Pub Date : 2022-09-10DOI: 10.1177/00157325221119043
Nobuhito Suga, M. Tawada, Akihiko Yanase
In a simple two-country Ricardian economy with public infrastructures, we consider a simultaneous and non-cooperate game between governments with respect to public infrastructure supply. Then it is shown that a country with larger (smaller) factor endowment exports a good whose production is more (less) dependent on public infrastructures, and both countries will gain from trade as long as factor endowment differs between countries. However, the following special features appear. (i) Any incompletely specialising country produces two goods at an inner point of the production possibility set. (ii) If factor endowment is the same between countries, the trading equilibrium is attained by the pattern of specialisation such that each country specialises in one good different from each other and both countries become better off. Which country specialises in which good is indeterminate. The result shows a typical case of symmetric breaking. JEL codes: F11, H41
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Pub Date : 2022-09-08DOI: 10.1177/00157325221119618
M. Devi, Amiya Sarma
Twin deficits have appeared as the indispensible reality of the Indian economy since long. The study is an attempt to trace out the inherent dynamics of India’s twin deficits problem, particularly to unveil its transmission mechanism. Applying annual secondary data for the period 1971 to 2019, the endeavour reveals India’s twin deficits encounter to follow the path prescribed by the Mundell- Fleming open economy IS-LM model. However, India’s realization is found to differ slightly from the standard theoretical manifestation. In India, domestic exchange rate is found to appreciate followed by the expansionary fiscal policies of the government. The improved exchange rate, owing to the sterilization policies of the monetary authority to uphold the country’s trade competitiveness, is observed to augment India’s domestic interest rate. Again, the increased interest rate, due to its positive effect on the financial inflows, is found to deteriorate India’s external balance. JEL Classification: H6, F32, F31, F21, E43
{"title":"Dynamics of Twin Deficits: An Enquiry of the Mundell–Fleming Proposition for India","authors":"M. Devi, Amiya Sarma","doi":"10.1177/00157325221119618","DOIUrl":"https://doi.org/10.1177/00157325221119618","url":null,"abstract":"Twin deficits have appeared as the indispensible reality of the Indian economy since long. The study is an attempt to trace out the inherent dynamics of India’s twin deficits problem, particularly to unveil its transmission mechanism. Applying annual secondary data for the period 1971 to 2019, the endeavour reveals India’s twin deficits encounter to follow the path prescribed by the Mundell- Fleming open economy IS-LM model. However, India’s realization is found to differ slightly from the standard theoretical manifestation. In India, domestic exchange rate is found to appreciate followed by the expansionary fiscal policies of the government. The improved exchange rate, owing to the sterilization policies of the monetary authority to uphold the country’s trade competitiveness, is observed to augment India’s domestic interest rate. Again, the increased interest rate, due to its positive effect on the financial inflows, is found to deteriorate India’s external balance. JEL Classification: H6, F32, F31, F21, E43","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-09-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86903034","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 : 2022-08-05DOI: 10.1177/00157325221106280
Deeparghya Mukherjee, R. Chanda
International trade through global value chains (GVCs) has helped the world split production of various goods and services across countries over time, providing a new dimension to globalisation (Gereffi et al., 2001). This has resulted in most products being ‘made in the world’. The story of comparative advantage in production of commodities stands modified as ‘comparative advantage in tasks’ (Blinder, 2006). Today, developing economies have the option of specialising in exportable tasks which could serve as the engine of trade-driven economic growth (Kummritz et al., 2017). Accordingly, trade agreements have proliferated to facilitate trade in parts and components. However, recent de-globalisation trends—including, the US–China trade war, the withdrawal of the USA and India from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Regional Comprehensive Economic Partnership (RCEP) agreements, respectively, the muted effectiveness of the WTO’s dispute settlement system and, most recently, the disruption of global trade and supply chains due to the COVID-19 crisis and the ongoing Ukraine crisis—raise questions about the future prospects of GVCs and more broadly about the future of globalisation (Amiti et al., 2019; Baldwin & Tomiura, 2020; Miroudot & Nordström, 2020). There are a number of academic questions that these developments generate, and this special issue entitled ‘Global Value Chains and International Trade Dynamics’ deals with a subset of these questions. We are grateful to the editor, Foreign Trade Review, and his/her team for giving us the opportunity to guest edit this special issue. The six articles included in this special issue may be broadly divided into three specific themes. The first two articles have a global canvas and address questions such as the effect of GVC participation on long-term growth and the effects of deglobalisation on Chinese involvement in GVCs and associated ramifications. The third and fourth articles concentrate on two specific sectors, namely the garment and wearing apparel sector and the automotive sector in India, and examine India’s participation in these sectoral GVCs. The last two articles address questions on the effect of GVC participation on genderbased wage gap and the problems faced by Micro Small and Medium Enterprises (MSMEs) in participating in GVCs. Both the articles are based on experiences in India. The implications of GVC participation for long-term economic growth is a fundamental question. Camila do Carmo Hermida, Anderson Moreira Aristides Editorial
随着时间的推移，通过全球价值链(GVCs)进行的国际贸易帮助世界各国分离了各种商品和服务的生产，为全球化提供了一个新的维度(Gereffi et al.， 2001)。这导致了大多数产品都是“世界制造”。商品生产中的比较优势被修改为“任务中的比较优势”(Blinder, 2006)。今天，发展中经济体可以选择专门从事可出口的任务，这些任务可以作为贸易驱动型经济增长的引擎(Kummritz等人，2017)。因此，促进零部件贸易的贸易协定激增。然而，最近的去全球化趋势——包括中美贸易战、美国和印度分别退出《全面与进步跨太平洋伙伴关系协定》(CPTPP)和《区域全面经济伙伴关系协定》(RCEP)、世界贸易组织争端解决机制效力减弱，以及最近，由于COVID-19危机和正在进行的乌克兰危机导致的全球贸易和供应链中断，对全球价值链的未来前景提出了问题，更广泛地说，对全球化的未来提出了问题(Amiti等人，2019;Baldwin & Tomiura, 2020;Miroudot & Nordström, 2020)。这些发展产生了许多学术问题，本期题为《全球价值链与国际贸易动态》的特刊讨论了这些问题的一个子集。我们非常感谢《对外贸易评论》的编辑和他/她的团队给我们这个特刊的客座编辑机会。本期特刊的六篇文章大致可分为三个具体主题。前两篇文章以全球为背景，探讨了全球价值链参与对长期增长的影响、去全球化对中国参与全球价值链的影响及其相关后果等问题。第三篇和第四篇文章集中在两个特定行业，即印度的服装和穿戴服装行业和汽车行业，并研究了印度在这些行业全球价值链中的参与情况。最后两篇文章讨论了参与全球价值链对性别工资差距的影响以及微型中小企业(MSMEs)参与全球价值链所面临的问题。这两篇文章都是基于印度的经历。全球价值链参与对长期经济增长的影响是一个根本性问题。Camila do Carmo Hermida, Anderson Moreira Aristides社论
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Pub Date : 2022-08-01DOI: 10.1177/00157325221095995
Nadia Doytch
The world’s geopolitical landscape has never been more dynamic. Environmental pressures and disruptions to the global economy have driven researchers to reexamine the links between globalisation and emerging threats. The current special issue touches on some issues related to the challenges in front of globalisation, economic connectivity and economic development for human prosperity. We ask the question what does a post-COVID-19 world look like in terms of trade and investment flows? What is the future of economic connectivity and what are policies that would lead to improvements? We inquire about putting in perspective the wide range of challenges economies are facing in the year 2022: disruptions and uncertainty in global trade and investment flows; environmental implications of international economic activity; accelerating automation of production that leads to falling labour shares and increasing income inequality in the context of an interconnected world. The issue contains five articles and one book review by international scholars. The first article by Canh Nguyen and Su Thanh (Canh & Thanh, 2022) investigates the dynamics of export diversification, economic complexity and economic growth cycles. The authors apply several advanced econometric techniques to estimate the relationships among the variables for a global sample of countries. They find a Granger bidirectional causality between economic complexity and export diversification, and a unidirectional Granger causality exists from economic complexity to economic growth cycles. A three-stage least squares method demonstrates that economic complexity and export diversification significantly impact each other, and the dynamics of economic complexity and export diversification reduce economic fluctuations. The authors also find that the negative impact of economic complexity on economic growth cycles is statistically significant only for high-income economies. The second article by Nidhi Bagaria (Bagaria, 2022) pays attention to the increasing trade in intermediate goods dues to the wider spread of global value chains (GVCs). With China emerging as one of the leading countries in the global GVC network, there is a heavier reliance on Chinese intermediate goods for the manufacturing sector. The outbreak of COVID-19 and the subsequent lockdowns in many countries, including China, have disrupted the supply of GVCs and have led to a search for alternative markets for intermediate goods. The study by Nidhi Bagaria explores how India can substitute for China as an alternative avenue for Editorial
{"title":"Special Issue on ‘Global Trade and FDI: The Road Ahead’","authors":"Nadia Doytch","doi":"10.1177/00157325221095995","DOIUrl":"https://doi.org/10.1177/00157325221095995","url":null,"abstract":"The world’s geopolitical landscape has never been more dynamic. Environmental pressures and disruptions to the global economy have driven researchers to reexamine the links between globalisation and emerging threats. The current special issue touches on some issues related to the challenges in front of globalisation, economic connectivity and economic development for human prosperity. We ask the question what does a post-COVID-19 world look like in terms of trade and investment flows? What is the future of economic connectivity and what are policies that would lead to improvements? We inquire about putting in perspective the wide range of challenges economies are facing in the year 2022: disruptions and uncertainty in global trade and investment flows; environmental implications of international economic activity; accelerating automation of production that leads to falling labour shares and increasing income inequality in the context of an interconnected world. The issue contains five articles and one book review by international scholars. The first article by Canh Nguyen and Su Thanh (Canh & Thanh, 2022) investigates the dynamics of export diversification, economic complexity and economic growth cycles. The authors apply several advanced econometric techniques to estimate the relationships among the variables for a global sample of countries. They find a Granger bidirectional causality between economic complexity and export diversification, and a unidirectional Granger causality exists from economic complexity to economic growth cycles. A three-stage least squares method demonstrates that economic complexity and export diversification significantly impact each other, and the dynamics of economic complexity and export diversification reduce economic fluctuations. The authors also find that the negative impact of economic complexity on economic growth cycles is statistically significant only for high-income economies. The second article by Nidhi Bagaria (Bagaria, 2022) pays attention to the increasing trade in intermediate goods dues to the wider spread of global value chains (GVCs). With China emerging as one of the leading countries in the global GVC network, there is a heavier reliance on Chinese intermediate goods for the manufacturing sector. The outbreak of COVID-19 and the subsequent lockdowns in many countries, including China, have disrupted the supply of GVCs and have led to a search for alternative markets for intermediate goods. The study by Nidhi Bagaria explores how India can substitute for China as an alternative avenue for Editorial","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84285470","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 : 2022-07-17DOI: 10.1177/00157325221114586
Prabhash Ranjan
The Russian invasion of Ukraine is one of the most flagrant violations of international law in recent times. The Russian action has received global condemnation with various countries imposing sanctions on Russia. This article argues that concerning imposing trade sanctions against Russia, countries can rely on the national security exception in the World Trade Organization (WTO). The relevant legal provision in this regard is Article XXI of the General Agreements on Tariffs and Trade (GATT). The article undertakes a doctrinal analysis of GATT’s Article XXI. This analysis is conducted in the light of two WTO disputes—the Russia: Transit case and the Saudi Arabia: Intellectual Property case—that have interpreted the national security exception. The article argues that while the national security exception given in GATT’s Article XXI is not self-judging, countries will enjoy deference in determining their essential security interests. The article then applies this doctrinal understanding to the current Russia–Ukraine war. The current situation will fall under Article XXI, and countries can impose trade-restricting measures against Russia (such as suspension of the most-favoured-nation treatment) following Article XXI of GATT. JEL Codes: F13, F19, F52, F51
{"title":"Russia-Ukraine War and WTO’s National Security Exception","authors":"Prabhash Ranjan","doi":"10.1177/00157325221114586","DOIUrl":"https://doi.org/10.1177/00157325221114586","url":null,"abstract":"The Russian invasion of Ukraine is one of the most flagrant violations of international law in recent times. The Russian action has received global condemnation with various countries imposing sanctions on Russia. This article argues that concerning imposing trade sanctions against Russia, countries can rely on the national security exception in the World Trade Organization (WTO). The relevant legal provision in this regard is Article XXI of the General Agreements on Tariffs and Trade (GATT). The article undertakes a doctrinal analysis of GATT’s Article XXI. This analysis is conducted in the light of two WTO disputes—the Russia: Transit case and the Saudi Arabia: Intellectual Property case—that have interpreted the national security exception. The article argues that while the national security exception given in GATT’s Article XXI is not self-judging, countries will enjoy deference in determining their essential security interests. The article then applies this doctrinal understanding to the current Russia–Ukraine war. The current situation will fall under Article XXI, and countries can impose trade-restricting measures against Russia (such as suspension of the most-favoured-nation treatment) following Article XXI of GATT. JEL Codes: F13, F19, F52, F51","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-07-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78255534","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 : 2022-07-07DOI: 10.1177/00157325221103642
Latha Sreeram, S. A. Sayed
This study empirically examines the determinants of India’s international reserves in the long run and in the short run with seven other macroeconomic variables using the vector error correction model. The Johansen co-integration results indicate a positive long-run relationship between international reserves holdings and broad money M3 and foreign direct investment (FDI) inflows and negative relationship with external debt. The Granger causality test outcome also verifies the results, demonstrating that increase in broad money supply and FDI inflows are the reason for the accumulation in international reserves in India in the long run. M3 demonstrated a higher influence on international reserves suggesting that monetary policy is used widely in regulating the international reserves in India. This study also estimated the short-run dynamics and the tendency of the variables to reinstate to its long-run equilibrium. The error correction term coefficient entails a moderately low level of adjustment of international reserves holding, indicating that it is the other reason that the level of international reserves holding in India is high in the short run. JEL Codes: E51, F31, F41
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Pub Date : 2022-07-03DOI: 10.1177/00157325221107294
Martin Richardson
In this note I identify a simple Pareto-improving tariff reform for two countries in a free trade area, motivated by the approach in Kemp and Wan (1976), involving a move ‘towards’ a Kemp-Wan customs union. JEL Codes: F02, F13, F15
{"title":"An Elementary Tariff Reform for a Free Trade Area","authors":"Martin Richardson","doi":"10.1177/00157325221107294","DOIUrl":"https://doi.org/10.1177/00157325221107294","url":null,"abstract":"In this note I identify a simple Pareto-improving tariff reform for two countries in a free trade area, motivated by the approach in Kemp and Wan (1976), involving a move ‘towards’ a Kemp-Wan customs union. JEL Codes: F02, F13, F15","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-07-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88253944","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 : 2022-06-13DOI: 10.1177/00157325221104585
D. Majumdar
Bihong Huang and Eden Yu (Eds), Ways to Achieve Green Asia 2020, Asian Development Bank Institute. 344 pp., ISBN: 978-4-89974-211-1 (Print), ISBN: 978-4-89974-212-8 (PDF).
{"title":"Book review: Bihong Huang and Eden Yu (Eds), Ways to Achieve Green Asia 2020","authors":"D. Majumdar","doi":"10.1177/00157325221104585","DOIUrl":"https://doi.org/10.1177/00157325221104585","url":null,"abstract":"Bihong Huang and Eden Yu (Eds), Ways to Achieve Green Asia 2020, Asian Development Bank Institute. 344 pp., ISBN: 978-4-89974-211-1 (Print), ISBN: 978-4-89974-212-8 (PDF).","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-06-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86021674","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 : 2022-05-06DOI: 10.1177/00157325221095650
P. Jithin, M. S. Babu
We examine the two-way links between foreign direct investments (FDI) in services and trade in services for 26 emerging economies from 2003 to 2015 using sectoral and sectoral disaggregated FDI data. Within a multivariate framework, we use panel unit root tests, recently developed heterogeneous panel cointegration and panel vector error correction model (VECM). Our results confirmed the cointegrating relationship between trade in services, FDI in services, financial services FDI and nonfinancial services FDI. We find the existence of long-run unidirectional causality from trade in services to FDI in services. However, the disaggregated analysis shows a bidirectional link between nonfinancial services FDI and trade in services in the short run. Still, there is no causality between financial services FDI and trade in services both in the short run and long run. The result also shows the evidence of unidirectional causality running from trade in services to nonfinancial services FDI in the long run. It implies that sectoral decomposition matters in the FDI–trade nexus in emerging economies. JEL Codes: G20, F14, G20, F23
{"title":"Testing for the Bidirectional Relationship Between FDI in Services and Trade in Services: Evidence from Emerging Economies","authors":"P. Jithin, M. S. Babu","doi":"10.1177/00157325221095650","DOIUrl":"https://doi.org/10.1177/00157325221095650","url":null,"abstract":"We examine the two-way links between foreign direct investments (FDI) in services and trade in services for 26 emerging economies from 2003 to 2015 using sectoral and sectoral disaggregated FDI data. Within a multivariate framework, we use panel unit root tests, recently developed heterogeneous panel cointegration and panel vector error correction model (VECM). Our results confirmed the cointegrating relationship between trade in services, FDI in services, financial services FDI and nonfinancial services FDI. We find the existence of long-run unidirectional causality from trade in services to FDI in services. However, the disaggregated analysis shows a bidirectional link between nonfinancial services FDI and trade in services in the short run. Still, there is no causality between financial services FDI and trade in services both in the short run and long run. The result also shows the evidence of unidirectional causality running from trade in services to nonfinancial services FDI in the long run. It implies that sectoral decomposition matters in the FDI–trade nexus in emerging economies. JEL Codes: G20, F14, G20, F23","PeriodicalId":29933,"journal":{"name":"Foreign Trade Review","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-05-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78509636","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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