The document discusses examining the existence of the J-curve effect of devaluation on trade balance in Ethiopia from 1974-2011 using time series econometrics. It outlines the background, objectives, hypotheses, methodology including variables and model specification to investigate the short-run and long-run relationship between real exchange rate and trade balance.
This paper investigates the evolution and determinants of manufactured exports and FDI in MED-11 countries over the period 1985-2009 as well as the prospects of their evolution under different scenarios pertaining to the evolution of the determinants. The econometric analysis confirmed the role of exchange rate depreciation, the openness of the economy and the quality of institution and infrastructure in fostering manufactured exports and FDI inflows in the Region. The prospects' assessment suggested that a scenario of deeper integration with the EU entails superior performance regarding manufactured exports and FDI than status quo or less integration with the EU but greater regional integration.
Authored by: Khalid Sekkat
Published in 2012
1. The document outlines trends in globalization, production technology, the new US economy, ICT industry development, and labor market reforms that have shaped the modern knowledge-based economy.
2. It discusses challenges Taiwan faces in moving toward a knowledge-based economy, including rising non-performing loans and reforms needed in the financial market.
3. The conclusion emphasizes that developing a knowledge-based economy requires establishing effective institutions.
This document provides an overview of macroeconomic analysis in an open economy context. It discusses exchange rate theories including PPP, UIP, and CIP. It also examines the advantages and disadvantages of fixed versus flexible exchange rate systems, and the impact of fiscal and monetary policy under each system. The document then presents the fundamental macroeconomic identity for an open economy and analyzes aggregate demand, the three macroeconomic gaps, and net exports. It also derives the relationship between net exports, investment-saving, and the exchange rate.
This document summarizes a study on how multinational companies in India manage foreign exchange exposure. It conducted a questionnaire with 200 Indian and foreign MNCs operating in India from 2004-2008. There are three types of foreign exchange exposure - transaction, translation, and economic. Most companies face all three exposures. The study found that most companies have systems to manage exposure, and there was no significant difference between Indian and foreign MNCs in their attitudes and policies. It analyzed differences between banking and non-banking companies and differences in how companies estimate and manage transaction versus economic exposure.
The document summarizes trends in the global high-net-worth individual (HNWI) population and wealth from 2006-2009. Some key points:
- In 2009, the global HNWI population increased 17.1% to 10 million people and their total wealth grew 18.9% to $39 trillion, nearly returning to 2007 levels.
- The Asia-Pacific region saw the largest increases and surpassed Europe in both HNWI population and wealth. However, over 50% of global HNWIs remain concentrated in the US, Japan, and Germany.
- HNWI assets allocated to equities and fixed income rose as markets rebounded in 2009, while allocations to cash declined from
Foreign Direct Investment and its Determinants: A Study on India and Brazilinventionjournals
International trade builds up through international factor movement (IFM). IFM means movement of labour, capital and other elements of production among different country. It occurs by three ways: first one is immigration or emigration, international borrowing or lending is second way and last one is foreign direct investment (FDI). FDI means controlling ownership of a business enterprise of one country is based on entity of another country. Investment through FDI depends on various factors namely Inflation Rate, Human Development Index (HDI), Global Terrorism Index (GTI), Global Peace Index (GPI), Unemployment, Population; Corruption Perception Index (CPI), Industrial disputes etc. Object of this present study is to identify the effect of these factors on FDI inflow for India and Brazil. Also identify the more important determinants for FDI of these two countries. Ten years data (2005 to 2014) have been used for determining the result of this study. Result reveals that there exist impact of sample factors on FDI Inflow between two countries but strength of different factors varies
This document discusses whether stock markets promote economic growth. It begins by outlining the debate on whether financial development causes growth or vice versa. The authors then:
1) Describe previous empirical studies on the relationship between financial development/stock markets and economic growth that have limitations in establishing causality.
2) Explain their use of Granger causality tests on data from 64 countries over varying time periods to help determine the causal direction of the relationship.
3) Present sample statistics showing differences in growth rates and financial development across income levels and degrees of financial market freedom.
This paper investigates the evolution and determinants of manufactured exports and FDI in MED-11 countries over the period 1985-2009 as well as the prospects of their evolution under different scenarios pertaining to the evolution of the determinants. The econometric analysis confirmed the role of exchange rate depreciation, the openness of the economy and the quality of institution and infrastructure in fostering manufactured exports and FDI inflows in the Region. The prospects' assessment suggested that a scenario of deeper integration with the EU entails superior performance regarding manufactured exports and FDI than status quo or less integration with the EU but greater regional integration.
Authored by: Khalid Sekkat
Published in 2012
1. The document outlines trends in globalization, production technology, the new US economy, ICT industry development, and labor market reforms that have shaped the modern knowledge-based economy.
2. It discusses challenges Taiwan faces in moving toward a knowledge-based economy, including rising non-performing loans and reforms needed in the financial market.
3. The conclusion emphasizes that developing a knowledge-based economy requires establishing effective institutions.
This document provides an overview of macroeconomic analysis in an open economy context. It discusses exchange rate theories including PPP, UIP, and CIP. It also examines the advantages and disadvantages of fixed versus flexible exchange rate systems, and the impact of fiscal and monetary policy under each system. The document then presents the fundamental macroeconomic identity for an open economy and analyzes aggregate demand, the three macroeconomic gaps, and net exports. It also derives the relationship between net exports, investment-saving, and the exchange rate.
This document summarizes a study on how multinational companies in India manage foreign exchange exposure. It conducted a questionnaire with 200 Indian and foreign MNCs operating in India from 2004-2008. There are three types of foreign exchange exposure - transaction, translation, and economic. Most companies face all three exposures. The study found that most companies have systems to manage exposure, and there was no significant difference between Indian and foreign MNCs in their attitudes and policies. It analyzed differences between banking and non-banking companies and differences in how companies estimate and manage transaction versus economic exposure.
The document summarizes trends in the global high-net-worth individual (HNWI) population and wealth from 2006-2009. Some key points:
- In 2009, the global HNWI population increased 17.1% to 10 million people and their total wealth grew 18.9% to $39 trillion, nearly returning to 2007 levels.
- The Asia-Pacific region saw the largest increases and surpassed Europe in both HNWI population and wealth. However, over 50% of global HNWIs remain concentrated in the US, Japan, and Germany.
- HNWI assets allocated to equities and fixed income rose as markets rebounded in 2009, while allocations to cash declined from
Foreign Direct Investment and its Determinants: A Study on India and Brazilinventionjournals
International trade builds up through international factor movement (IFM). IFM means movement of labour, capital and other elements of production among different country. It occurs by three ways: first one is immigration or emigration, international borrowing or lending is second way and last one is foreign direct investment (FDI). FDI means controlling ownership of a business enterprise of one country is based on entity of another country. Investment through FDI depends on various factors namely Inflation Rate, Human Development Index (HDI), Global Terrorism Index (GTI), Global Peace Index (GPI), Unemployment, Population; Corruption Perception Index (CPI), Industrial disputes etc. Object of this present study is to identify the effect of these factors on FDI inflow for India and Brazil. Also identify the more important determinants for FDI of these two countries. Ten years data (2005 to 2014) have been used for determining the result of this study. Result reveals that there exist impact of sample factors on FDI Inflow between two countries but strength of different factors varies
This document discusses whether stock markets promote economic growth. It begins by outlining the debate on whether financial development causes growth or vice versa. The authors then:
1) Describe previous empirical studies on the relationship between financial development/stock markets and economic growth that have limitations in establishing causality.
2) Explain their use of Granger causality tests on data from 64 countries over varying time periods to help determine the causal direction of the relationship.
3) Present sample statistics showing differences in growth rates and financial development across income levels and degrees of financial market freedom.
This document contains a webinar on exchange rates with multiple choice questions. It discusses Egypt moving from a fixed to floating exchange rate in 2016. It also covers how currency values are determined in floating exchange rate systems and factors that influence currency appreciation and depreciation like interest rates, current account balances, and speculative flows. Examples are provided of Sterling and the Euro against the US Dollar between 2014-2016. The effects of currency depreciations and appreciations on trade balances and the economy are evaluated in the context of concepts like the J-Curve and Marshall-Lerner condition. Different exchange rate regimes like floats, pegs, and currency boards are also classified.
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
The Key factor that has resulted policy issues in equity and debt of international Finance due to the “International finance liberalization”
There are certain factors that could result policy issues in equity and debt of international finances which has furnished below.
Covering the sequence and order of financial liberalisation,
Capital controls,
exchange rate policy
asymmetric information
This document summarizes a working paper that estimates capital flight from developing countries from 1971-1998 using multiple methods. It acknowledges that while capital flight is assumed to be prevalent, estimation methods may not fully capture capital fleeing due to economic and political instability. The paper evaluates different estimation methods and definitions of capital flight used in literature. Estimates of capital flight, resident outflows, misinvoicing, and hot money flows are presented for regions and time periods. The estimates reveal high resident outflows from some countries and regions even in the 1990s, and that capital leaves countries with both liberalized and controlled capital accounts. Outflows have been large recently from East Asia, Europe, Central Asia and Latin America. The paper provides a
This document discusses the economic opportunities and challenges in sub-Saharan Africa, with a focus on Nigeria. It notes that sub-Saharan Africa has experienced strong economic growth above 5% annually despite the global economic slowdown. This growth is driven by factors like natural resources, a large population including many youths, and increasing urbanization and middle class. However, challenges include infrastructure gaps, poverty, and lack of education. The document argues that sub-Saharan Africa, and Nigeria in particular, have potential to emerge as the next frontier for global retail investments if countries can address challenges and improve conditions.
Argentina is positioned as an attractive investment destination based on its sustained economic growth, skilled workforce, and integration into global markets. Key points include:
1. Argentina has experienced strong annual GDP growth of 8.5% over the past six years, outpacing other Latin American economies.
2. Exports have doubled over six years, reaching a record high of $82.1 billion in 2008, led by growth in manufactured goods and services.
3. Membership in Mercosur provides preferential access to a large regional market as well as trade agreements with other countries and regions.
Rabah Arezki - Middle East and North Africa World Bank
ERF Conference on “Arab Oil Exporters: Coping with a New Global Oil Order”
Kuwait, November 26-27, 2017
www.erf.org.eg
Eastern Europe Market And Country Profile Sis International ResearchResearchShare
The document provides an overview of economic opportunities and challenges in researching Eastern European countries. It includes economic comparisons of several countries through charts and snapshots of each country's economy, demographics, and key sectors. The information indicates strong recent growth in many Eastern European countries from EU integration and foreign investment, but some countries still face challenges such as unemployment, corruption, and over-reliance on certain industries.
1) The document analyzes the relationship between currency intervention (official purchases of foreign assets by governments) and current account balances (trade imbalances).
2) Statistical analysis finds that currency intervention has a very large effect on current account balances, increasing them by 60-100 cents for each dollar spent on intervention. This effect is much larger than commonly assumed.
3) These results suggest that international financial markets are not efficient at equalizing returns across countries, and that current account imbalances could be more readily corrected through policy actions than generally believed.
1) Tunisia has experienced steady economic growth of around 5% annually from 2005-2008, with a diversified economy focused on services, tourism, and exports to Europe.
2) While the global financial crisis negatively impacted many countries, Tunisia was relatively unaffected due to minimal foreign exposure and a stable banking sector.
3) However, slowing growth in Europe led to declining exports and GDP growth in Tunisia towards the end of 2008, with further slowing expected in 2009 due to the economic turmoil in Europe and the US.
11.theoretical issues on the african stock markets and portfolio performanceAlexander Decker
This document discusses theoretical issues surrounding African stock markets and portfolio performance. It examines issues of perceived market inefficiency in African stock markets and argues that integrating stock exchanges through mergers could help address problems by increasing volume. The document provides an overview of the development, characteristics and performance of African stock markets, noting their small size and liquidity issues. It also discusses the case for regional integration, preconditions needed, and examples like the BRVM in West Africa. Portfolio performance is defined and studies on topics like diversification and its effects on performance in South Africa are summarized.
The document summarizes key concepts from a chapter in a macroeconomics textbook. It discusses the gross domestic product (GDP) and how it measures the market value of all final goods and services produced in an economy over a period of time. It also describes the circular flow between households, firms, and the financial sector and how they exchange money, products, and resources. The chapter covers macroeconomic indicators like leading, coinciding, and lagging indicators used to predict and analyze economic fluctuations. It analyzes aggregate demand and supply curves and how they determine equilibrium output and price levels in the economy. The summary provides an overview of the US economic history, including the Great Depression, postwar growth, and stagflation in the
The 1991 Indian balance of payments crisis occurred due to a combination of factors: a large current account deficit caused by rising oil prices after the Gulf War, declining exports, and a withdrawal of foreign capital. India's foreign exchange reserves fell dangerously low, forcing the government to undertake major economic reforms, including currency devaluation, trade liberalization, and industrial deregulation. In the following decades, these reforms helped stabilize the economy and shift to a market-oriented policy framework, leading to strong growth in foreign investment, exports, and overall macroeconomic indicators. However, some slowing was seen in the late 1990s due to global trade declines.
This document discusses sovereign wealth funds (SWFs) and their potential role in macroeconomic stabilization in home economies. It begins by explaining what SWFs are and how they differ from foreign reserves, pension funds, and private wealth funds. The document then discusses several research areas related to SWFs, including their potential impacts on home countries. It finds that SWFs can help facilitate fiscal stabilization and savings. The document outlines some methodological issues in analyzing the impacts of SWFs and describes its analysis of how SWFs may reduce fiscal procyclicality and improve fiscal balances/sustainability in home countries. It finds evidence that SWFs are most effective when complemented by other fiscal institutions like rules and
The document discusses India's trade policy reforms from 2008-2019. It provides details on various trade agreements and reforms India has undertaken, including the establishment of free trade areas with ASEAN and other countries. It also analyzes the impact of reforms on India's economy, noting improvements in areas like the trade deficit but that challenges remain like infrastructure development. The document concludes by examining the US-China trade war and its effects on India's exports.
MCM will offer the lowest cost global index funds by managing labor costs. It will outsource all labor except sales to India, where costs are one-fourth of U.S. rates. MCM will track the MSCI All Country World Investable Market Index for stocks and the Barclays Global Aggregate Float Adjusted Bond Index for bonds, charging only 0.25% for each fund. This low cost structure takes advantage of trends showing investor capital increasingly flowing into low cost, global index funds due to their benefits of diversification and minimized fees. By keeping costs lower than competitors, MCM aims to maximize its assets under management.
The document discusses monetary unions and the Eurozone. It provides background on monetary unions, describes the stages of economic integration that can lead to a monetary union. It then focuses on the Eurozone, listing the current member countries and those that have not joined. Several charts show unemployment, debt levels, and other economic indicators for various Eurozone countries. The document also examines issues facing the Greek economy like high debt levels, fiscal austerity imposed by international lenders, and Greece's internal devaluation efforts.
This document summarizes recent trends in capital flows to South Korea. It finds that capital inflows have increased substantially since the 1980s, driven primarily by surges in portfolio investments. Large capital inflows have contributed to rising asset prices and currency appreciation in Korea. The document empirically analyzes the effects of capital inflows on asset prices and exchange rates using a VAR model. It also discusses policy options for managing capital flows and their impacts.
This document discusses the relationship between export and economic growth in Nigeria. It begins with an abstract noting that while some economists argue export competition improves productivity, others argue it can negatively impact local industries. The document aims to empirically test the relationship between export and GDP in Nigeria. It provides background on Nigeria's economic history, including a reliance on oil exports. It reviews theories on how export can impact growth, including Ricardo's comparative advantage model. Tables show Nigeria's weak manufacturing exports as a percentage of total exports. The document aims to analyze problems with Nigeria's exports and propose solutions to strengthen manufacturing exports and economic growth.
This document contains a webinar on exchange rates with multiple choice questions. It discusses Egypt moving from a fixed to floating exchange rate in 2016. It also covers how currency values are determined in floating exchange rate systems and factors that influence currency appreciation and depreciation like interest rates, current account balances, and speculative flows. Examples are provided of Sterling and the Euro against the US Dollar between 2014-2016. The effects of currency depreciations and appreciations on trade balances and the economy are evaluated in the context of concepts like the J-Curve and Marshall-Lerner condition. Different exchange rate regimes like floats, pegs, and currency boards are also classified.
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
The Key factor that has resulted policy issues in equity and debt of international Finance due to the “International finance liberalization”
There are certain factors that could result policy issues in equity and debt of international finances which has furnished below.
Covering the sequence and order of financial liberalisation,
Capital controls,
exchange rate policy
asymmetric information
This document summarizes a working paper that estimates capital flight from developing countries from 1971-1998 using multiple methods. It acknowledges that while capital flight is assumed to be prevalent, estimation methods may not fully capture capital fleeing due to economic and political instability. The paper evaluates different estimation methods and definitions of capital flight used in literature. Estimates of capital flight, resident outflows, misinvoicing, and hot money flows are presented for regions and time periods. The estimates reveal high resident outflows from some countries and regions even in the 1990s, and that capital leaves countries with both liberalized and controlled capital accounts. Outflows have been large recently from East Asia, Europe, Central Asia and Latin America. The paper provides a
This document discusses the economic opportunities and challenges in sub-Saharan Africa, with a focus on Nigeria. It notes that sub-Saharan Africa has experienced strong economic growth above 5% annually despite the global economic slowdown. This growth is driven by factors like natural resources, a large population including many youths, and increasing urbanization and middle class. However, challenges include infrastructure gaps, poverty, and lack of education. The document argues that sub-Saharan Africa, and Nigeria in particular, have potential to emerge as the next frontier for global retail investments if countries can address challenges and improve conditions.
Argentina is positioned as an attractive investment destination based on its sustained economic growth, skilled workforce, and integration into global markets. Key points include:
1. Argentina has experienced strong annual GDP growth of 8.5% over the past six years, outpacing other Latin American economies.
2. Exports have doubled over six years, reaching a record high of $82.1 billion in 2008, led by growth in manufactured goods and services.
3. Membership in Mercosur provides preferential access to a large regional market as well as trade agreements with other countries and regions.
Rabah Arezki - Middle East and North Africa World Bank
ERF Conference on “Arab Oil Exporters: Coping with a New Global Oil Order”
Kuwait, November 26-27, 2017
www.erf.org.eg
Eastern Europe Market And Country Profile Sis International ResearchResearchShare
The document provides an overview of economic opportunities and challenges in researching Eastern European countries. It includes economic comparisons of several countries through charts and snapshots of each country's economy, demographics, and key sectors. The information indicates strong recent growth in many Eastern European countries from EU integration and foreign investment, but some countries still face challenges such as unemployment, corruption, and over-reliance on certain industries.
1) The document analyzes the relationship between currency intervention (official purchases of foreign assets by governments) and current account balances (trade imbalances).
2) Statistical analysis finds that currency intervention has a very large effect on current account balances, increasing them by 60-100 cents for each dollar spent on intervention. This effect is much larger than commonly assumed.
3) These results suggest that international financial markets are not efficient at equalizing returns across countries, and that current account imbalances could be more readily corrected through policy actions than generally believed.
1) Tunisia has experienced steady economic growth of around 5% annually from 2005-2008, with a diversified economy focused on services, tourism, and exports to Europe.
2) While the global financial crisis negatively impacted many countries, Tunisia was relatively unaffected due to minimal foreign exposure and a stable banking sector.
3) However, slowing growth in Europe led to declining exports and GDP growth in Tunisia towards the end of 2008, with further slowing expected in 2009 due to the economic turmoil in Europe and the US.
11.theoretical issues on the african stock markets and portfolio performanceAlexander Decker
This document discusses theoretical issues surrounding African stock markets and portfolio performance. It examines issues of perceived market inefficiency in African stock markets and argues that integrating stock exchanges through mergers could help address problems by increasing volume. The document provides an overview of the development, characteristics and performance of African stock markets, noting their small size and liquidity issues. It also discusses the case for regional integration, preconditions needed, and examples like the BRVM in West Africa. Portfolio performance is defined and studies on topics like diversification and its effects on performance in South Africa are summarized.
The document summarizes key concepts from a chapter in a macroeconomics textbook. It discusses the gross domestic product (GDP) and how it measures the market value of all final goods and services produced in an economy over a period of time. It also describes the circular flow between households, firms, and the financial sector and how they exchange money, products, and resources. The chapter covers macroeconomic indicators like leading, coinciding, and lagging indicators used to predict and analyze economic fluctuations. It analyzes aggregate demand and supply curves and how they determine equilibrium output and price levels in the economy. The summary provides an overview of the US economic history, including the Great Depression, postwar growth, and stagflation in the
The 1991 Indian balance of payments crisis occurred due to a combination of factors: a large current account deficit caused by rising oil prices after the Gulf War, declining exports, and a withdrawal of foreign capital. India's foreign exchange reserves fell dangerously low, forcing the government to undertake major economic reforms, including currency devaluation, trade liberalization, and industrial deregulation. In the following decades, these reforms helped stabilize the economy and shift to a market-oriented policy framework, leading to strong growth in foreign investment, exports, and overall macroeconomic indicators. However, some slowing was seen in the late 1990s due to global trade declines.
This document discusses sovereign wealth funds (SWFs) and their potential role in macroeconomic stabilization in home economies. It begins by explaining what SWFs are and how they differ from foreign reserves, pension funds, and private wealth funds. The document then discusses several research areas related to SWFs, including their potential impacts on home countries. It finds that SWFs can help facilitate fiscal stabilization and savings. The document outlines some methodological issues in analyzing the impacts of SWFs and describes its analysis of how SWFs may reduce fiscal procyclicality and improve fiscal balances/sustainability in home countries. It finds evidence that SWFs are most effective when complemented by other fiscal institutions like rules and
The document discusses India's trade policy reforms from 2008-2019. It provides details on various trade agreements and reforms India has undertaken, including the establishment of free trade areas with ASEAN and other countries. It also analyzes the impact of reforms on India's economy, noting improvements in areas like the trade deficit but that challenges remain like infrastructure development. The document concludes by examining the US-China trade war and its effects on India's exports.
MCM will offer the lowest cost global index funds by managing labor costs. It will outsource all labor except sales to India, where costs are one-fourth of U.S. rates. MCM will track the MSCI All Country World Investable Market Index for stocks and the Barclays Global Aggregate Float Adjusted Bond Index for bonds, charging only 0.25% for each fund. This low cost structure takes advantage of trends showing investor capital increasingly flowing into low cost, global index funds due to their benefits of diversification and minimized fees. By keeping costs lower than competitors, MCM aims to maximize its assets under management.
The document discusses monetary unions and the Eurozone. It provides background on monetary unions, describes the stages of economic integration that can lead to a monetary union. It then focuses on the Eurozone, listing the current member countries and those that have not joined. Several charts show unemployment, debt levels, and other economic indicators for various Eurozone countries. The document also examines issues facing the Greek economy like high debt levels, fiscal austerity imposed by international lenders, and Greece's internal devaluation efforts.
This document summarizes recent trends in capital flows to South Korea. It finds that capital inflows have increased substantially since the 1980s, driven primarily by surges in portfolio investments. Large capital inflows have contributed to rising asset prices and currency appreciation in Korea. The document empirically analyzes the effects of capital inflows on asset prices and exchange rates using a VAR model. It also discusses policy options for managing capital flows and their impacts.
This document discusses the relationship between export and economic growth in Nigeria. It begins with an abstract noting that while some economists argue export competition improves productivity, others argue it can negatively impact local industries. The document aims to empirically test the relationship between export and GDP in Nigeria. It provides background on Nigeria's economic history, including a reliance on oil exports. It reviews theories on how export can impact growth, including Ricardo's comparative advantage model. Tables show Nigeria's weak manufacturing exports as a percentage of total exports. The document aims to analyze problems with Nigeria's exports and propose solutions to strengthen manufacturing exports and economic growth.
This document examines whether the Marshall-Lerner condition holds for Kenya's bilateral trade using dynamic panel data analysis. It finds that Kenya has persistent trade surpluses with Uganda, Tanzania, and Netherlands, but large and persistent deficits with China, UAE, India, Germany, and USA. The study applies unit root and cointegration tests to Kenya's bilateral trade data before using mean group estimation. The results indicate that currency devaluation in Kenya would only improve its trade balance according to the Marshall-Lerner condition when considering its bilateral trade with China, UAE, India, and South Africa. The study thus recommends that Kenya should assess currency devaluation decisions on a bilateral rather than aggregate basis.
An Economic Inquiry into Ethiopian Exports: Pattern, characteristics, Dynamic...essp2
The document presents an economic analysis of Ethiopia's exports from 1995 to 2014. It finds that while Ethiopia's GDP and imports have grown substantially, export growth has been more modest, causing the trade deficit to widen. Exports are highly concentrated in commodities like coffee, making Ethiopia vulnerable to global price fluctuations. The analysis examines trade trends, composition, and dynamics using aggregate and firm-level data to evaluate Ethiopia's export performance and identify opportunities for diversification and growth.
Economic Implications of Foreign Exchange Rationing in Ethiopiaessp2
1) Increased foreign exchange inflows from capital flows led to real exchange rate appreciation and a decline in exports.
2) Higher domestic investment and spending increased domestic prices more than world prices, further appreciating the real exchange rate.
3) Agricultural incomes, especially for export crops, did not rise as much as urban incomes due to effects on trade competitiveness.
Ethiopia’s export performance with major trade partners a gravity model approachAlexander Decker
This document analyzes factors that determine Ethiopia's export flows to major trading partners using a gravity model approach. It examines both supply-side factors like a country's production capacity as well as demand-side factors like market access conditions. The study uses data from 1995-2010 for 14 importing countries and employs a random effects gravity model. The model results show that per capita GDP, population size, and distance between countries significantly impact Ethiopia's export levels, while the effects of Ethiopia's population size and bilateral exchange rates are insignificant or opposite of what was hypothesized.
The Global
Economic
Environment
1
Interesting The Guardian story about Italy that combines Culture (population) + Political (govt business subsidies) + Economic environments
https://www.theguardian.com/world/2019/sep/11/underpopulated-italian-region-molise
Global Economic Environment
1 of 2
International Trade Theory
firms expanding internationally must appreciate how their international activities match with a country’s goals for international trade
Balance of Payments
a leading indicator of the international economic health of a country and may directly influence a firm’s expansion decisions https://tradingeconomics.com/united-states/balance-of-trade
Government Policy and Trade
firms are directly impacted by government policies in areas such as tariffs and non-tariff barriers
3
Global Economic Environment
2 of 2
Institutions in the World Economy
institutions such as the World Trade Organization and the World Bank greatly influence trade policies, and ultimately can influence a firm’s global strategy
Regional Economic Integration
firms generally benefit from economic integration through lower costs of doing business. However it can also lead to stronger competitors
4
International Trade Theory
Why do nations trade?
Key international trade theories:
Absolute Advantage and Comparative Advantage
Product Life Cycle – Trade patterns and production over time
5
Comparative Advantage
“Different countries have dissimilar prices and costs on goods because different goods require a different mix of factors in their production and because countries differ in their supply of these factors.” (Ohlin)
e.g., Can you grow salmon in Texas?
6
Product Life Cycle
Four Phases of the Product Life Cycle:
Phase 1: the U.S. exports the product
Phase 2: foreign production starts
Phase 3: foreign production becomes competitive in export markets
Phase 4: import competition begins
The Product Life Cycle may not explain trade and production patterns as well anymore due to:
Short gap between phases
“Born globals” may skip some phases
7
Product Life Cycle
1 of 3
Developed Nation (strong economy)
Produces more than consumes at the beginning, then a switch
8
Product Life Cycle
2 of 3
Emerging Nation
Consumes more than produces at the beginning, then a switch
9
The Consumer PLC
Extending a Product in Other Markets
Balance of Payments 1 of 2
The Balance of Payments (BOP) is a summary of a country's economic transactions w/the world, for a specified period of time.
Current Account
Goods (Merchandise)
Services
Unilateral Transfers
http://www.bea.gov/newsreleases/glance.htm
http://tse.export.gov/TSE/
https://economictimes.indiatimes.com/markets/forex/indian-rupee-hits-an-all-time-low-of-72-69-versus-us-dollar/videoshow/65769296.cms
11
U.S. Imports
vs. Exports
https://tradingeconomics.com/united-states/balance-of-trade
Financial considerations
Reflects a country’s solvency/economic health
Steady loss of foreign exch.
Despite major efforts made in the post-colonial era to reform trade policies in Zimbabwe in the 1990s, recent events have led to a severe retardation in Zimbabwe’s trade. The government has taken little action to try to change any of these policies in accordance to the economic disaster that the country has been experiencing for nearly a decade. This paper aims to analyze the trade policies, which were effective in boosting Zimbabwe’s economy. It will then assess the factors causing the deterioration of Zimbabwe’s trade policies, and the debt which has resulted thereof.
Evaluating The Merits And Demerits Of Fixed And Floating...Angela Williams
This document discusses fixed and floating exchange rate regimes. It provides examples of the 2008 US financial crisis to illustrate how the US benefited from a floating exchange rate, and the 1929 stock market crash to show how the US economy suffered from excessive speculation under a floating rate. Similarly, it discusses dangers of speculation during the 1929 crash and Argentina's 2001 emerging market crisis to analyze fixed exchange rates. In general, floating rates provide more adaptability but can lead to instability and speculation, while fixed rates offer stability but reduce independence.
Ethiopian coffee trade pattern an augmented gravity modeling approachAlexander Decker
This document summarizes a study that used an augmented gravity model to assess Ethiopia's coffee trade patterns from 1997-2011 with 36 importing countries. The study found that demand side variables, like the GDP of trade partners, had a significant positive effect on Ethiopia's coffee exports. However, domestic supply side factors in Ethiopia were not found to significantly affect coffee export levels. The document provides background on Ethiopia's historical reliance on coffee and few other agricultural exports. It also reviews Ethiopia's changing trade strategies and export performance under different past regimes.
THE IMPACT OF TRADE LIBERALIZATION ON ECONOMIC GROWTH; THE CASE OF SUB-SAHARA...AkashSharma618775
The main aim of this research is to explore the effect of trade liberalization on economic growth in subSaharan Africa by analyzing certain macro-economic indicators using Ordinary Least Squares approach to
estimate regression equations. Many developing countries have substantially liberalized their trade regime over the
past three decades, either unilaterally or as part of multilateral initiatives. Nevertheless, trade barriers remain
high in many developing countries. One of the concerns that attributes to the reluctance of many of these countries
to liberalize their trade regime is the possible worsening of the trade balance.
This research paper is meant to give a recommendation on which macro-economic indicators sub-Saharan African
countries should pay particular attention to, implementing the necessary policies to ensure its effectiveness thereby
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Ppt to....
1. Exchange rate and trade
balance in Ethiopia; j curve
effect
February 2013 1
2. Chapter One Introduction
1.1) Background of the study
Forex/Fx:how it
works???
Market for currency; biggest and 24 hrs in a day ,7 days in
complex one a week
Trading entirely on computer
The “bid” and “ask”
Traders, speculators involved
Euro/JPY,USD/CHF and
currency quotes; A” bid”
CAD/USD are popular and the price at w/c u can
common pairs sell and “ask” is a price u
Forex mkt(takes the notion of can buy
mkt in economic) is just
mechanism not a common place No commission charges;
….all trading done over brokers make profit Via
computer ask and bid quotes
2
3. Review of foreign
currency reserves
Certain figures in Africa
on forex Have got accumulated
recently from high export and
aid flows
Adequacy in reserve allow to
London mkt borrow and hedge against
largest(36%) instability in external capital
flows but there are forgone
Newyork(18%)Tokyo( costs from investment and
6%) social expenditure that could
be financed by these reserves
USD accounts 85% rather(Elhiraika andNdikumana;
euro 40% Yen 19% 2007)
3
4. Reserve accumulation seen as
a tool for maintaining low
exchange rates in order to Review of reserve in
promote trade Ethiopia
competitiveness: mercantilist Began depleting Sep 2007
motive (Aizenman and Lee By end of Nov 2008 it had
2005). reached a record low of just
one month of imports(result
in rationing(a temporary
strategy) foreign currency to
rebuild)
4
5. Certain figures on gross
foreign Reserves of of NBE
2.0 months of import of goods and non-factor
services(at end of 2008/09)
2.4 months of import(1.5 Billion USD) (On
June 2009)
2.2 months of import of goods and non-factor
services(on July 7, 2010)
5
6. Figures on Export and import
components in Ethiopia
Export 1980 Import 1980
Coffee(62%), leather and leather Capital goods(averaging
products(11%),oilseeds(3%) 34%),
Export 2008/09 Capital goods37%(1980-
Coffee(26%),leather and leather 1990) to 31%(2000-2009)
products(5%),Oilseeds(25%)
On export 2009/10
Consumer go0ds(29.5%)
Coffee(26%), Oilseeds(17%) Raw materials 3.1%(1980-
Gold (14%)and chat(10%), 1990) to 2.2%(2000-2009)
A shift in share of exports and a A shift of import sources from
shift in destination(south-south trade Europe to Asia(what a
w.r.t Asia and Africa) were dramatic import from china!!!)
observed(Tewodros Makonnen;
6
2012)
7. 1.2) Statement of the problem
Despite growth in export(mainly from the
agricultural sector) , magnitude of trade deficit
has increased(Birr 40,320.7 million in 2005 to
Birr 72,822.3 in 2009, with an average growth
rate of nearly 16%) .Due to the high cost and
dependency on imports and the slow growth of
exports (Samuel and Tarekegn; 2011)
Country’s industrial base failed to boost the
export of or to produce substitutes : in order to
narrow the ever widening trade deficit.
7
8. The country reported( in 2009) huge deficit even
on agricultural goods :where it has the potential
to narrow the gap such as Soya bean, wheat
flour, grain sorghum etc.
Does devaluation improve trade balance?
A surprise in devaluation of birr in August
31, 2010 from a value of 13.63 to the US dollar
to 16.35 as an effort to boost export;.
The move ,by itself, might not address the trade
problem
8
9. Certain points That Devaluation
Might Prove To Be
Disappointing
First, the trade balance will correct only if: the sum of
the import and export demand elasticities greater than
one
developing country context :believed to be low at least
in SR
Market structure :to dampen the impact of the
devaluation. A market for developing nations are
dominated by a few major international buyers who had
market power
9
10. Because of this market structure, little benefit
for the Ethiopian producers (hence limit supply
response)
An excess or spare capacity must exist ready to
meet the demand
devaluation affects intermediate and capital
goods that are imported from abroad hence;
affecting domestic production in a negative way.
In the unlikely event that other trading partners
follow suit or take other retaliatory measures.
May trigger mini trade war involving
Ethiopia, its neighbors and her major trading
partners (Bienen et.al; 2010) 10
11. There is a doubt about enough available
domestically (Ethiopian) produced goods which
both domestic and foreign consumers wish to
buy(evidence ; the cause of inflation in 2008 and
thereafter is due to shortage of food items)
The times, how long will it take for both domestic
and foreign consumers to adjust their preferences
and switch towards Ethiopian-made goods matter
as well.
Others ; bring the theory of J-curve to play:
though devaluation deteriorate trade balance in SR
it could lead to positive result in LR
11
12. There is some support in theory for J Pattern but
again it is up to empirical evidence and that is why
the researcher is interested to support or reject
theory in Ethiopia.
The study will employ a time series econometrics on
data set available period 1974 – 2011.
Lulit Asefa has done impact of exchange rate on
trade balance (1992-2007).
This study will fill the gap(2008-2011) and will
also assess the trade balance pattern to the period
1974-1991
12
13. Hypothesis of the study
Previous research has tested the theory of J curve for
many developed and developing countries(little
attention at/to African countries)
Glenville Rawlins and John Praveen (1993) have done
on nineteen Sub-Sahara African countries(Burkina Faso,
Cameroon, Central African Republic, Côted'Ivoire,
Gabon, The Gambia, Ghana, Kenya, Madagascar,
Mauritius, Niger, Nigeria, Rwanda, Senegal, Sierra
Leone, Tanzania, Togo, Zaire, and Zambia).
13
14. Based on the analysis; in 17/19 countries:
devaluation improve trade balance though it is
not continuous. For only two of indicate J curve
but based on t-statistics only the J exist in
Tanzania
Mohsen Bahmani-Oskooee and Abera
Gelan(2012) had test J curve for nine African
countries ( Burundi, Egypt, Kenya, Mauritius,
Morocco, Nigeria, Sierra Leone, South Africa,
and Tanzania ).They were unable to find any
support for the J-Curve
Two reasons that the researcher don’t expect J
curve to hold in Ethiopia
14
15. A prominent professor of accountancy who has
published a number of professional articles on
sub-Saharan stated: The J curve has not been
observed in many African countries; hence there
is little reason to expect it in Ethiopia.
Some others said , the J-curve effect holds true
only if a country has a balanced BOP position at
the time of devaluation, which is not the case in
Ethiopia; Right?
15
16. Objectives of the study
General objective;
to examine the existence of j curve effect of
devaluation on trade balance
Specific objective:
To investigate the short run and long run
relationship between real exchange rate and trade
balance
To examine the pattern of trade balance during
in the two recent regimes; Derg and EPDRF
regimes 16
17. Scope and significance
1) Scope of the study
Idea scope: relationship between exchange rate, domestic income,
foreign income with trade balance;
Time scope :1974-2011 (the two regimes period)
Of course the area scope :is on multilateral trade balance in
Ethiopia
2) Significance of the study
Serve as a road map for policy makers on the short run
and long run relationship between exchange rate and
trade balance in Ethiopia on a particularly specified
period
it will contribute to the existing literature in the area.
17
18. Methodology of the study
Data type, data description and time series characteristic
logarithms
of trade balance (TB)
Real effective exchange rate(RER) and
domestic GDP and
World Industrial Production Index /US GDP
will be used as a proxy variable for foreign
income(Y*)
export and import values will be used for
calculating TB ratio measure 18
19. Model specification
In general: Three approaches for estimating j curve
Bahmani-Oskooee(1985) employed an aggregate data
Rose and Yellen(1989) used bilateral data
Bahmani-oskooee and Wang(2008) used sectoral data
However, the researcher will use only the first
approach of estimating J curve : employing an
aggregate trade data/ multilateral trade model.
19
20. Model used; a reduced form model employed by Rose and Yellen
(1989)and Bahmani-Oskooee (1991)
Model assumptions:
both exports and imports are imperfect substitutes for
domestically produced goods
the market clearing condition that equates the domestic
demand for imports to the foreign supply of exports.
the demand variables are represented only by current
income rather than permanent and transitory income.
homogeneity of the demand function is assumed, so that
the consumer does not suffer from money illusion -
demand will remain constant when doubling money
income and prices. 20
21. The standard "two-country" imperfect substitute model is as
follows
Domestic demand for import (Md), and the demand
for import by the rest of the world (M*d), are given
by equations (1) and (2):
Md F(Y,Pm,P)……………(1)
Md* F(Y*e,P*m,P*)………………………(2)
21
22. Where Y is domestic income,
PM the domestic currency price paid by domestic importers
and P denotes the overall domestic price level,
Y* represents foreign income,
e the exchange rate expressed as the domestic currency price
of foreign exchange,
P*M denotes the foreign currency price paid by domestic
importers and
P* the overall foreign price level.
In other words, the quantity demand is a function of the level
of money income in the importing region, the imported goods'
own price and the price of domestic substitutes.
22
24. the relative price of imports is equivalent to
the foreign currency price of foreign exports
adjusted for the exchange rate hence:
RPm eP*x/P=(EP*/P)(P*x/P)=(1/Q)RP*x ……….(5)
Where P*x is the foreign currency price of foreign exports
Q is the1)real exchange rate defined as the relative price of
domestic to foreign goods
{ i.e Q=P/(EP*)} and RP*x the relative price of foreign
exports to foreign produced goods
24
25. Substituting RPm from equation 5 in to equation 3 we
obtain
Md Md(RPx*/Q ,Y)…………………………..(6)
……….(2)
Similarly foreign country’s demand for imports
depends up on foreign income and domestic
relative export price;
M*d Md*(RPxQ ,Y*)…………………………..(7)
25
26. Domestic exports are foreign imports and vice versa
Xs= M*d X*s= Md ……………………..………………......(8)
……….(2)
trade balance TB as the following ratio
TB= Md / Xs = Md / M*d Md(RPx*/Q ,Y)/ Md*(RPxQ ,Y*) …………(9)
……….(2)
Assuming constant or stationary values of RPx and RPx* we
can write the above equation in general form:
TB=TB(Q,Y,Y*) ……………………….(10)
26
27. The log-linear functional form approximation is
Log TB t α β Log Yd, t γ LogYW, t λ Log REX t ε t (11)
Yd (Yw) is a measure of domestic (foreign) income, REX
is a measure of real effective exchange rate and ε is an error
term
Following Bahmani-Oskooee (1991) and others such
as Gligoric and Petrovic(2009 ) the researcher define
trade balance as the ratio of imports over exports
The ratio measure of is good for several and
important reasons
27
28. First, the main reason to use :regardless of
whether exports are less than import.
Especially good for the case in Ethiopia that
trade balance as a difference measure
between export and import takes almost in
all periods a negative value
Secondly, The ratio measure is not sensitive
to units of measurement in export and
imports (Bahmani-oskooee and Alse(1994))
28
29. Third , the form gives direct elasticities for
interpretation: additionally the use of ratio in log
gives the MLC exactly rather than approximately
(Onafowora 2003).
Fourth, the ratio is used to make the measure of
trade balance unit free (Bahmani-Oskooee, 1991).
Fifth it allows focusing on what proportion of
import is financed by exports.
29
30. Regarding with the expected sign of parameters used in the
model;
β and γ could be negative or positive.
Usually an increase in domestic income leads to higher
imports yielding a positive estimate for β.
However, if the increase in domestic income is due to an
increase in production of import substitute goods, imports
could actually decline yielding a negative β.
Higher in foreign income expected to boost domestic
export thus a positive effect on domestic trade balance
(Bahmani-Oskooee 1986).
• Finally, if a decrease in REX or depreciation has also an
ambiguous result until it is justified empirically
30
31. Equation (11) represents the long-run relationships. To test the J-Curve
phenomenon which is a short-run concept, we must incorporate the
short-run dynamics into the long-run model .Thus the following ARDL
representations
31
32. Where k lag length
Applying the familiar F test to determine joint significance of
lagged level variables as a test of cointegration, i.e., if 1- 4
are jointly significant, variables are said to be cointegrated.
The short-run effects of depreciation are inferred by the
estimates of K’s. Specifically, negative values for K’s. at
lower lags followed by positive values at higher lags will be
consistent with the J-Curve hypothesis in the case when
devaluation effect become negative at lower lags and positive
at higher lags.
The long-run effects are inferred by the estimate of 4
which is normalized on 1.
32
33. Econometrics tools
The researcher will apply the following tools
Granger causality Method: determining whether one
time series is useful in forecasting the other
Unit root test :identifying the order of time series and
test stationarity of main variables
Cointegration Aalysis; explore the existence of long
run relationship: Johansen Cointegration test
(johansen1996) and Autoregressive distributed
lage(ARDL) approach of pesaran,shin and smith(2001)
will be respectively used if the variables have the same
order of integration
33
34. Impulse response functions: to examine the J curve
pattern of the trade balance upon exchange rate shock.
Auto Regressive Distributive Lag Approach(ARDL)
ADRL allows
to estimate both the short run effects and long run
estimates
solves the problem of variable endogeniety
in small samples is superior (Narayan (2005)
works whether unit root exist or not. This method
does not require both variables to be integrated in
the same order.
34
35. Graphical Methods And Summary Statistics
All the data are having a time series property
thus in order to show the relationship easier.
And graphical insights will be given on
stationary and non-stationary properties of
variables
35