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1 – 10 of 12Masruri Muchtar, Ahmad Rodoni, Euis Amalia and Titi Dewi Warninda
This study aims to analyse the potential impacts of free trade agreement (FTA) between Indonesia and Organisation of Islamic Cooperation (OIC) countries by eliminating import…
Abstract
Purpose
This study aims to analyse the potential impacts of free trade agreement (FTA) between Indonesia and Organisation of Islamic Cooperation (OIC) countries by eliminating import tariffs in the halal food sector on welfare, gross domestic product (GDP) and trade balance. OIC countries as the second-largest organisation after the United Nations are the potential markets for the halal food industry.
Design/methodology/approach
This study used the Global Trade Analysis Project database version 10 by adopting a computable general equilibrium (CGE) model for two scenarios. The first scenario stated that Indonesia should conduct an FTA with ten potential OIC countries as export destination, while the second one stated that it should be conducted with all OIC countries.
Findings
Indonesia is predicted to get the highest increase in welfare by making an FTA with all OIC countries. Scenario 2 showed that Indonesia had much higher changes in real GDP with a positive change of 0.0018%. Even though it is projected to experience a surplus in the trade balance in both scenarios, Indonesia is predicted to experience a decline in exports for the particular halal food sector. The findings contribute some new insights to the existing literature, revealing an alignment between economic integration and the concept of international trade in Islam.
Research limitations/implications
The limitation of this study is the available data that cannot describe the population of all OIC countries. Only 31 countries out of a total of 56 OIC countries can be used in research. The scope of research is limited to analysing FTAs between Indonesia and OIC countries in the form of abolishing import tariffs and does not include non-tariff barrier issues such as halal certification.
Practical implications
The preferential trade agreement is considered relevant as Indonesia’s initial commitment to conduct a bilateral trade with ten selected OIC countries. The Indonesia Government, however, still needs to make several mitigation efforts in various sectors experiencing losses as a result of economic integration, such as by creating a more conducive business climate, supporting the sources of capital, facilitating bureaucratic affairs, as well as providing tax incentives.
Originality/value
This paper contributes to the literature by focusing on the critical aspects of the FTA’s impacts on halal food sectors by optimizing the reduction of import tariffs of OIC countries. Different from previous studies, this study applied a static CGE model to examine the impacts of FTA on macroeconomic indicators.
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Even with the Saudi Arabian Government's discretionary measures to mitigate the spread of the coronavirus disease 2019 (COVID-19), the economic sectors were not spared from the…
Abstract
Purpose
Even with the Saudi Arabian Government's discretionary measures to mitigate the spread of the coronavirus disease 2019 (COVID-19), the economic sectors were not spared from the damage. Thus, the paper aims to use a computable general equilibrium (CGE) model to evaluate the impact of COVID-19 on the Kingdom of Saudi Arabia's (KSA) economy, with a special focus on small and medium enterprises (SMEs) and production. These influence the level of poverty.
Design/methodology/approach
The paper adopted the social accounting matrix (SAM) for Saudi Arabia built in 2021 by Imtithal Althumairi from Saudi Arabia's 2017 SAM. The model represents a snapshot of the economy and different flows that exist within the tasks and institutions. Two simulations (mild and severe) were conducted because of the focus on the distributional outcomes.
Findings
Decrease in job creation and economic growth were significant evidence from the study's findings. Findings show that more families hit below the poverty line because the negative impacts of the pandemic have shifted the income allocation curve. Findings show that the weakest of the poor are mitigated by government social grants during the pandemic.
Research limitations/implications
The paper is restricted to the relevant literature relating to the impact of COVID-19 on Saudi Arabia's economy and evaluated using the SAM model. Moreover, the COVID-19 is still an ongoing scenario; thus, the model should be updated as data utilised for the operationalisation are made available.
Practical implications
The information from the suggested model can be suitable to measure the degree of the harm, and thus, the likely extent of the desirable policy feedback. Also, the model can be updated, as data are made available and formulated policies based on the updated data implemented by the policymakers.
Originality/value
Apart from the recovery planning of SMEs during the pandemic, the paper intends to stir up Saudi Arabia's policymakers through the macro-micro model to recovery planning and resilience of the economy with emphasis on mitigating unemployment.
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The paper is devoted to modeling a pricing policy of competitive firms in a “closed” economy framework.
Abstract
Purpose
The paper is devoted to modeling a pricing policy of competitive firms in a “closed” economy framework.
Design/methodology/approach
The proposed model can be regarded as an analog to CGE model and is based on the intersectoral balance methodology incorporating linear demand functions for goods and services.
Findings
By performing different model experiments, we show that a certain degree of competition can bring more profit to all competing firms, than in case of complete absence of such competition, what is also supported by empirical investigation. This finding implies that monopolies may perform worse than competitive firms, what contradicts with the modern provisions of economic theory, stating that monopoly is the most lucrative type of market structure for a producer. The discovered effect occurs due to the aggressive pricing policy, adopted by monopolies, spurring up the inflation spiral, which is most obvious if monopolies are strongly interdependent in terms of production matrix. This inflation spiral drives prices too high, what negatively reflects on firms’ costs and, consequently, results in monopolies receiving less profit.
Originality/value
The proposed model can also be useful for understanding and assessing various economic consequences after different external or internal shocks, what is especially crucial when conducting monetary or fiscal policy.
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Rahul Arora, Nitin Arora and Sidhartha Bhattacharjee
COVID-19 has affected the economies adversely from all sides. The sudden halt in production has impacted both the supply and demand sides. It calls for analysis to quantify the…
Abstract
Purpose
COVID-19 has affected the economies adversely from all sides. The sudden halt in production has impacted both the supply and demand sides. It calls for analysis to quantify the impact of the reduction in economic activity on the economy-wide variables so that appropriate steps can be taken. This study aims to evaluate the sensitivity of various sectors of the Indian economy to this dual shock.
Design/methodology/approach
The eight-sector open economy general equilibrium Global Trade Analysis Project (GTAP) model has been simulated to evaluate the sector-specific effects of a fall in economic activity due to COVID-19. This model uses an economy-wide accounting framework to quantify the impact of a shock on the given equilibrium economy and report the post-simulation new equilibrium values.
Findings
The empirical results state that welfare for the Indian economy falls to the tune of 7.70% due to output shock. Because of demand–supply linkages, it also impacts the inter- and intra-industry flows, demand for factors of production and imports. There is a momentous fall in the demand for factor endowments from all sectors. Among those, the trade-hotel-transport and manufacturing sectors are in the first two positions from the top. The study recommends an immediate revival of the manufacturing and trade-hotel-transport sectors to get the Indian economy back on track.
Originality/value
The present study has modified the existing GTAP model accounting framework through unemployment and output closures to account for the impact of change in sectoral output due to COVID-19 on the level of employment and other macroeconomic variables.
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Olumide Olusegun Olaoye, Mamdouh Abdulaziz Saleh Al-Faryan and Mosab I. Tabash
The objective of the research is threefold. First, the study examines the fiscal policy – income inequality nexus in SA. Second, the study addressed the potential asymmetric…
Abstract
Purpose
The objective of the research is threefold. First, the study examines the fiscal policy – income inequality nexus in SA. Second, the study addressed the potential asymmetric effects in fiscal policy – income inequality nexus in SA (i.e. we assessed the effects of fiscal policy on income inequality at different quantiles of the income inequality) using secondary data from 1980–2020. Third, the study also identifies the optimal fiscal policy instrument that achieve the greatest distributional objectives.
Design/methodology/approach
The study adopts the traditional ordinary least square (OLS) and the innovative Quantile estimation techniques.
Findings
The study found that fiscal policy marginally reduces the income inequality at the lower quantiles (t: 0.05). Specifically, the results show that government spending on health and education reduces income inequality at the lower quantiles (t: 0.05; t: 0.25), albeit exerts a statistically weak impact. On the other hand, the results show that at the upper quantiles, fiscal policy has no statistically significant impact on income inequality. However, we do not find either direct or indirect tax to have any impact on income inequality at any conventional level of significance. This suggests that government spending on health and education have the greater potential to reduce income inequality in South Africa. The research and policy implications are discussed.
Originality/value
The study addressed the asymmetric phenomenon in income inequality-fiscal policy nexus in South Africa.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-12-2023-0956
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Sid'Ahmed Soumbara and Ahmed El Ghini
This study aims to examine the asymmetric effects of average temperature (TP) and rainfall (RF) on the Moroccan food security, measured by the food production index (FPI), using…
Abstract
Purpose
This study aims to examine the asymmetric effects of average temperature (TP) and rainfall (RF) on the Moroccan food security, measured by the food production index (FPI), using annual data from 1961 to 2020.
Design/methodology/approach
The study uses the Climate Change and Food Security Framework (CCFS) developed by the Food and Agriculture Organization (FAO) and employs the nonlinear auto-regressive distributed lag (NARDL) model and various econometric techniques to show the effects of climate variability in the short and long-term. It also examines if the impacts on Moroccan food security are asymmetric by analyzing the positive and negative partial sums of mean temperature and rainfall.
Findings
The study shows that RF has a long-term relationship with FPI, with increased RF leading to increased FPI and decreased RF leading to decreased FPI. FPI responds more strongly and persistently to a positive shock in RF than to an adverse shock. The study also identifies an asymmetric relationship between FPI and RF, with increased TP enhancing food output in the long run and a decrease reducing food production in the long run.
Research limitations/implications
The current study could have some limitations. For instance, there are several other non-climate factors that might potentially impact food security. In particular, CO2 emissions which from the literature is a key variable that represent climate change impact on food security, was not included. The present research has not included those factors mainly because adding more variables to the model reduces the degree of freedom available to estimate the parameters, resulting in inaccurate results.
Originality/value
This paper contributes to the food security literature by utilizing the latest asymmetry methodology to decompose climate changes into their positive and negative trends and examining the contrasting impacts food production.
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Hien Nguyen Phuc, Dung Nguyen Viet, Xuyen Le Thi Kim, Cuong Nguyen Van and Minh Nguyen Van
This paper aims to investigate whether official development assistance (ODA) inflows to developing countries (lower-middle and low income) can cause the symptoms of Dutch disease…
Abstract
Purpose
This paper aims to investigate whether official development assistance (ODA) inflows to developing countries (lower-middle and low income) can cause the symptoms of Dutch disease or not.
Design/methodology/approach
This study applies the methodology of dynamic panel data estimation with a one-step system generalized methods of moment (GMM) for the sample of 59 developing countries from 2001 to 2019.
Findings
The results indicate that ODA (as a percentage of gross domestic product (GDP)) rises by 1%, the real effective exchange rate (REER) appreciates by 0.252%. This finding reveals that these selected developing countries have faced the symptoms of Dutch disease. The countries with the higher ODA ratio have a higher effect of the Dutch disease, and the managed floating exchange rate regime is the lowest impacted, when compared to the fixed and flexible exchange rate.
Practical implications
The selected countries are recommended to use ODA inflows right and efficiently. These ODA inflows should be invested in productive sectors or support for production rather than in consumption. The managed float exchange rate regime is applied to reduce the symptom of Dutch disease for the selected countries. The good cooperation of monetary and fiscal policies is important to absorb the huge ODA inflow and sterilize the adverse effects of the disease.
Originality/value
The paper contributes to the literature and empirical of the Dutch disease. An adverse effect of the huge ODA inflow to the developing countries appreciated of the real exchange rate and caused the symptom of the dutch disease.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-12-2022-0777
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The present study aims to examine the moderating impact of governance quality on the tourism poverty nexus using a panel of six South Asian Association for Regional Cooperation…
Abstract
Purpose
The present study aims to examine the moderating impact of governance quality on the tourism poverty nexus using a panel of six South Asian Association for Regional Cooperation (SAARC) countries during the period 2002 to 2019.
Design/methodology/approach
For the soundness of the results, fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) econometric models were applied to determine the long-run relationship.
Findings
The findings confirmed the positive and significant impact of tourism development (international tourism arrival) and governance quality (effectiveness of governmental services) on poverty (per capita household consumption) reduction. Interestingly results confirm that governance quality and tourism development have complementary impacts on poverty reduction.
Originality/value
The present study has twofold contributions; First, despite the high potential of SAARC tourism, research remains limited in studies examining the role of tourism and governance quality on poverty reduction within the SAARC region. As a result, the present paper presents critical insights into the impact of tourism inflow and governance quality on poverty reduction in South Asian countries. Second, to the best of the author's knowledge, this is the first attempt to conduct an econometric analysis to examine the role of governance quality on the relationship between tourism inflow and poverty reduction in SAARC countries.
Jihad Ait Soussane and Aomar Ibourk
The primary objective is to analyze the direct and short-run impact of hosting the FIFA World Cup on inward FDI, considering both aggregate and sectoral levels. Additionally, the…
Abstract
Purpose
The primary objective is to analyze the direct and short-run impact of hosting the FIFA World Cup on inward FDI, considering both aggregate and sectoral levels. Additionally, the study aims to investigate the moderating role of governance quality on this impact, emphasizing the importance of robust institutional frameworks in attracting FDI.
Design/methodology/approach
This paper uses panel data spanning 1970–2022, encompassing 12 countries that have hosted FIFA World Cup events. The study employs a linear regression model with a robust weighted least squares (RWLS) estimation method. It incorporates various control variables and the institutional quality as moderating variables, to evaluate the impact of hosting the FIFA World Cup on inward FDI at both aggregate and sectoral levels.
Findings
Hosting the FIFA World Cup is associated with a significant average increase of $4.33 bn in inward FDI at the aggregate level. Notably, governance quality serves as a critical moderating factor, with well-governed countries experiencing a more substantial increase in FDI, totaling $10.5 bn. At the sectoral level, the results reveal that poorly governed countries attract FDI in primary sectors, while well-governed countries attract FDI in secondary and tertiary sectors. This highlights the nuanced dynamics of FDI attraction depending on the institutional quality of the host countries.
Research limitations/implications
A primary limitation lies in the scarcity of sectoral-level data, constraining the comprehensive study of the relationship between hosting mega-sport events and FDI. Future research could explore alternative data sources and methodologies to overcome this limitation. Additionally, extending the analysis to include other economic indicators beyond FDI could provide a more holistic understanding of the economic implications of hosting major international sporting events.
Originality/value
This study contributes to the literature by focusing exclusively on the FIFA World Cup and undertaking a comprehensive sectoral analysis. By incorporating governance quality as a moderating variable, it adds a nuanced layer to the understanding of the impact of hosting international events on FDI at the sectoral level. The findings underscore the importance of targeted strategies and robust institutional quality in enhancing FDI attractiveness.
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Su Pan, Xuanhao Zhang and Miraj Ahmed Bhuiyan
This study reveals the economic impact of the Indo-Pacific Strategy on the Regional Comprehensive Economic Partnership (RCEP).
Abstract
Purpose
This study reveals the economic impact of the Indo-Pacific Strategy on the Regional Comprehensive Economic Partnership (RCEP).
Design/methodology/approach
This paper uses the GTAP model to analyze the economic effects of RCEP under the effect of the “Indo-Pacific Strategy” under different scenarios.
Findings
The results show that (1) with the improvement of the implementation effect of the US “Indo-Pacific Strategy,” the welfare level of China has gradually had a significant negative impact, while the welfare level of US Allies and partners has been further improved. (2) The implementation of the Indo-Pacific Strategy will further expand the import scale of Japan, South Korea and other Allies that are both RCEP members and the USA and slightly reduce the import scale of the European Union (EU) and other countries. (3) After the USA implemented the “Indo-Pacific Strategy,” its export scale has significantly improved, and it has been able to completely offset the adverse effects of the signing of RCEP on its exports. China's export scale has also gradually declined, and Japan has benefited the most.
Originality/value
There are three main possible contributions to this article: first, the authors combined geopolitical factors to simulate and evaluate the economic effects of RCEP under different Indo-Pacific Strategy implementation scenarios, which is more relevant than analyzing the economic effects of RCEP in a “vacuum.” Second, the standard static GTAP model can only measure the change of equilibrium state before and after the trade policy. At the same time, the dynamic GTAP model (GTAP-Dyn) introduces mechanisms such as capital flow and capital accumulation and treats time as a continuous variable affected by exogenous variables so that each variable has a time dimension so as better to simulate the medium- and long-term economic effects. This paper refers to the dynamic recursion method of Walmsley (2006) and Yang (2011) to update the base year of the GTAP version 10.0 database to 2020, that is the time when RCEP officially reached 2020. The simulation results of shock variables introduced into the baseline scenario are more reliable. Third, the authors analyze the welfare effect of RCEP and the impact on the import and export of relevant countries from the macrolevel and examine the impact on different products in different countries from the microlevel.
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