Tagged: Trade liberalization

Dynamic estimation of the relationship between trade openness and output growth in Asia

This paper studies the relationship between trade openness and output growth for a sample of twenty-three Asian countries using both a static OLS and a dynamic ECM estimation models. At the country specific level, the findings of this study provide robust empirical evidence indicating that higher revealed trade openness is not the main engine explaining the Asian economic-growth miracle.

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The impact of trade openness on growth: The case of Kenya

This paper investigates the effects of trade openness on the level of investment and the rate of economic growth in Kenya using annual time series data. The aggregate trade openness and trade-policy induced openness are evaluated. Controlling for a number of factors, aggregate trade openness is found to have positively affected the level of investment and the rate of economic growth, although the effect on the latter is statistically insignificant. On the other hand, we find trade-policy induced openness to have negatively and significantly affected investment and the rate of economic growth. Granger Causality tests suggest that a change in trade openness influences the long-term rate of economic growth through the interaction with physical capital growth in the case of Kenya.

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Intra-industry Trade Liberalization and the Environment

This paper examines how trade liberalization affects national and global pollution in a multi-country model incorporating monopolistic competition and intra-industry trade as well as inter-industry trade. Each country produces skill-intensive differentiated goods and labor-intensive goods. Pollution is a by-product of production but pollution abatement can be undertaken. Regardless of country characteristics, if the differentiated-good sector is sufficiently cleaner (dirtier) then, without any change in environmental taxes, a multilateral reduction in import protection accorded to the differentiated good or to both goods typically leads to a decline (rise) in pollution in all countries. Pollution havens tend not to arise.

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Constitutional Courts as Bulwarks against the Erosion of Social and Economic Rights through Free Trade Agreements

Over the past decades, the process of untrammelled trade liberalization has engulfed many parts of the world. Albeit the attenuated success obtained on trade facilitation on global trade in Bali 2013, the global proclivity toward bilateral trade deals remains patent. The acceleration of this trend can be explained by the inability of political masters and their economic sherpas to reach a comprehensive global trade deal. Within many bilateral agreements negotiated between industrialised countries, on the one hand, and emerging or developing nations, on the other hand, elastic provisions are included that go far beyond what negotiators contemplate in the Doha Round talks. To our understanding, the expansive content of the trade agreements are both cause and effect of the observable growing politicisation of trade negotiations and trade policy tout court. Some of these expansive provisions that are included in the final agreements often have debilitating effects on the attainment of economic and social rights of citizens in ways unforeseen or simply neglected during the negotiations. Increasingly municipal courts are joining social activists to unequivocally say ‘stop!’ to this trend. This article systematically compares the manner in which the highest courts in Colombia and South Africa have served as bulwarks against the erosion of constitutionally protected economic and social rights through free trade agreements entered with industrialised countries.

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Union wage-setting and international trade with footloose capital

This paper sets up a general oligopolistic equilibrium model with two countries that differ in the centralization of union wage-setting. Being interested in the consequences of openness, we show that, in the short run, trade increases welfare and employment in both locations, and it raises income of capital owners as well as workers. In the long run, capital outflows from the country with the more centralized wage-setting generate winners and losers and make the two countries more dissimilar in terms of unemployment or welfare. Decentralization of wage-setting can successfully prevent capital outflow and the export of jobs.

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Does Trade Liberalization Promote Regional Disparities?

Over last few decades, there has been a growing interest among researchers in understanding the link between trade liberalization and regional disparities within the context of an individual country. In this study, we develop the first ever single-country multiregional Computable General Equilibrium (CGE) model for the Indian economy to investigate this linkage. Overall our results suggest that, in the short run, trade liberalization has a beneficial impact on the rich and fast-growing middle-income states and a marginal or negative impact on the poor states.

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The new goods margin in Japanese–Chinese trade

This paper uses the methodology developed in Kehoe and Ruhl (2013) to measure the change in the extensive, or new goods, margin of trade between Japan and China after China’s entry into the World Trade Organization in 2001. The new goods account for 15.9% of Japanese exports to China and 22% of Chinese exports to Japan after trade liberalization. For the case of Chinese exports to Japan, a time series measure shows the growth in new goods coincides with the timing of the trade liberalization.

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