometric analysis was undertaken to evaluate the current level of research on GMoT. The search was conducted through Scopus where 648 documents were retrieved and examined. The article indicates key findings and discusses future research prospects. JEL: F10, F13, F14
贸易引力模型(gravity model of trade, GMoT)最近在从业者和学者中变得流行起来，主要是因为它能够全面解释现实世界的贸易数据。与此相辅相成的是Viner提出的贸易创造(TC)和贸易转移(TD)的概念，这两个概念对于制定评估贸易协定的贸易影响的概念框架至关重要。本文试图利用GoMT对技术转移和技术转移进行文献计量分析。已经观察到，使用gmt后的TC和TD估计很少。此外，对自由贸易协定(FTA)进行了TC和TD估算，但对区域贸易协定(RTA)进行的估算并不多。因此，可以进行广泛的研究，特别是考虑到新区域贸易协定最近的动态环境。本文采用文献计量学分析来评价目前关于GMoT的研究水平。搜索是通过Scopus进行的，其中检索和检查了648个文档。文章指出了主要发现，并讨论了未来的研究前景。Jel: f10, f13, f14
{"title":"Future Prospects of the Gravity Model of Trade: A Bibliometric Review (1993–2021)","authors":"Suhas Jadhav, Ishita Ghosh","doi":"10.1177/00157325221140154","DOIUrl":"https://doi.org/10.1177/00157325221140154","url":null,"abstract":"The gravity model of trade (GMoT) has become popular among practitioners and academics lately, essentially because of its power to provide a comprehensive explanation of real-world trade data. Complementing this are Viner’s concepts of trade creation (TC) and trade diversion (TD), which have been crucial in the development of a conceptual framework for evaluating the trade implications of a trade agreement. This article attempts to conduct a bibliometric analysis for estimating TC and TD using the GoMT. It has been observed that the TC and TD estimations following the use of the GoMT are few. Additionally, TC and TD estimations for free trade agreements (FTA) have been conducted, but not so much for regional trade agreements (RTA). As a result, a broad range of research can be conducted, especially given the recent dynamic environment for new RTAs. A bibliometric analysis was undertaken to evaluate the current level of research on GMoT. The search was conducted through Scopus where 648 documents were retrieved and examined. The article indicates key findings and discusses future research prospects. JEL: F10, F13, F14","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"52 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89470399","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 : 2023-01-27DOI: 10.1177/00157325221137945
Archana Srivastava, S. Mathur, P. De
The study attempts to analyse the economy-wide impact of Indo-Pacific alliance between India and rest of the 45 participating members using computable general equilibrium (CGE) model. We introduce four simulation scenarios in the general equilibrium model. The first scenario is the one in which India bilaterally liberalises trade in terms of both tariffs liberalisation alone and then removal of tariffs and reduction of non-tariff barriers together with all the countries of Indo-Pacific region. The second scenario is when India bilaterally liberalises trade with all the Asian countries of the Indo-Pacific region. The third scenario is when India bilaterally liberalises trade with all the countries of the Indo-Pacific region but excludes China from the region because of the current geopolitical reasons. The fourth scenario is the one when free trade is considered among all the countries in the Indo-Pacific region. The Indo-Pacific alliance seems to go beyond strategic alliance with the 46 Indo-Pacific participating countries, wherein the members gain due to potential movement of capital and welfare and economic gains because of tariff and non-tariff liberalisation among the member countries. The article suggests the road map for maximum welfare gains for India, keeping strategic and economic engagements with other member countries and sub-regions. JEL Code: F15
{"title":"Ex-Ante Evaluation of India’s Trade Alliance with Indo-Pacific Region: A General Equilibrium Analysis","authors":"Archana Srivastava, S. Mathur, P. De","doi":"10.1177/00157325221137945","DOIUrl":"https://doi.org/10.1177/00157325221137945","url":null,"abstract":"The study attempts to analyse the economy-wide impact of Indo-Pacific alliance between India and rest of the 45 participating members using computable general equilibrium (CGE) model. We introduce four simulation scenarios in the general equilibrium model. The first scenario is the one in which India bilaterally liberalises trade in terms of both tariffs liberalisation alone and then removal of tariffs and reduction of non-tariff barriers together with all the countries of Indo-Pacific region. The second scenario is when India bilaterally liberalises trade with all the Asian countries of the Indo-Pacific region. The third scenario is when India bilaterally liberalises trade with all the countries of the Indo-Pacific region but excludes China from the region because of the current geopolitical reasons. The fourth scenario is the one when free trade is considered among all the countries in the Indo-Pacific region. The Indo-Pacific alliance seems to go beyond strategic alliance with the 46 Indo-Pacific participating countries, wherein the members gain due to potential movement of capital and welfare and economic gains because of tariff and non-tariff liberalisation among the member countries. The article suggests the road map for maximum welfare gains for India, keeping strategic and economic engagements with other member countries and sub-regions. JEL Code: F15","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"26 1","pages":"220 - 245"},"PeriodicalIF":1.3,"publicationDate":"2023-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79653113","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 : 2023-01-27DOI: 10.1177/00157325221137173
Fisayo Fagbemi, A. Fajingbesi, G. E. Nzeribe
The study examines the interaction effect of trade and institutional quality on financial sector development in 20 leading economies in sub-Saharan Africa selected based on 2018 GDP per capita ranking (top 20 richest economies by GDP per capita released by the IMF) over the period 2005–2020. Using system-generalised method of moments estimation, the results indicate that the effect of the interaction term of trade and regulatory quality on financial development is positive and significant. Further findings show unidirectional causality running from the interaction term to financial development, implying that the likelihood of trade enhancing financial development depends on the soundness of the regulatory framework. It is confirmed that the magnitude and direction of the effect of trade on financial development are sensitive to the quality of institutions. Therefore, the poor quality of regulations on business activities and financial services could undermine the salutary impact of trade on financial development. It is suggested that creating a conducive regulatory environment to improve the level of financial development is crucial for mitigating the potential impact of the weak institutional quality risks. This remains a significant prerequisite for having a competitive business environment, thereby stimulating the role of trade in the process of financial development.
{"title":"Trade–Finance Nexus: The Centrality of the Quality of Institutions in Sub-Saharan African Leading Economies","authors":"Fisayo Fagbemi, A. Fajingbesi, G. E. Nzeribe","doi":"10.1177/00157325221137173","DOIUrl":"https://doi.org/10.1177/00157325221137173","url":null,"abstract":"The study examines the interaction effect of trade and institutional quality on financial sector development in 20 leading economies in sub-Saharan Africa selected based on 2018 GDP per capita ranking (top 20 richest economies by GDP per capita released by the IMF) over the period 2005–2020. Using system-generalised method of moments estimation, the results indicate that the effect of the interaction term of trade and regulatory quality on financial development is positive and significant. Further findings show unidirectional causality running from the interaction term to financial development, implying that the likelihood of trade enhancing financial development depends on the soundness of the regulatory framework. It is confirmed that the magnitude and direction of the effect of trade on financial development are sensitive to the quality of institutions. Therefore, the poor quality of regulations on business activities and financial services could undermine the salutary impact of trade on financial development. It is suggested that creating a conducive regulatory environment to improve the level of financial development is crucial for mitigating the potential impact of the weak institutional quality risks. This remains a significant prerequisite for having a competitive business environment, thereby stimulating the role of trade in the process of financial development.","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"25 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90465977","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 : 2023-01-05DOI: 10.1177/00157325221126588
N. Dhamija
There is a high level of policy interest on the effect of trade liberalisation on inequality, especially in developing countries, because of their large vulnerable populations. India also initiated the process of liberalisation as a response to the severe balance of payments crisis of 1991. However, both rural and urban inequality has been increasing since the period 1993–1994, with urban inequality increasing at a higher rate. This study empirically examines the impact of trade openness on wage inequality using panel data for Indian states (separately for rural and urban areas). The results of this study indicate that trade openness does not lead to decrease in the wage inequality in the states and their rural areas. However, urban wage inequality is found to be increasing due to trade openness. These results are analysed and explained by various factors present in the Indian economy such as, skill biased technological changes; trade in intermediate goods; barriers to domestic labour mobility; and pattern and composition of India’s exports. An interesting aspect emerging is that higher education levels lead to increase in wage inequality as returns to education and inequality are increasing and the increase is also attributed to liberalisation. JEL Codes: F16, O18, C23
{"title":"Distributional Effects of Trade Liberalisation on Wages in India","authors":"N. Dhamija","doi":"10.1177/00157325221126588","DOIUrl":"https://doi.org/10.1177/00157325221126588","url":null,"abstract":"There is a high level of policy interest on the effect of trade liberalisation on inequality, especially in developing countries, because of their large vulnerable populations. India also initiated the process of liberalisation as a response to the severe balance of payments crisis of 1991. However, both rural and urban inequality has been increasing since the period 1993–1994, with urban inequality increasing at a higher rate. This study empirically examines the impact of trade openness on wage inequality using panel data for Indian states (separately for rural and urban areas). The results of this study indicate that trade openness does not lead to decrease in the wage inequality in the states and their rural areas. However, urban wage inequality is found to be increasing due to trade openness. These results are analysed and explained by various factors present in the Indian economy such as, skill biased technological changes; trade in intermediate goods; barriers to domestic labour mobility; and pattern and composition of India’s exports. An interesting aspect emerging is that higher education levels lead to increase in wage inequality as returns to education and inequality are increasing and the increase is also attributed to liberalisation. JEL Codes: F16, O18, C23","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"56 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-01-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77199799","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 : 2022-11-15DOI: 10.1177/00157325221126598
Ivan D. Trofimov
This article examines the relationship between the real exchange rate and the services trade balance in the UK using the quarterly data for the 2005Q1–2019Q4 period. We consider the aggregate as well as disaggregated trade across five services categories. We employ linear and non-linear autoregressive distributed lag (ARDL) models. The non-linear model, in particular, allows consideration of asymmetric response of the trade balance to depreciations as opposed to appreciations. The findings indicate little evidence of a long-term improvement in the trade balance following depreciation, and suggest the absence of J-curve effect. The effects of domestic, ‘rest of the world’ GDP and monetary base on the trade balance were respectively negative, positive and mixed. JEL Codes: F14, F31, C22
{"title":"The J-Curve Effect in Services Trade: A Disaggregated Analysis","authors":"Ivan D. Trofimov","doi":"10.1177/00157325221126598","DOIUrl":"https://doi.org/10.1177/00157325221126598","url":null,"abstract":"This article examines the relationship between the real exchange rate and the services trade balance in the UK using the quarterly data for the 2005Q1–2019Q4 period. We consider the aggregate as well as disaggregated trade across five services categories. We employ linear and non-linear autoregressive distributed lag (ARDL) models. The non-linear model, in particular, allows consideration of asymmetric response of the trade balance to depreciations as opposed to appreciations. The findings indicate little evidence of a long-term improvement in the trade balance following depreciation, and suggest the absence of J-curve effect. The effects of domestic, ‘rest of the world’ GDP and monetary base on the trade balance were respectively negative, positive and mixed. JEL Codes: F14, F31, C22","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"18 1","pages":"199 - 219"},"PeriodicalIF":1.3,"publicationDate":"2022-11-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76419490","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 : 2022-11-01DOI: 10.1177/00157325221092609
Sonia Mukherjee, A. Mukherjee
Small and medium enterprises (SMEs) account for bulk of the enterprises in most countries and play a crucial role in global value chains (GVCs). In India, micro, small and medium enterprises (MSMEs) constitute around 30% of the gross domestic product (GDP), accounts for 50% of exports and a major share in employment. Under the Aatmanirbhar Bharat Abhiyan, the Central government intends to enhance the share of MSMEs in exports to 60% in the next 5 years. The government also plans to increase the contribution of the MSMEs to 40% of the GDP. In this context, this article examines how effective the government policies have been in the past 10 years to help Indian MSMEs integrate in the GVCs. It first presents an overview of the MSMEs in India, focusing on their exports and global market integration. It then examines the schemes and policies of the Ministry of Micro, Small and Medium Enterprises, and provides an empirical estimation (2000–2001 to 2020–2021) of the impact of government schemes/programmes on MSMEs integration in the GVCs. Based on key informant interviews, it identified the core issues faced by the MSMEs and makes recommendation on how to address them, so that, the targets set by the government for enhancing the contribution of the sector to GDP and exports can be achieved. JEL Codes: F10, G28, O10, O20, O57
{"title":"Indian SMEs in Global Value Chains: Status, Issues and Way Forward","authors":"Sonia Mukherjee, A. Mukherjee","doi":"10.1177/00157325221092609","DOIUrl":"https://doi.org/10.1177/00157325221092609","url":null,"abstract":"Small and medium enterprises (SMEs) account for bulk of the enterprises in most countries and play a crucial role in global value chains (GVCs). In India, micro, small and medium enterprises (MSMEs) constitute around 30% of the gross domestic product (GDP), accounts for 50% of exports and a major share in employment. Under the Aatmanirbhar Bharat Abhiyan, the Central government intends to enhance the share of MSMEs in exports to 60% in the next 5 years. The government also plans to increase the contribution of the MSMEs to 40% of the GDP. In this context, this article examines how effective the government policies have been in the past 10 years to help Indian MSMEs integrate in the GVCs. It first presents an overview of the MSMEs in India, focusing on their exports and global market integration. It then examines the schemes and policies of the Ministry of Micro, Small and Medium Enterprises, and provides an empirical estimation (2000–2001 to 2020–2021) of the impact of government schemes/programmes on MSMEs integration in the GVCs. Based on key informant interviews, it identified the core issues faced by the MSMEs and makes recommendation on how to address them, so that, the targets set by the government for enhancing the contribution of the sector to GDP and exports can be achieved. JEL Codes: F10, G28, O10, O20, O57","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"38 1","pages":"473 - 496"},"PeriodicalIF":1.3,"publicationDate":"2022-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77981017","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 : 2022-10-28DOI: 10.1177/00157325221128654
Naiyue Cui, Yunfang Hu
This study examines the macroeconomic effects of foreign aid and fiscal policy by employing a multi-sector growth model. Foreign aid may decrease the recipient country’s market activities by lowering its capital accumulation and shifting market labour and capital to the non-market sector. This market activity shifting can improve the recipient country’s foreign asset/debt position where real exchange rate plays a role. We examine fiscal policies’ long- and short-run impacts and the recipient country’s administration efficiency in handling aid. Efficiency improvements in the recipient country’s governance of foreign aid can lower its real exchange rate, thereby contribute to improving foreign asset/debt holdings. Although administration costs in foreign aid may cause losses, by raising both market and non-market goods consumption, foreign aid improves the welfare of the recipient country. Our numerical analysis demonstrates the comparative statics and comparative dynamics impacts of several fiscal policy experiments. We illustrate that capital and labour income’s taxation effects can be very different.
{"title":"Foreign Aid and Fiscal Policy in a Small-Open Economy with a Non-Market Sector","authors":"Naiyue Cui, Yunfang Hu","doi":"10.1177/00157325221128654","DOIUrl":"https://doi.org/10.1177/00157325221128654","url":null,"abstract":"This study examines the macroeconomic effects of foreign aid and fiscal policy by employing a multi-sector growth model. Foreign aid may decrease the recipient country’s market activities by lowering its capital accumulation and shifting market labour and capital to the non-market sector. This market activity shifting can improve the recipient country’s foreign asset/debt position where real exchange rate plays a role. We examine fiscal policies’ long- and short-run impacts and the recipient country’s administration efficiency in handling aid. Efficiency improvements in the recipient country’s governance of foreign aid can lower its real exchange rate, thereby contribute to improving foreign asset/debt holdings. Although administration costs in foreign aid may cause losses, by raising both market and non-market goods consumption, foreign aid improves the welfare of the recipient country. Our numerical analysis demonstrates the comparative statics and comparative dynamics impacts of several fiscal policy experiments. We illustrate that capital and labour income’s taxation effects can be very different.","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"15 1","pages":"144 - 175"},"PeriodicalIF":1.3,"publicationDate":"2022-10-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75220541","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 : 2022-10-02DOI: 10.1177/00157325221127606
An‐Chi Tung, H. Wan
This study showcases the specific inspiration from Professor Kemp by focusing on one particular firm—ASML, a Dutch lithography company. It has become the only producer to launch a group of products, the extreme ultraviolet (EUV) systems for advanced integrated circuits (ICs). Such success is relatively new and is due to a single, unprecedented multi-year programme, Customer Co-investment Program CCIP), since 2012. This programme accelerated ASML’s development of EUV, which has marginalised the other two rivals and former market leaders, Nikon and Canon, that they can only compete in the less advanced DUV and i-line systems. The article explores a number of interrelated aspects about the selected case. It discusses how economic theories offer tools into the crux of the matter. It then reviews technical and historical facts to facilitate further understanding. Next, the article considers two main issues: Is the ASML’s claim that CCIP is necessary based on the financing requirement linked to the new technology true? And is the outcome good? The first question is analysed by four inter-related levels of information asymmetry, and the second is discussed at a broader level. Finally, the article explains how Kemp and Shimomura inspires the analysis here of the illustrative case of ASML. JEL Codes: D22, D23, D82, L22, L63
{"title":"Organisational Investment: The Case of ASML—Can the Product Make the Producer?","authors":"An‐Chi Tung, H. Wan","doi":"10.1177/00157325221127606","DOIUrl":"https://doi.org/10.1177/00157325221127606","url":null,"abstract":"This study showcases the specific inspiration from Professor Kemp by focusing on one particular firm—ASML, a Dutch lithography company. It has become the only producer to launch a group of products, the extreme ultraviolet (EUV) systems for advanced integrated circuits (ICs). Such success is relatively new and is due to a single, unprecedented multi-year programme, Customer Co-investment Program CCIP), since 2012. This programme accelerated ASML’s development of EUV, which has marginalised the other two rivals and former market leaders, Nikon and Canon, that they can only compete in the less advanced DUV and i-line systems. The article explores a number of interrelated aspects about the selected case. It discusses how economic theories offer tools into the crux of the matter. It then reviews technical and historical facts to facilitate further understanding. Next, the article considers two main issues: Is the ASML’s claim that CCIP is necessary based on the financing requirement linked to the new technology true? And is the outcome good? The first question is analysed by four inter-related levels of information asymmetry, and the second is discussed at a broader level. Finally, the article explains how Kemp and Shimomura inspires the analysis here of the illustrative case of ASML. JEL Codes: D22, D23, D82, L22, L63","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"2019 1","pages":"176 - 191"},"PeriodicalIF":1.3,"publicationDate":"2022-10-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86806477","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 : 2022-09-26DOI: 10.1177/00157325221120712
Hajra Manzoor, P. Mir
Currently, the world is witnessing one of China’s most significant economic integration initiatives–One Belt One Road (OBOR). This article aims to evaluate the general equilibrium (GE) effects of this initiative on member nations. The structural gravity model is used in this study to perform the counterfactual analysis while analysing the conditional and general equilibrium effects of the trade policy of border removal on international trade flow among the member countries. The estimates suggest varied strade gains for the member countries in response to the trade policy changes. Most Asian countries are witnessing an increase in producers’ prices and therefore gaining more from globalisation. We also deduced that the member countries had reached half of their potential to trade gains, with most developing countries witnessing a decrease in multilateral trade resistance (MTR). The findings of this study implicate a debate for the policymakers over continuing support for further trade integration. JEL Codes: C21, F15, F17
{"title":"General Equilibrium Trade Policy Analysis among One Belt One Road Nations Using Structural Gravity Framework","authors":"Hajra Manzoor, P. Mir","doi":"10.1177/00157325221120712","DOIUrl":"https://doi.org/10.1177/00157325221120712","url":null,"abstract":"Currently, the world is witnessing one of China’s most significant economic integration initiatives–One Belt One Road (OBOR). This article aims to evaluate the general equilibrium (GE) effects of this initiative on member nations. The structural gravity model is used in this study to perform the counterfactual analysis while analysing the conditional and general equilibrium effects of the trade policy of border removal on international trade flow among the member countries. The estimates suggest varied strade gains for the member countries in response to the trade policy changes. Most Asian countries are witnessing an increase in producers’ prices and therefore gaining more from globalisation. We also deduced that the member countries had reached half of their potential to trade gains, with most developing countries witnessing a decrease in multilateral trade resistance (MTR). The findings of this study implicate a debate for the policymakers over continuing support for further trade integration. JEL Codes: C21, F15, F17","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":"1 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2022-09-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89373111","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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