Ramesh PhD Conference 2012

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Ramesh PhD Conference 2012

  1. 1. Export Performance of Landlocked Developing Countries Ramesh Paudel Panel: Chandra Athukorala Peter Warr Paul Burke Crawford PhD Conference 2012 Australian National University November 27, 2012Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing November 27, 2012 Export Performance Crawford PhD Conference 2012Countries National Univer Australian 1 / 25
  2. 2. Outline 1 Research Questions 2 Policy and Logistic Contexts 3 Export Performance: Trends and Patterns 4 Determinants: Gravity Modelling Framework 5 Results 6 ConclusionsRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing November 27, 2012 Export Performance Crawford PhD Conference 2012Countries National Univer Australian 2 / 25
  3. 3. Research Questions Research Questions How landlocked developing countries’ export performance differs from that of other developing countries. What are the determinants of export performance in the LLDCs Does export performance of African landlocked countries differ from that of other LLDCs.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing November 27, 2012 Export Performance Crawford PhD Conference 2012Countries National Univer Australian 3 / 25
  4. 4. Research Questions Research Questions How landlocked developing countries’ export performance differs from that of other developing countries. What are the determinants of export performance in the LLDCs Does export performance of African landlocked countries differ from that of other LLDCs.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing November 27, 2012 Export Performance Crawford PhD Conference 2012Countries National Univer Australian 3 / 25
  5. 5. Research Questions Research Questions How landlocked developing countries’ export performance differs from that of other developing countries. What are the determinants of export performance in the LLDCs Does export performance of African landlocked countries differ from that of other LLDCs.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing November 27, 2012 Export Performance Crawford PhD Conference 2012Countries National Univer Australian 3 / 25
  6. 6. Policy and Logistic Contexts Policy and Logistic Contexts Conventional wisdom that export performance is aided by economic openness Indicators of Openness: Sachs-Warner Index Exports or trade to GDP TariffsRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing November 27, 2012 Export Performance Crawford PhD Conference 2012Countries National Univer Australian 4 / 25
  7. 7. Policy and Logistic Contexts Sachs-Warner Index A Country is liberalised when it has, Non tariff barrier no more than 40% Average tariff rate no more than 40% Black market premium on exchange rate no more than 20% Not export marketing board controlled by government Not the socialist stateRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing November 27, 2012 Export Performance Crawford PhD Conference 2012Countries National Univer Australian 5 / 25
  8. 8. Policy and Logistic Contexts Sachs-Warner Index A Country is liberalised when it has, Non tariff barrier no more than 40% Average tariff rate no more than 40% Black market premium on exchange rate no more than 20% Not export marketing board controlled by government Not the socialist stateRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing November 27, 2012 Export Performance Crawford PhD Conference 2012Countries National Univer Australian 5 / 25
  9. 9. Policy and Logistic Contexts Sachs-Warner Index A Country is liberalised when it has, Non tariff barrier no more than 40% Average tariff rate no more than 40% Black market premium on exchange rate no more than 20% Not export marketing board controlled by government Not the socialist stateRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing November 27, 2012 Export Performance Crawford PhD Conference 2012Countries National Univer Australian 5 / 25
  10. 10. Policy and Logistic Contexts Sachs-Warner Index A Country is liberalised when it has, Non tariff barrier no more than 40% Average tariff rate no more than 40% Black market premium on exchange rate no more than 20% Not export marketing board controlled by government Not the socialist stateRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing November 27, 2012 Export Performance Crawford PhD Conference 2012Countries National Univer Australian 5 / 25
  11. 11. Policy and Logistic Contexts Sachs-Warner Index A Country is liberalised when it has, Non tariff barrier no more than 40% Average tariff rate no more than 40% Black market premium on exchange rate no more than 20% Not export marketing board controlled by government Not the socialist stateRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing November 27, 2012 Export Performance Crawford PhD Conference 2012Countries National Univer Australian 5 / 25
  12. 12. Policy and Logistic Contexts Table 1: Sachs-Warner Criteria up to 2009 Region/Country year Tariff NTB BM X Board S- State EAP: Lao PDR - 11.3 na na 0 0 Mongolia 1997 4.8 0 0 0 0 ECA: Armenia 1995 2.2 0 0 0 0 Azerbaijan 1995 4.9 0 0 0 0 Belarus - 6.3 na 0 0 0 Kazakhstan - 4.4 na na 0 0 Kosovo - na na na 0 0 Kyrgyz Republic 1994 4.3 0 0 0 0 Macedonia, FYR 1994 5.3 0 0 0 0 Moldova 1994 2.3 0 0 0 0 Serbia - 6.6 na na 0 0 Tajikistan 1996 5.3 0 0 0 0 Turkmenistan - 1.44 na na 0 0 Uzbekistan - 6.6 na 0 0 0 LAC: Bolivia 1985 7.5 0 0 0 0 Paraguay 1989 7.7 0 0 0 0 SA: Afghanistan - 5.5 na 22 0 0 Bhutan - 18.0 na 0 0 0 Nepal 1991 15 0 0 0 0 SSA: Botswana 1979 7.9 0 0 0 0 Burkina Faso 1998 11.2 0 0 0 0 Burundi 1999 13.2 0 0 0 0 CA Republic - 15.5 na 0 1 0 Chad 2001 14.1 0 0 0 0 Ethiopia 1996 12.6 0 0 0 0 Lesotho 2001 15.3 0 0 0 0 Malawi 2001 13.1 0 0 0 0 Mali 1988 9.8 0 0 0 0 Niger 1994 11.1 0 0 0 0 Rwanda 2001 12.5 0 0 0 0 Swaziland 2001 7 0 0 0 0 Uganda 1988 7.7 0 0 0 0 Zambia 1993 9.3 0 0 0 0 Zimbabwe - 20.3 0 29 0 0Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing November 27, 2012 Export Performance Crawford PhD Conference 2012Countries National Univer Australian 6 / 25
  13. 13. Policy and Logistic Contexts Table 2: Trade to GDP Percent Average Countries / Region 1995-99 2000-04 2005-10 Average 1995-2010 X/GDP T/GDP X/GDP T/GDP X/GDP T/GDP X/GDP T/GDP EAP 30 84 29 95 33 98 31 93 Lao PDR 21 71 17 68 21 81 20 74 Mongolia 39 96 42 122 44 115 42 112 ECA 35 92 39 103 37 96 37 98 Armenia 15 77 19 76 13 62 16 71 Azerbaijan 19 77 37 96 58 93 39 89 Belarus 44 114 58 137 50 123 51 125 Kazakhstan 28 75 43 96 45 88 39 86 Kosovo - - - - - 71 - - Kyrgyz Republic 31 87 32 85 34 130 32 103 Macedonia, FYR 31 84 32 100 36 113 33 100 Moldova 43 122 38 131 29 131 36 128 Serbia - 47 15 65 22 82 21 68 Tajikistan 65 143 61 151 33 81 52 122 Turkmenistan 52 135 69 139 54 102 58 124 Uzbekistan 25 51 27 61 34 72 29 62 LAC 13 79 18 71 28 91 20 81 Bolivia 14 49 18 50 33 74 22 59 Paraguay 12 108 18 91 23 107 18 102 SA 21 72 13 79 18 81 16 78 Afghanistan - - 3 111 4 79 4 90 Bhutan 33 86 24 75 42 117 33 93 Nepal 9 58 11 50 8 46 10 51 SSA 21 63 23 70 25 73 23 67 Botswana 47 93 40 83 37 78 41 84 Burkina Faso 10 38 8 32 10 37 10 10 Burundi 8 27 6 33 6 57 7 35 Cen. Af. Republic 15 40 13 36 9 36 12 37 Chad 16 50 21 85 50 107 30 83 Ethiopia 6 30 6 40 7 45 6 39 Lesotho 23 150 47 163 47 161 39 158 Malawi 24 66 21 64 20 69 22 66 Mali 20 60 24 Burke of70Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul 24 Developing November 23 2012 66 Countries National Univer Export Performance Crawford PhD Conference 2012 Australian Landlocked 27, 65 / 25 7
  14. 14. Policy and Logistic Contexts Table 3: Export Policy and Logistic Indicators Countries /Region EDBs LPI T2X Doc2x Cost2X Dis2Port EAP Lao PDR 163 2.46 48 9 1860 373 Mongolia 89 2.25 46 8 2131 1323 ECA Armenia 61 2.52 13 5 1665 337 Azerbaijan 69 2.64 38 8 2980 525 Belarus 91 2.54 15 9 1772 401 Kazakhstan 47 2.83 76 9 3005 2091 Kosovo 117 - 17 8 2230 269 Kyrgyz Republic 67 2.62 63 8 3010 1917 Macedonia, FYR 34 2.77 12 6 1376 178 Moldova 99 2.57 32 6 1765 145 Serbia 88 2.69 12 6 1398 320 Tajikistan 152 2.35 82 11 3350 1370 Turkmenistan - 2.49 - - - 414 Uzbekistan 164 2.79 71 10 3150 1450 LAC Bolivia 147 2.51 19 8 1425 540 Paraguay 100 2.75 33 8 1440 803 SA Afghanistan 154 2.24 74 10 3545 1081 Bhutan 146 2.38 38 8 2230 560 Nepal 110 2.2 41 9 1960 641 SSA Botswana 52 2.32 28 6 3010 358 Burkina Faso 151 2.23 41 10 2412 413.6 Burundi 177 2.31 25 9 2747 1129 Central African Republic 183 - 54 9 5491 986 Chad 182 2.49 75 8 5902 1067 Ethiopia 104 2.41 43 7 1760 563 Lesotho 142 - 31 8 1680 328 Malawi 141 - 41 10 1713 451 Mali 148 2.27 26 6 2202 715 Niger 172 2.54 59 8 3545 797 Rwanda 50 2.04 35 8 3275 1091 Swaziland 123 - 18 9 1745 132 Uganda 119 2.82 37 7 2780 932 Zambia 80 2.28 44 6 2664 849 Zimbabwe 168 Peter WarrPaul Burke of Landlocked Developing November 27, 2012Ramesh Paudel (Panel: Chandra Athukorala - Export Performance 53Crawford PhD Conference3280 Countries 464 8 2012 Australian National Univer 8 / 25
  15. 15. Export Performance: Trends and Patterns Export Performance: Trends and PatternsRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing November 27, 2012 Export Performance Crawford PhD Conference 2012Countries National Univer Australian 9 / 25
  16. 16. Export Performance: Trends and Patterns Export Performance: Trends and PatternsRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 10 / 25
  17. 17. Determinants: Gravity Modelling Framework Gravity Modelling Framework Tinbergen (1962): Trade between 2 countries is determined by some gravitional forces such as exporters and importers GDP and distance between them. Anderson (1979); Bergstrand (1985) and Deardorff (1995) contributed theoretical backgroundRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 11 / 25
  18. 18. Determinants: Gravity Modelling Framework Model Ln(Xij,t ) = α + β1 Ln(GDPi,t ) + β2 Ln(GDPj,t ) + β3 Ln(DISij ) + β4 (LLOCKi) + β5 Ln(RERi,t ) + β6 Ln(GDPPCi,t ) + β7 Ln(GDPPCj,t ) + β8 (LANij,t ) + β9 (BORij,t ) + β10 Ln(RFEi,t ) + β11 (OPENi,t ) + β12 (RTAij,t ) + ij,t ......... (1)Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 12 / 25
  19. 19. Determinants: Gravity Modelling Framework Model contd..... X - Real non-oil exports between trading countries, the dep. variable GDP - Real (GDP), a measure of the economic size (+) DIS- The distance between the business cities of country i and j (-) LLOCK - If the exporter is landlocked countries, binary dummy (-) RER - Real exchange rate (+) (Its domestic currency/US$) GDPPC - Per capita GDP (+,-) LAN - Common language, a measure of cultural affinity (+) BOR - Common boarder of trading countries (+) OPEN - Openness measured by weighted average tariff rate (-) RFE - Relative factor endowment (+, -), either H-O or Linder hypothesis RTA - Regional Trade Agreements (+)Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 13 / 25
  20. 20. Determinants: Gravity Modelling Framework Model contd..... For Landlocked Developing Countries Ln(Xij,t ) = Υ1 +Υ2 Ln(GDPi,t )+Υ3 Ln(GDPj,t )+Υ4 Ln(DISij,t )+Υ5 Ln(RERi,t ) + Υ6 Ln(GDPPCi,t ) + Υ7 Ln(GDPPCj,t ) + Υ8 (LANij,t ) + Υ9 (BORij,t ) + Υ10 (RFEi,t ) + Υ11 (OPENi,t ) + Υ12 (RTAij,t ) + Υ13 (AFLLOCKj,t ) + ij,t ......... (2) Where, AFLLOCK= Binary Dummy for African landlocked country (-/+)Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 14 / 25
  21. 21. Determinants: Gravity Modelling Framework Data Compilation and Sources Country pair level annual data, non-oil export from 1995-2010 World-Bank (2012)-WDI- real GDP in US$, real GDP and nominal GDP in local currency to calculate the GDP deflator, nominal exchange rate, weighted average tariff rate, and GDPPC UNCOMTRADE: Exports country to country CEPII data base: distance, language and border de Sousa (2012), recently updated RTAsRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 15 / 25
  22. 22. Determinants: Gravity Modelling Framework Econometric Methodology Most previous studies use OLS, RE and FE methods OLS is suffered by heterogeneity bias so RE is preffered over OLS, but the assumption of country specific effects are uncorrelated with all regressor- has been rejected in many studies so FE is preferred over OLS and RE. One problem for us in FE is main variable of interest is time invariant, can not obtain the coefficient for time invariant variable Hence, Later Hausman and Taylor (1981) instrumental variable (HT) estimator is used In this estimation, HT estimator could not pass the normality testRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 16 / 25
  23. 23. Determinants: Gravity Modelling Framework Econometric Methodology Most previous studies use OLS, RE and FE methods OLS is suffered by heterogeneity bias so RE is preffered over OLS, but the assumption of country specific effects are uncorrelated with all regressor- has been rejected in many studies so FE is preferred over OLS and RE. One problem for us in FE is main variable of interest is time invariant, can not obtain the coefficient for time invariant variable Hence, Later Hausman and Taylor (1981) instrumental variable (HT) estimator is used In this estimation, HT estimator could not pass the normality testRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 16 / 25
  24. 24. Determinants: Gravity Modelling Framework Econometric Methodology Most previous studies use OLS, RE and FE methods OLS is suffered by heterogeneity bias so RE is preffered over OLS, but the assumption of country specific effects are uncorrelated with all regressor- has been rejected in many studies so FE is preferred over OLS and RE. One problem for us in FE is main variable of interest is time invariant, can not obtain the coefficient for time invariant variable Hence, Later Hausman and Taylor (1981) instrumental variable (HT) estimator is used In this estimation, HT estimator could not pass the normality testRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 16 / 25
  25. 25. Determinants: Gravity Modelling Framework Econometric Methodology Most previous studies use OLS, RE and FE methods OLS is suffered by heterogeneity bias so RE is preffered over OLS, but the assumption of country specific effects are uncorrelated with all regressor- has been rejected in many studies so FE is preferred over OLS and RE. One problem for us in FE is main variable of interest is time invariant, can not obtain the coefficient for time invariant variable Hence, Later Hausman and Taylor (1981) instrumental variable (HT) estimator is used In this estimation, HT estimator could not pass the normality testRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 16 / 25
  26. 26. Determinants: Gravity Modelling Framework Econometric Methodology Most previous studies use OLS, RE and FE methods OLS is suffered by heterogeneity bias so RE is preffered over OLS, but the assumption of country specific effects are uncorrelated with all regressor- has been rejected in many studies so FE is preferred over OLS and RE. One problem for us in FE is main variable of interest is time invariant, can not obtain the coefficient for time invariant variable Hence, Later Hausman and Taylor (1981) instrumental variable (HT) estimator is used In this estimation, HT estimator could not pass the normality testRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 16 / 25
  27. 27. Determinants: Gravity Modelling Framework Econometric Methodology Contd..... Hence, Poisson Pseudo Maximum Likelihood (PPML) developed by Silva and Tenreyro (2006) is applied. PPML deals with hetorogeneity Some issues with the log linearization and missing data-some countries data are not available for the dependent variable and results are not consistent due to heteroskedasticity in trade data- coefficients are still unbiased but doubtful t-statistics. In this situation, Silva and Tenreyro (2006) PPML is applied, because Time invariant variable can be estimated Can deal with missing value , and Log linearization problem- dependent variable is level not in log.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 17 / 25
  28. 28. Determinants: Gravity Modelling Framework Econometric Methodology Contd..... Hence, Poisson Pseudo Maximum Likelihood (PPML) developed by Silva and Tenreyro (2006) is applied. PPML deals with hetorogeneity Some issues with the log linearization and missing data-some countries data are not available for the dependent variable and results are not consistent due to heteroskedasticity in trade data- coefficients are still unbiased but doubtful t-statistics. In this situation, Silva and Tenreyro (2006) PPML is applied, because Time invariant variable can be estimated Can deal with missing value , and Log linearization problem- dependent variable is level not in log.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 17 / 25
  29. 29. Determinants: Gravity Modelling Framework Econometric Methodology Contd..... Hence, Poisson Pseudo Maximum Likelihood (PPML) developed by Silva and Tenreyro (2006) is applied. PPML deals with hetorogeneity Some issues with the log linearization and missing data-some countries data are not available for the dependent variable and results are not consistent due to heteroskedasticity in trade data- coefficients are still unbiased but doubtful t-statistics. In this situation, Silva and Tenreyro (2006) PPML is applied, because Time invariant variable can be estimated Can deal with missing value , and Log linearization problem- dependent variable is level not in log.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 17 / 25
  30. 30. Determinants: Gravity Modelling Framework Econometric Methodology Contd..... Hence, Poisson Pseudo Maximum Likelihood (PPML) developed by Silva and Tenreyro (2006) is applied. PPML deals with hetorogeneity Some issues with the log linearization and missing data-some countries data are not available for the dependent variable and results are not consistent due to heteroskedasticity in trade data- coefficients are still unbiased but doubtful t-statistics. In this situation, Silva and Tenreyro (2006) PPML is applied, because Time invariant variable can be estimated Can deal with missing value , and Log linearization problem- dependent variable is level not in log.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 17 / 25
  31. 31. Determinants: Gravity Modelling Framework Econometric Methodology Contd..... Hence, Poisson Pseudo Maximum Likelihood (PPML) developed by Silva and Tenreyro (2006) is applied. PPML deals with hetorogeneity Some issues with the log linearization and missing data-some countries data are not available for the dependent variable and results are not consistent due to heteroskedasticity in trade data- coefficients are still unbiased but doubtful t-statistics. In this situation, Silva and Tenreyro (2006) PPML is applied, because Time invariant variable can be estimated Can deal with missing value , and Log linearization problem- dependent variable is level not in log.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 17 / 25
  32. 32. Results Table 9:All Countries Dep. Var.: export (log) / export (HT) (PPML) Landlockedness (Dummy) -2.621*** 0.075*** (0.330) (0.000) GDP (log GDPi,t) 1.176*** 0.884*** (0.035) (0.000) Partner’s GDP (log GDPj,t) 1.360*** 0.786*** (0.036) (0.000) Distance (log Dij) -1.418*** -0.527*** (0.040) (0.000) Openness (Tariff Rate %) -0.000 -0.000*** (0.000) (0.000) Relative Factor Endowment -0.081*** 0.016*** (0.008) (0.000) Bilateral RER -0.000** -0.000*** (0.000) (0.000) Per Capita GDP (log) 0.043 -0.174*** (0.035) (0.000) Partner’s per capita GDP (log) 0.166*** 0.002*** (0.037) (0.000) Common Border (Dummy) 0.585*** 0.560*** (0.195) (0.000) Common Language (Dummy) 1.077*** 0.210*** (0.079) (0.000) Regional Trade Agreement 0.154*** 0.356*** (0.016) (0.000) Number of observations 203,556 203,556 Number of country pairs 18,133 F Statistics 1,150.91 Sargan Hansen Statistics 535.41 Sargan Hansen P-value 0.000 Pseudo R-squared 0.88 RESET test p-values 0.25 Year Effect Yes YesRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 18 / 25
  33. 33. Results Table 10:All Developing Countries Dependent Variable.: exports (PPML) (PPML) (PPML) (PPML) Landlockedness (Dummy) -0.250*** -0.229*** -0.641*** 6.461*** (0.000) (0.000) (0.000) (0.000) GDP (log GDPi,t) 1.063*** 1.078*** 1.078*** 1.078*** (0.000) (0.000) (0.000) (0.000) Partner’s GDP (log GDPj,t) 0.803*** 0.800*** 0.800*** 0.803*** (0.000) (0.000) (0.000) (0.000) Distance (log Dij) -0.593*** -0.557*** -0.557*** -0.554*** (0.000) (0.000) (0.000) (0.000) Openness (Tariff Rate %) -0.085*** -0.084*** -0.084*** -0.084*** (0.000) (0.000) (0.000) (0.000) Relative Factor Endowment 0.071*** 0.080*** 0.080*** 0.080*** (0.000) (0.000) (0.000) (0.000) Bilateral RER 0.001*** 0.000*** 0.000*** 0.000*** (0.000) (0.000) (0.000) (0.000) Per Capita GDP (log) -0.269*** -0.332*** -0.332*** -0.332*** (0.000) (0.000) (0.000) (0.000) Partner’s per capita GDP (log) 0.046*** 0.030*** 0.030*** 0.031*** (0.000) (0.000) (0.000) (0.000) Common Border (Dummy) 1.118*** 1.040*** 1.040*** 1.041*** (0.000) (0.000) (0.000) (0.000) Common Language (Dummy) 0.798*** 0.806*** 0.806*** 0.807*** (0.000) (0.000) (0.000) (0.000) Regional Trade Agreement 0.315*** 0.315*** 0.312*** (0.000) (0.000) (0.000) llock*gdp 0.018*** (0.000) llock*partgdp -0.246*** (0.000) Number of observations 123,507 123,507 123,507 123,507 Pseudo R-squared 0.88 0.88 0.88 0.86 RESET test p-values 0.27 0.18 0.29 0.27 Year Effect Yes Yes Yes YesRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 19 / 25
  34. 34. Results Table 11: Landlocked Developing Countries Dependent Variable: exports (PPML) (PPML) (PPML) (PPML) GDP (log GDPi,t) 0.682*** 0.814*** 0.674*** 0.801*** (0.000) (0.000) (0.000) (0.000) Partner’s GDP (log GDPj,t) 0.782*** 0.814*** 0.782*** 0.813*** (0.000) (0.000) (0.000) (0.000) Openness (Tariff Rate %) -0.030*** -0.040*** -0.027*** -0.037*** (0.000) (0.000) (0.000) (0.000) Bilateral RER 0.001*** 0.001*** 0.001*** 0.001*** (0.000) (0.000) (0.000) (0.000) Per Capita GDP (log) 0.430*** 0.318*** 0.394*** 0.286*** (0.000) (0.000) (0.000) (0.000) Partner’s per capita GDP (log) -0.220*** -0.218*** 0.061*** 0.043*** (0.000) (0.000) (0.000) (0.000) Distance (log Dij) -0.834*** -0.723*** -0.876*** -0.762*** (0.000) (0.000) (0.000) (0.000) African Landlocked (Dummy) 0.337*** 0.528*** 0.304*** 0.492*** (0.000) (0.000) (0.000) (0.000) Common Border (Dummy) 1.455*** 1.052*** 1.297*** 0.927*** (0.000) (0.000) (0.000) (0.000) Common Language (Dummy) 0.567*** 0.241*** 0.586*** 0.253*** (0.000) (0.000) (0.000) (0.000) Regional Trade Agreement 1.180*** 1.150*** (0.000) (0.000) Relative Factor Endowment -0.243*** -0.225*** (0.000) (0.000) Number of observations 22,409 22,409 22,409 22,409 Pseudo R-squared 0.67 0.70 0.68 0.71 RESET test p-values 0.28 23.00 0.25 0.29 Year Effect Yes Yes Yes Yes Note: *** , ** and * indicate the significance levels at 1%, 5% and 10% level of significance, the figures in the parenthesis are standard errors.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 20 / 25
  35. 35. Results Key Points from Empirical Analysis Landlockedness deters export more to poor countries Having common language and border increase export but border’s role is more important RFE- results suggest trade between poor countries is the phenomenon of LLDCs RER has positive significant role even small magnitude Having more bilateral and regional trade agreements is more favourable exportsRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 21 / 25
  36. 36. Results Key Points from Empirical Analysis Landlockedness deters export more to poor countries Having common language and border increase export but border’s role is more important RFE- results suggest trade between poor countries is the phenomenon of LLDCs RER has positive significant role even small magnitude Having more bilateral and regional trade agreements is more favourable exportsRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 21 / 25
  37. 37. Results Key Points from Empirical Analysis Landlockedness deters export more to poor countries Having common language and border increase export but border’s role is more important RFE- results suggest trade between poor countries is the phenomenon of LLDCs RER has positive significant role even small magnitude Having more bilateral and regional trade agreements is more favourable exportsRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 21 / 25
  38. 38. Results Key Points from Empirical Analysis Landlockedness deters export more to poor countries Having common language and border increase export but border’s role is more important RFE- results suggest trade between poor countries is the phenomenon of LLDCs RER has positive significant role even small magnitude Having more bilateral and regional trade agreements is more favourable exportsRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 21 / 25
  39. 39. Results Key Points from Empirical Analysis Landlockedness deters export more to poor countries Having common language and border increase export but border’s role is more important RFE- results suggest trade between poor countries is the phenomenon of LLDCs RER has positive significant role even small magnitude Having more bilateral and regional trade agreements is more favourable exportsRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 21 / 25
  40. 40. Conclusions Conclusions Landlockedness remains binding constraint- opportunities exist to improve export performance creating a more trade friendly environment through lowering the tariffs and focusing trade promotion effort on bilateral trade agreements Landlockedness matters more to LLDCs compared to rich LC. RFE-measured by the difference between the per capita income of trading partners confirm the Linder hypothesis that trade links are much stronger among countries with similar income levels.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 22 / 25
  41. 41. Conclusions Conclusions Landlockedness remains binding constraint- opportunities exist to improve export performance creating a more trade friendly environment through lowering the tariffs and focusing trade promotion effort on bilateral trade agreements Landlockedness matters more to LLDCs compared to rich LC. RFE-measured by the difference between the per capita income of trading partners confirm the Linder hypothesis that trade links are much stronger among countries with similar income levels.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 22 / 25
  42. 42. Conclusions Conclusions Landlockedness remains binding constraint- opportunities exist to improve export performance creating a more trade friendly environment through lowering the tariffs and focusing trade promotion effort on bilateral trade agreements Landlockedness matters more to LLDCs compared to rich LC. RFE-measured by the difference between the per capita income of trading partners confirm the Linder hypothesis that trade links are much stronger among countries with similar income levels.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 22 / 25
  43. 43. Conclusions Conclusions Contd..... LLDCs have many products line that have revealed comparative advantage. Mostly the product lines are high value light products such as processed foods, garments-textiles, tea and coffee. Distance-related trade costs deter export performance more in landlocked developing countries compared with other developing countries. Having common border is more important than having common language for export performance of these countries On the contrary, African landlocked countries export levels are about 30 percent higher-perhaps reflect the impact of liberalisation reforms undertaken by a number of these countries since the mid 1990s -which are not adequately captured by the explanatory variables used in the model.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 23 / 25
  44. 44. Conclusions Conclusions Contd..... LLDCs have many products line that have revealed comparative advantage. Mostly the product lines are high value light products such as processed foods, garments-textiles, tea and coffee. Distance-related trade costs deter export performance more in landlocked developing countries compared with other developing countries. Having common border is more important than having common language for export performance of these countries On the contrary, African landlocked countries export levels are about 30 percent higher-perhaps reflect the impact of liberalisation reforms undertaken by a number of these countries since the mid 1990s -which are not adequately captured by the explanatory variables used in the model.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 23 / 25
  45. 45. Conclusions Conclusions Contd..... LLDCs have many products line that have revealed comparative advantage. Mostly the product lines are high value light products such as processed foods, garments-textiles, tea and coffee. Distance-related trade costs deter export performance more in landlocked developing countries compared with other developing countries. Having common border is more important than having common language for export performance of these countries On the contrary, African landlocked countries export levels are about 30 percent higher-perhaps reflect the impact of liberalisation reforms undertaken by a number of these countries since the mid 1990s -which are not adequately captured by the explanatory variables used in the model.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 23 / 25
  46. 46. Conclusions Conclusions Contd..... LLDCs have many products line that have revealed comparative advantage. Mostly the product lines are high value light products such as processed foods, garments-textiles, tea and coffee. Distance-related trade costs deter export performance more in landlocked developing countries compared with other developing countries. Having common border is more important than having common language for export performance of these countries On the contrary, African landlocked countries export levels are about 30 percent higher-perhaps reflect the impact of liberalisation reforms undertaken by a number of these countries since the mid 1990s -which are not adequately captured by the explanatory variables used in the model.Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 23 / 25
  47. 47. Conclusions Comments and Feedback Thank You !Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 24 / 25
  48. 48. Conclusions Comments and Feedback Thank You !Ramesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 24 / 25
  49. 49. Conclusions Reasons to think Why Africa is Different Africa Had slow growth for almost 2 decades compared to other countries Africa initiated trade reforms in 1990s Africa Booming See Richard Dowden (2009) Africa Altered States, Ordinary Miracles Investment from China and other developing countriesRamesh Paudel (Panel: Chandra Athukorala Peter WarrPaul Burke of Landlocked Developing Countries 2012 Export Performance Crawford PhD Conference 2012 Australian National Univer November 27, 25 / 25

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