Impact of ICT on trade in different technology groups: analysis and implications / Evgeniya Yushkova

The link between ICT use and trade flows has been widely discussed in the literature. It has been argued that the use of ICT contributes to the fall of trade costs. The analysis presented identifies the role of a specific ICT variable, namely the extent of use of Internet by the business community, in international trade. The export flows between 40 countries (OECD countries plus Brazil, China, India, Indonesia, Russia and South Africa) are analyzed. The results are presented for different technology groups of products, from high-tech to low-tech. The relationship between the use of Internet and trade in ICT goods is also considered

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Does the internet generate economic growth, international trade, or both? / Huub Meijers

Recent cross country panel data studies find a positive impact of internet use on economic growth and a positive impact of internet use on trade. The present study challenges the first finding by showing that internet use does not explain economic growth directly in a fully specified growth model. In particular openness to international trade variables seem to be highly correlated with internet use and the findings in the literature that internet use causes trade is confirmed here suggesting that internet use impacts trade and that trade impacts economic growth. A simultaneous equations model confirms the positive and significant role of internet use to openness and the importance of openness to economic growth. Internet use shows to be more impacting trade in non-high income countries than in high income countries whereas the impact of trade on economic growth is the same for both income groups.

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A macro assessment of China effects on Malaysian exports and trade balances / Tze-Haw Chan, Hooi Hooi Lean and Chee-Wooi Hooy

This paper aims to focus on the impact of China’s export expansion on Malaysian monthly trading with to her 12 major trading partners over the liberalization era.

Regime shifts are evident in the long run where structural break(s) found mostly coincides with the Asia crisis and China’s accession into WTO. While the income effects are more apparent in most cases, the real exchanges are rather insignificant and incorrectly signed for Malaysian bilateral trading. Besides, the trade balance estimation is generally more consistent that the Chinese exports have exhibited complementary effects in the long-run, mainly for advanced export destination such as Australia, Germany, Japan, the UK and the USA. On the whole, there is insufficient evidence to support the “PRC competitive threat”.

The paper assesses the China’s crowding out effect and magnitudes of Malaysian export and trade balance elasticities with model specifications that consider structural breaks. The paper also assesses the macro dimension of income and real exchanges effects.

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Trade Policy: Home Market Effect versus Terms-of-Trade Externality / Alessia Campolmi, Harald Fadinger, Chiara Forlati

We study trade policy in a two-sector Krugman (1980) trade model, allowing for wage, import and export subsidies/taxes. We study non-cooperative trade policies, first for each individual instrument and then for the situation where all instrumentscan be set simultaneously, and contrast those with the efficient allocation. We show that in this general context there are four motives for non-cooperative trade policies: the correction of monopolistic distortions; the terms-of-trade manipulation; the delocation motive for protection (home market effect); the fiscal-burden-shifting motive. The Nash equilibrium when all instruments are available is characterized by first-best-level wage subsidies, and inefficient import subsidies and export taxes, which aim at relocating firms to the other economy and improving terms of trade. Thus, the dominating incentives for non-cooperative trade policies are the fiscal-burden-shifting motives and terms-of-trade effects.

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The sustainability of trade accounts of the ASEAN-5 countries / Olayeni Olaolu Richard and Aviral Kumar Tiwari

The present study aims to analyse the sustainability of the trade deficits in the Association of Southeast Asian Nations (ASEAN)-5 countries using panel framework during the period from 1965 to 2011. The paper found the evidence of sustainable trade deficit in ASEAN-5 countries while utilizing panel unit root tests as well as panel cointegration tests.

The main contribution of the paper is to show that the macroeconomic policies of ASEAN-5 countries had been effective in leading exports and imports to long-run steady-state equilibrium relationship. To the authors’ best knowledge, in this area, this is the first study in the panel framework for ASEAN countries.

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Exchange-rate risk and UK-China trade: evidence from 47 industries / Mohsen Bahmani-Oskooee, Scott Hegerty and Ruixin Zhang

Recent years have seen a rapid expansion of studies that examine the effects of exchange-rate risk on bilateral exports and imports for specific industries. Since the underlying theory is ambiguous, each case must be studied individually. This paper considers British trade with China, for 47 types of product, over the period from 1978 to 2010. Consistent with the underlying theory, cointegration analysis shows that most industries register no effect due to volatility in the long run, while some trade flows are reduced and a handful are even increased. An analysis of industry characteristics suggests that while the type of good might play little role on an industry’s specific results, a product’s trade share does. This is the case for UK imports of Chinese goods, perhaps because large Chinese exporters are able to successfully hedge against exchange-rate risk. The paper aims to discuss these issues.

The paper arrives at two key conclusions. First, as has been shown previously for other country pairs, most industries demonstrate no long-run response to exchange-rate volatility. A fraction of industries are affected, and most of these effects are negative.

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The sustainability of trade accounts of the ASEAN-5 countries / Olayeni Olaolu Richard and Aviral Kumar Tiwari.

The present study aims to analyse the sustainability of the trade deficits in the Association of Southeast Asian Nations (ASEAN)-5 countries using panel framework during the period from 1965 to 2011.

The paper found the evidence of sustainable trade deficit in ASEAN-5 countries while utilizing panel unit root tests as well as panel cointegration tests. The findings have important macroeconomic policies implication for ASEAN-5 countries that these policies had been effective in leading exports and imports to long-run steady-state equilibrium relationship among the ASEAN-5 countries. The main contribution of the paper is to show that the macroeconomic policies of ASEAN-5 countries had been effective in leading exports and imports to long-run steady-state equilibrium relationship. To the authors’ best knowledge, in this area, this is the first study in the panel framework for ASEAN countries.

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