Foreign Trade Review

Publisher:: Sage Publications, Inc.
Publication date:: 2021-08-12

ISBN:: 0015-7325

Issue Number

Latest documents

National Defence Under Alternative Trade Policy Regimes: Theory and Evidence from Developing Countries
Defence mechanism for any nation is the way through which internal as well as external geo-political condition can be stabilised. Moreover, defence sector can also be treated as one of the most potential sectors regarding financial transactions and the relevance of it is valid both in autarky and in the regime of international trade. Using Granger Causality for a panel of 27 developing countries across Asian and South American continents, we have found that different trade measures are playing major role in the way of functioning of national defence. For further analytical purpose and also to select the most effective trade policy regime among the alternatives, we have adopted a trade theoretic framework. In this regard, we have used a four-sector general equilibrium trade model with special emphasis on defence as well as R&D to defence to illustrate the impact of trade liberalisation on defence system. From such setup and by using bootstrap policy simulation we have found that trade liberalisation in the form foreign direct investment (specific to the R&D to defence) as the most effective trade regime to claim gains from trade in the presence of defence dualism for any small open developing economy. Such comparative statics is critical from the policy perspective. Policymakers should be cautious before defence industry liberalisation. JEL Codes: H56, C33, F11, F14, F21, D58
Impact of Exchange Rate Changes on the Trade Balance of India: An Asymmetric Nonlinear Cointegration Approach
Applying an asymmetric model, the study reported no evidence of J-curve phenomenon in case of India. In the short-run currency appreciation deteriorates the trade balance and currency depreciation improves it. In the long-run, again the similar response is observed, however, only the impact of currency depreciation is statistically significant. Increase in domestic demand deteriorates the trade balance by a greater magnitude than improvement is observed due to the decline in domestic demand conditions. Finally, foreign demand hike improves the trade balance relatively by a higher magnitude; however, the impact of a foreign demand decline is statistically insignificant. JEL Codes: F4, F41, F42
Book review: Xu Qian, Water Services Disputes in International Arbitration: Reconsidering the Nexus of Investment Protection, Environment, and Human Rights
Xu Qian, Water Services Disputes in International Arbitration: Reconsidering the Nexus of Investment Protection, Environment, and Human Rights. The Netherlands: Kluwer Law International BV, 2020, xiv+280 pp., GBP 156.51. ISBN 978-94-035-2203-6.
Does Trade Openness Affects Employment in Cameroon?
The objective of this paper is to examine the effect of trade openness on employment in Cameroon. The methodologies used in order to test our hypothesis were the FMOLS and DOLS. The results of the estimations show a positive and significant effect of trade openness on employment in Cameroon with both methods. Indeed, industrialisation and investments were found to significantly increase employment in Cameroon. As recommendations, if Cameroon envisages expanding in international trade, she should encourage sectors that have a spillover effect. These include increasing industrialisation which will lead to increase in national productivity. Furthermore, the educational system should match training with jobs. JEL Codes: F16, C22
Financial Crisis, Globalisation and Development in Africa
This study unites two streams of research by simultaneously focusing on the impact of financial globalisation on financial development and pre- and post-crisis dynamics of the investigated relationship. The empirical evidence is based on 53 African countries for the period 2004–2011 and Generalised Method of Moments. The following findings are established. First, whereas marginal effects from financial globalisation are positive on financial dynamics of activity and size, corresponding net effects (positive thresholds) are negative (within range). Second, while decreasing financial globalisation returns are apparent for financial dynamics of depth and efficiency, corresponding net effects (negative thresholds) are positive (not within range). Third, financial development dynamics are more weakly stationary and strongly convergent in the pre-crisis period. Fourth, the net effect from the: pre-crisis period is lower on money supply and banking system efficiency; post-crisis period is positive on financial system efficiency and pre-crisis period is positive on financial size. JEL Codes: F02, F21, F30, F40, O10
Evaluating Asian Free Trade Agreements: What Does Gravity Model Tell Us?
This paper evaluates the performance of Free Trade Agreements (FTAs) by analysing the determinants of trade flows of Asian economies for a panel of 31 countries during 2007–2014 using a Gravity model. The estimated results suggest that certain FTAs negatively contribute to trade flows across the region and, that GDP and population, among other factors, can explain total trade flows. This study also finds that trade costs using distance as a proxy has a significant and negative effect on trade. Our results are in-line with the expectations which can be drawn by looking at trends of trade flows in Asia. Thus, a case is attempted for smoothening trade-flows across the region by reducing tariff and non-tariff barriers, pumping in investments on transport infrastructure and improving productivity of the partners as a whole which has positive effects on GDP and thus trade. JEL Codes: F13, F14, C23
Post-SAFTA NTMs for Agricultural Trade: Revelations from the India–South Asia Approach
Commitment of South Asian Free Trade Agreement (SAFTA) from South Asian Preferential Trading Agreement (SAPTA) for trade liberalisation was one of the hopes in South Asia. This article highlights untapped trade potential in agro-trade between India and its trading partners in South Asia through Trade Potential Index (TPI). This article evaluates post-SAFTA effects of non-tariff measures (NTMs) on agro-products (HS 6-digit level) over the period 2004–2016. After 2004, many agro-products of South Asia have suffered trade restrictions which create challenges over SAFTA implementation. This article inquires whether NTMs in post-SAFTA has been trade creating or trade inhibiting in agro-trade for member countries as per the earlier commitments. Research methodology for this study includes qualitative and quantitative approach. Qualitative approach examines agri-trade constraints faced between India and rest seven South Asian countries and vice versa. Quantitative analysis explores prevailing trade barriers in selected agro-products during 2002–2016 applying Regional Trade Barrier Index and NTM Coverage Ratio. Results establish the presence of agri-trade barriers from South Asian countries against India as well as India’s barriers against rest seven countries of South Asia. Study concludes that agri-trade restrictions prevail in South Asia despite SAFTA which shows the slow process of trade liberalisation. JEL Codes: F13, F14, Q17
Trade Mis-Invoicing Between India & USA: An Empirical Exercise
India shares its majority of international trade with the United States of America. But a huge amount of discrepancy is frequently observed in the recorded bilateral trade statistics between these two countries. The main reasons are caused by several restrictions prevailing on the account of international trade in India. Export is found to be under-reported consistently whereas import data shows both over and under mis-invoicing in a periodic swing. This paper focuses on the determinants of this data fabrication with the help of empirical exercises. Several macroeconomic policy variables are taken to build up an econometric model and are tested statistically with the help of time series econometrics. Among all, relative interest rate plays the most important role to influence export and import mis-invoicing, followed by spot exchange rate and forward exchange rate. The exercise also finds a uni-directional causal relationship from import mis-invoicing of a period to export mis-invoicing of the next period. JEL Codes: C10, C13, C61, F13, F14, F21, K42
‘Efficiency and Performance of Global Supply Chain: Theory and Evidence’
Logistics Cost Dynamics in International Business: A Causal Approach
The cost of logistics plays a vital role in the pricing of goods in international trade. Besides, the recent imposition of additional tariff by even upper-middle income countries such as the USA, China etc., has led to an increase in the total landed cost of goods. However, a seller has no option but to adapt to changing tariff requirements and can articulate only the logistics cost to a certain extent. This aspect requires an understanding of the logistics cost dynamics in international business. Since a higher volume of goods moves by marine transportation, this study focusses on the same. In this article, authors have attempted to establish a statistically significant relationship between prices and other factors like fuel, number of vessels, freight, and weight value ratio. The paper introduces a logistics-coefficient to indicate the extent of integration of logistics activities to keep the total-landed-cost (TLC) unchanged. Finally, the author proposes the system dynamics model to study the impact of changes in any one or some or all these factors on the price of the product. This model will enable the global firm to decide the entry and exit in the market. JEL Codes: F23