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The purpose of this paper is to propose a model where trade has a direct and positive impact on growth rate of two trading nations beyond the level effect. We use the idea of virtual trade in intermediates induced by non-overlapping time zones and show how trade can increase the equilibrium optimal rate of growth. In this structure the trade impact goes beyond the level effect and directly causes growth. Typically standard models of trade cannot generate an automatic growth impact. Virtual trade may allow production to continue uninterrupted in separated time zones such as between the USA and India, and that can lead to higher growth for both countries. Later we extend the model to incorporate the accumulation of skills which becomes necessary for sustaining steady state growth. [ABSTRACT FROM AUTHOR]

Abstract: This paper looks at the link between the quality of economic institutions and innovation, and innovation and growth. We construct a measure of the innovation content of individual manufacturing industries and show that countries with stronger economic institutions specialize in more innovation‐intensive industries. Our results also provide evidence that industries involving higher levels of innovation grow relatively faster in countries with better economic institutions. The results suggest that innovation is an important channel through which higher quality economic institutions contribute to better growth performance in the long run. [ABSTRACT FROM AUTHOR]

Using a North- South model of heterogeneous firms, the paper investigates the effects of the financial development of the South on the choice of international entry mode (export vs foreign direct investment [ FDI]) of Northern firms. Such development facilitates the entry of local firms and thus intensifies product market competition. As a result, the intensive margins, extensive margins and total sales from export or FDI of Northern firms are all reduced. The paper provides conditions that determine whether export or FDI is affected more significantly. The results generate empirically testable hypotheses. [ABSTRACT FROM AUTHOR]

This paper takes a fresh look at Africa's growth experience by using the Bayesian model averaging (BMA) methodology. BMA enables us to consider a large number of potential explanatory variables and sort out which of these variable can effectively explain Africa's growth experience. Posterior coefficient estimates reveal that key engines of growth in Africa are substantially different from those in the rest of the world. More precisely, it is shown that mining, primary exports and initial primary education exerted differential effect on African growth. These results are examined in relation to the existing literature. Copyright © 2008 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to analyse the causality between exports and GDP of Namibia and to evaluate the relationship of these variables for the period 1970 to 2005. Time-series econometric techniques (Granger causality and cointegration) are applied to test the hypothesis of a growth strategy led by exports. It tests whether export Granger causes GDP, or whether the causality runs from GDP to exports, or if there is bi-directional causality between exports and GDP. The results revealed that exports Granger cause GDP and GDP per capita. This suggests that the export-led growth strategy through various incentives has a positive influence on growth. [ABSTRACT FROM AUTHOR]

China's foreign trade has entered a new stage, marked by some profound changes since 2003. After 5 years' consecutive high growth, China's foreign trade experienced a significant slowdown in growth following the onset of the global financial crisis in 2008. The purpose of this article is to present a review of the development in China's foreign trade over the past 10 years, and to explore important changes that have taken place during this period of time. A major finding of the present paper is that the traditional forces driving the high export growth in China, that is, low-cost labor, low-cost resources and low-cost money, have been disappearing. The policy implication is that over the next 10-15 years, the most important conditions for sustaining high export growth will be promoting the development and export of private enterprises in traditional heavy industries and high-technology industries, and relying on technological progress and high productivity to propel export expansion. [ABSTRACT FROM AUTHOR]

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Australia has experienced frequent and large commodity export price shocks similar to commodity exporters in Asia, Africa, and Latin America, but this price volatility has had much more modest impact on economic performance. Why? This paper explores Australian terms of trade volatility since 1901. It identifies two major price shock episodes before the recent mining-led boom and bust. It assesses their relative magnitude, their impact on de-industrialisation and distribution during the booms, and the labour market and policy responses to the shocks. Australia has indeed responded differently to volatile commodity prices than have other commodity exporters. [ABSTRACT FROM AUTHOR]

Applying a commonly used index for export sophistication in a cross-country study, Rodrik finds that the technological content of Chinese exports over the past decade has been so high that it cannot be explained simply by the economic fundamentals of a low-income country abundant with unskilled labor. Question has been raised for the empirical robustness of the index. I am also doubtful with Rodrik's analysis but develop my argument from a different perspective. This paper briefly reviews Rodrik's methodology and identifies other factors his empirical results potentially hinge on. Based on this, it elaborates on China's unique processing trade regime, the uneven distribution of its exports across Chinese regions and the limitation of HS codes in terms of identifying differentiated products, in an attempt to show that these factors also contribute to higher estimations of China's export sophistication level. Finally, it organizes trade data to reveal the trade patterns that are indeed consistent with the country's comparative advantage. [ABSTRACT FROM AUTHOR]

The objective of this paper is to quantify the potential gains in trade performance from the implementation of trade facilitation reform. The study applies a gravity model augmented with trade facilitation, regulatory quality and infrastructure indicators to assess the impact of trade facilitation and other trade-related constraints on export performance. Quantitatively, our results suggest that a 10 per cent improvement in trade facilitation would yield an increase in exports of about 5 per cent. Identical percentage improvements in the regulatory environment and in the quality of infrastructure provision would result in increases of 9–11 per cent and 8 per cent, respectively. The results confirm that while trade facilitation can contribute to improved export performance, improvements in the quality of the regulatory environment and the basic transport and communications infrastructure are equally or more important, in facilitating export growth. The conclusion is that trade facilitation alone is unlikely to result in a significant improvement in export performance. Copyright © 2007 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This paper examines a two-country dynamic general equilibrium model with status-seeking agents. We show that the introduction of status-seeking behavior brings about new properties in equilibrium dynamics. While there exists a continuum of steady states in the standard dynamic models, the present framework demonstrates that, under some conditions, there uniquely exists an incompletely specialized steady state, which is locally saddle-point stable. Therefore, catching-up and overtaking phenomena seen in economic development can be explained, and comparative statics analysis also is made possible. Our comparative statics analysis illustrates, for example, that trade pattern is determined in the Heckscher–Ohlin manner; the patient country acts just like a capital abundant one to export the capital-intensive good. Furthermore, as distinct from the existing literature, the present study shows that the existence of an incompletely specialized steady state can be ensured even if the two countries conduct different policies. [ABSTRACT FROM AUTHOR]

The explosive growth of Chinese trade may be due to international production fragmentation, but few have assessed these phenomena together, in part, because it is difficult to measure the vertical specialization (VS) of China's trade. Unique features of China's processing trade cause both identification of imported inputs and their allocation across sectors to vary by trade regime. This paper estimates the VS of Chinese merchandise exports, addressing these two challenges. A new method to identify Chinese imported inputs is developed, and used to calculate VS by sector and destination. VS estimates based on the official Chinese input-output table are contrasted with those based on a split table, capturing processing and normal exports separately. Last, the paper tests whether Chinese 'export sophistication' can be explained by VS. [ABSTRACT FROM AUTHOR]

I perform Arellano-Bond GMM estimations using panel data over the period 1995-2008 and explore the growth effects of Africa's trade with China, distinguishing between the effect of imports and the effect of exports, and controlling for the role of export concentration. Four important results are obtained from the empirical analysis. First, there is no empirical evidence that exports to China enhance growth unconditionally. Second, the results suggest that export concentration enhances the growth effects of exporting to China, implying that countries which export one major commodity to China benefit more (in terms of growth) than do countries that have more diversified exports. Third, contrary to the widely held view that increasing imports from China would have a negative effect, the empirical results show that the share of China in a country's total imports has a robust positive effect on growth. Finally, the evidence suggests that there is an inverted-U relationship between exports to developed countries and growth in Africa. Overall, the results seem to provide support for the hypothesis of growth by destination (i.e., that where a country exports matters for the exporting country's growth and development). I draw on these findings to outline some policy implications. [ABSTRACT FROM AUTHOR]

This paper argues that the contribution of trade preferences to economic development needs to be reappraised in light of the growth of globalised trade in manufactures. Trade preferences may be able to act as a catalyst for manufacturing exports, leading to rapid growth in exports and employment. To do so, preferences need to be designed to be consistent with international trade in fragmented ‘tasks’ (as opposed to complete products) and need to be open to countries with sufficient levels of complementary inputs such as skills and infrastructure. Recent experience with the African Growth and Opportunities Act shows that, in the right conditions, Sub-Saharan African countries have had large manufacturing export supply response to trade preferences. [ABSTRACT FROM AUTHOR]

This paper revisits the highly debated export-led growth hypothesis in a number of different ways using Malaysia as a case study. First, the hypothesis is tested in terms of labour and total factor productivity growth as a potential channel via which exports can affect or be affected by GDP growth. Considering the impact of imports on GDP and productivity growth serves a similar purpose. In addition, GDP is trade-adjusted to avoid the double-counting problem arising from the national income identity. Second, the relationships are examined using the relatively recent Toda and Yamamoto (1995 ) causality tests. These results have major implications and are necessary to reassess the effectiveness of trade policy as a strategy for economic development. [ABSTRACT FROM AUTHOR]

In 2007 a free trade area (BFTA) will be created in the Balkans. In this paper we study BFTA-induced trade growth in the SEE. Given that welfare impacts associated with trade growth depend on the growth channels, more goods and varieties exported or at higher price or more volume of exported goods and varieties, we study the structure of integration-induced export growth in the Balkans. Given that no firm-level trade data is available for the Balkans, we adopt the heterogeneous firm framework, which allows to decompose aggregate trade growth into intensive margin of trade and extensive margin of trade using only aggregate trade data. Our empirical findings predict that the BFTA would primarily increase the export volume through a growing number of shipments (the extensive margin of trade) suggesting that the actual welfare gains from the trade growth in the Balkans might in fact be larger than predicted in previous trade studies. We also found that reducing variable trade costs leads to higher export growth rates compared to reducing fixed trade costs by the same percentage. [ABSTRACT FROM AUTHOR]

The relationship between exports and economic growth has been analysed by a number of recent empirical studies. This paper re-examines the sources of growth for the period 1971–2001 for India. It builds upon) model to investigate empirically the relationship between export growth and GDP growth (the export led growth hypothesis), using recent data from the Reserve Bank of India, and by focusing on GDP growth and GDP growth net of exports. We investigate the following hypotheses: (i) whether exports, imports and GDP are cointegrated using the Johansen approach and Breitung's nonparametric cointegration test; (ii) whether export growth Granger causes GDP growth; (iii) and whether export growth Granger causes investment. Finally, a VAR is constructed and impulse response functions (IRFs) are employed to investigate the effects of macroeconomic shocks. [ABSTRACT FROM AUTHOR]

This paper contains an assessment of major econometric studies that have estimated the causality between exports and economic growth. These studies have used a variety of methodological approaches, such as Granger causality, cointegration with multivariate error correction models, exogeneity and structural invariance, VAR models with variance decomposition, and impulse response functions. The assessment in this paper refers both to the methodologies employed as well as to the empirical findings. A major conclusion is that empirical support for the export-led growth in both the developed and the developing countries is considerably weaker than was estimated on the basis of earlier correlation and production function studies. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to explore the manner in which Australian policy in matters of international trade is set. The author finds a number of puzzling features. First is the lack of detailed scrutiny given to the policy mechanisms employed by the countries of North-East Asia which have recently been so outstandingly successful in furthering their international trade and economic interests. There can be no valid reason for failing to give close attention to the means whereby others have succeeded. Second is the apparent separation in Australia, unlike Japan, between international trade policy and other, broader economic objectives such as the identification and support of new high value industries with global export potential. If we lack national objectives of this latter kind it is legitimate to ask whether this lack is for the best. Third is the extent to which policy appears to assume, without more ado, that through the liberation of market forces we shall largely resolve our international competitive and trade problems. This is a truly heroic assumption which should be clearly recognised for what it is. Fourth and perhaps most puzzling of all is the extraordinarily low level of community debate, even of interest group debate, over precisely where our 1990s international trade and economic development interests lie. If the current GATT round should largely fail, which is quite likely, clear thinking about where our best interests lie will suddenly become urgent. [ABSTRACT FROM AUTHOR]

Corruption has varying effects on international trade flows. Through the lenses of the institutional and transaction costs theories, we propose a novel institutional analysis of foreign aid as a formal institution that moderates the negative impact of corruption on international trade. We investigate this framework using a sample of the imports and exports of 30 Organization for Economic Co‐operation and Development (OECD) member countries and their 150 trading partners from 1995 to 2018. We analyze two main types of bilateral foreign aid within this framework: official development assistance and aid for trade. We present three main findings. First, the trading partners' corruption has a negative impact on OECD bilateral imports and exports. Second, both forms of foreign aid moderate the negative effect of the trading partners' corruption on OECD countries' exports. These findings confirm that OECD member countries are willing to export to very corrupt countries. Third, official development assistance does not moderate the relationship between corruption and imports, meaning that OECD countries do not import from corrupt locations. However, aid for trade still moderates the negative impact of corruption on OCED countries' imports. Overall, we confirm that foreign aid negatively moderates the adverse effect of corruption on exports but not on imports. Thus, foreign aid as a formal institution deserves more attention from OECD policymakers and managers of MNEs as a mechanism for reducing corruption and boosting international trade. [ABSTRACT FROM AUTHOR]

We examined the implementation statuses of a total of 5,919 foreign direct investment (FDI) projects approved by the Vietnamese Ministry of Planning and Investment since 1988, and compiled a database of actually disbursed FDI in Vietnam. The database covers FDI flows into Vietnam from 23 countries from 1990 to 2004. Using the data, we analyzed the impact of FDI on the exports of Vietnam with gravity equations. The empirical results demonstrate that FDI is one of the major factors driving the rapid export growth of Vietnam. It has significantly facilitated the expansion of Vietnam's exports to FDI source countries. In particular, the empirical analysis shows that a 1 percent increase in FDI inflows will be expected to give rise to a 0.13 percent increase in Vietnam's exports to these countries. [ABSTRACT FROM AUTHOR]

Earlier studies on threshold effects of financial sector development on international trade have relied on rudimentary approach which assumes exogenous inclusion of quadratic square terms of finance. However, findings from such studies are not instructive as it obscures country's unique domestic conditions such as differences in the levels of financial sector development. By relying on 46 countries in Africa over the period 1980–2016, this study employs a sample splitting and threshold estimation approach which allows finance–international trade to be mediated by the level of domestic financial sector development. We find evidence of threshold effects for a number of the countries suggesting that the precise impact of financial development on international trade is threshold–specific given the various indicators of finance. The study highlights that whether finance supports or limits international trade crucially depends on the attainment of a certain threshold which is both country and indicator–specific. [ABSTRACT FROM AUTHOR]

Aid for trade increases a recipient's public services, which lower its import and export transport costs. Formulating a two-country endogenous growth model, we obtain two main results. First, a permanent increase in the donor's aid/gross domestic product (GDP) ratio raises the steady-state growth rate as well as both countries' long-run fractions and cost shares of imported varieties if and only if it lowers the product of transport costs. Second, under a plausible condition, there exists a unique interior growth-maximizing aid/GDP ratio. These results are robust to alternative specifications for congestion and stock-flow nature of public goods. [ABSTRACT FROM AUTHOR]

This study examines the effect of the 'Everything But Arms' ( EBA) trade preferences regime on exports from the African, Caribbean and Pacific countries ( ACP) to the European Union ( EU). With this aim, an augmented gravity model is estimated for exports from the 79 ACP countries to the EU-15 for the time period of 1995-2013 using panel data techniques. The results are used to quantify the effect of the eligibility for EBA preferences on the export performance of the ACP least developed countries ( LDCs) and to relate it to the impact of official development assistance on exports. In addition to their separate effects, the combined impact of EBA and aid flows is examined. The main results do not provide evidence for an additional positive effect of the EBA agreement on the export performance of the ACP LDCs. However, receiving aid shows a significant and positive effect on exports from EBA-eligible ACP countries to the EU-15, supporting an EU development strategy that includes both sorts of assistance, aid and trade preferences. [ABSTRACT FROM AUTHOR]

Geographical Indications have evolved in recent years to protect indigenous knowledge in the agrifood sector without hampering the ethos of free trade. Supporters regard them as useful tools for protecting national property rights and offering new export opportunities, while opponents consider them as barriers to trade. This article provides theoretical justifications for them, based on insights from the New Institutional Economics, and cites Darjeeling tea and Basmati rice as Indian examples highlighting some of their dynamic institutional aspects. The new legal framework for GIs is mainly based on the international level. [ABSTRACT FROM AUTHOR]

Emerging-market multinational enterprises (MNEs) often lack conventional competitive advantages (high knowledge bases, stable currencies, industry concentrations of foreign direct investment) and, thus, should be disadvantaged in competing globally. A protective environment, however, may help develop firm-specific advantages in countries with deficiencies in human capital, and market and technological resources. We demonstrate how four such companies from South Africa progressed from their domestic base to become successful MNEs. Contrary to expectations, international expansion of MNEs from less competitive economies may be driven more by the transfer of intangible knowledge across national boundaries than by exporting finished goods. © 2009 Wiley Periodicals, Inc. [ABSTRACT FROM AUTHOR]

Using South Africa as an example, this article explores how the structure of production affects export diversification and economic growth. We show that the lagging process of structural transformation is part of the explanation for stagnant exports per capita in South Africa over the past 40 years. This slow structural transformation is shown to be a consequence in part of the peripheral nature of South Africa's productive capabilities: the country is specialized in sectors intensive in highly specific factors of production that cannot be easily redeployed to other activities. Using this methodology, we examine the sectoral priorities of the South African Department of Trade and Industry and explore the policy implications of the country's orientation in the product space. [ABSTRACT FROM AUTHOR]

Mauritius has achieved sustained economic growth over the past three decades notwithstanding the limited liberalization of its foreign exchange and financial markets which took place even during the adjustment period of 1979–86. Reforms in these markets have in fact been introduced gradually and have been stepped up only as from the 1990s when they were considered to be sustainable. A policy of mild exchange rate depreciation has helped to boost exports and growth; the exchange rate is currently market determined and current and capital transfers have been completely liberalized. In the financial market, credit ceilings have been removed and interest rate controls have given way to open market operations. There has also been improved financial intermediation, in keeping with the McKinnon–Shaw hypothesis. Copyright © 1999 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

The consistently held contention that export performance determines economic growth, particularly in the LDCs, is analysed empirically for the South Pacific island nations (SPINs). Given that there is reasonable evidence on export revenue/GDP linkages, this study is focused on the short-run relationships between exports and GDP, using the most consistent data set available for selected SPINs. Granger causality based on VAR models, forecast error decomposition analysis (FEDA) and impulse response analysis (IRA) were employed for the short-run investigations. Whilst Granger causality gave mixed results, those of FEDA and IRA were quite consistent. Copyright © 1998 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Over the past 15 years, Ireland has experienced a meteoric rise to prominence in mining. A decade ago output of metallic minerals was virtually non-existent. Today, metal concentrates from Irish mines are valued at $55 million annually, or 4 percent of total national exports. Metals have assumed fourth place among individual export categories. There is no single explanation for the mining boom. Rather, it must be attributed to several interrelated factors. Most notably, these include government tax relief incentives for economic development, recent advances in mining technology, the role played by Canadian exploration companies, and the impetus created by initial ore discoveries. Mining development has impacted significantly on the country, in terms both economic and social. It has bolstered the economy, provided valuable employment, spurred regional development and helped discourage emigration in rural areas. However, owing to a dramatic reversal of national mining policy in 1974, the industry's future is now in some question. [ABSTRACT FROM AUTHOR]