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Article
Publication date: 1 February 2015

Rahul Arora, Sarbjit Singh and Somesh K. Mathur

The present study is an attempt to evaluate the impact of the proposed India-China free trade agreement (FTA) in goods trade on both countries under a static general…

Abstract

Purpose

The present study is an attempt to evaluate the impact of the proposed India-China free trade agreement (FTA) in goods trade on both countries under a static general equilibrium framework.

Design/Methodology/Approach

The study has utilized the Global Trade Analysis Project (GTAP) model of world trade with the presence of skilled and unskilled unemployment in the world. For analysis purposes, 57 GTAP sectors, representing the whole regional economy, have been aggregated into 43 sectors and 140 GTAP regions, representing the whole world, have been aggregated into 19 regions. The study has also used the updated tariff rates provided by the World Trade Organization for better results.

Findings

The preliminary analysis using trade indicators depicted that by utilizing their own comparative advantage, both of the countries can maximize their gains by exporting more to the world. The simulation results from the GTAP analysis revealed that a tariff reduction in all goods trade would be more beneficial for both the countries than the tariff reduction in each other's specialized products. All other regions lose in terms of shifting the Indian imports towards China in a post-simulation environment. Regions with a significant loss are: the European Union (28 members), Southeast Asia, the Unites States, Japan, Korea, West Asia, and the European Free Trade Association (EFTA).

Originality/Value

The disaggregated sector-wise analysis has been performed using the latest available GTAP database, version 9.

Details

Journal of Centrum Cathedra: The Business and Economics Research Journal, vol. 8 no. 2
Type: Research Article
ISSN: 1851-6599

Keywords

Book part
Publication date: 9 September 2020

Peter C.Y. Chow

Applying a computable general equilibrium model to assess the impact of tariffs between the US and China, Taiwan stands to gain from trade diversion of the trade war…

Abstract

Applying a computable general equilibrium model to assess the impact of tariffs between the US and China, Taiwan stands to gain from trade diversion of the trade war between the two largest world economies in the short term.

Initially, Taiwan suffered a minor loss from the sector-specific tariff on steel and aluminum imposed by the US. However, its loss is mitigated after counting counter measures from foreign countries. The cumulated US tariffs and China's retaliations led to trade diversion effect. Taiwan's initial loss from the steel and aluminum tariffs was over compensated by a series of trade war between the US and China.

Under the scenario of the cumulated tariffs of $250 billion of US imports and China's retaliations of $110 billion on US goods, the social welfare, exports, import and trade balance in Taiwan increased. Its terms of trade improved as well. Real wage increases slightly more for unskilled labor than for skilled labor. The short-term effect of the trade war has positive effect on all macro indicators of Taiwan's economy.

On sectoral shift, Taiwan's export will gain the most in precision engineering products ($2,941.6 million), followed by electronics ($310.7 million) and agricultural products ($31.3 million). The negative effects are in sectors such as business services ($58.323 million), other services ($46.9 million), transportation service ($36.6 million), trade service ($25.3 million), and finance service ($24.5 million). Taiwan's total imports will increase by 0.59%, whereas its total export will increase by 0.33%. However, total trade balance still increases by $451.1 million.

The study also finds that Taiwan has a high degree of overlapping export commodities with China in the US market, much higher than most major trading partners for the US, yet its market share for those products in the US is ranged from 1% to 5% only. Moreover, more than 60% of Taiwan's export to the US is in intermediate goods which have less product differentiation than those in final consumption goods. These two factors will provide an opportunity for Taiwan to exploit the US market.

Though the short-term effect of trade war is positive, Taiwan needs to have a long-range planning amid the external shocks. Policy implications for Taiwan are to map out a cosmopolitan view of its geo-strategy by diversifying outward foreign direct investment and trade destinations. It needs to reduce the “systemic risk” of relying on single market in China which is vulnerable to the uncertainty in the US–China relations. If the trade war lasts too long, Taiwan would need to reevaluate its triangular trade-investment nexus with China and the US as well as its role in the global supply chain.

Details

Advances in Pacific Basin Business, Economics and Finance
Type: Book
ISBN: 978-1-83867-363-5

Keywords

Article
Publication date: 21 June 2018

Mona Farid Badran

The purpose of this study is to quantify the impact of laws and regulations that govern the cross-border flow of data on the economies of five selected African countries…

Abstract

Purpose

The purpose of this study is to quantify the impact of laws and regulations that govern the cross-border flow of data on the economies of five selected African countries, namely, Egypt, Morocco, South Africa, Kenya and Mauritius. Moreover, this study addresses the state of cloud computing in Africa. Finally, policy recommendations are provided in this respect.

Design/methodology/approach

To reach accurate finding the Global Trade Analysis Project (GTAP) data was used, and then the computable general equilibrium (CGE) was computed to estimate the total cost on the economy. Using the three data regulations linkages indexes (DRLs), the increased administrative cost effect was analyzed on five to six major economic sectors in the target countries. This was followed by estimating the loss in sector-wide total factor productivity (TFP) (for the five to six shortlisted sectors). Using this data, the computable general equilibrium model (CGE) was computed, in order to estimate the economy-wide impact. Based on these findings, a set of recommendations were offered to the policy maker, reflecting the obtained results and conclusions and their implications on drafting data-related policies.

Findings

The obtained data indexes reveal that Mauritius is the country with the most laws and regulations governing the cross border flow of data, followed by South Africa Egypt to a lesser extent and finally Morocco and Kenya both showing an obvious lack of data regulations. The small value of the estimated elasticity of the selected countries compared to the value of the estimated elasticity in the EU-0.347 shows that the impact of data localization is less in the selected African countries than in the other set of EU countries examined in the research paper. This is because the former has smaller economies with fewer linkages to the global economy and are less reliant on sectors that are heavy users of data. Thus, the overall impact of data localization was not as profound on TFP as is the case in advanced economies. This research paper arrives at the conclusion that fighting the trend of data localization is crucial. In fact, data localization hinders the necessary and essential role of global trade in realizing economic development. Specifically, this is evident in the increase in production costs as reflected in the increase of the prices of goods, which would lead to a decline in incomes.

Originality/value

Global studies looked at the impact of data localization on the EU, as well as China, India, Korea and Vietnam, providing some data on Asia Pacific. However, no study has ever been conducted on the Middle East and Africa. This study aims to fill this gap. The approach of this study is to capture the extent of data localization mandates encoded in the laws of each of the selected five African countries showing how these mandates govern their cross-border data flow and, in turn, affect their economies. Furthermore, the policy recommendations section of this research paper makes a contribution to the existing literature.

Details

Digital Policy, Regulation and Governance, vol. 20 no. 4
Type: Research Article
ISSN: 2398-5038

Keywords

Article
Publication date: 19 June 2017

Gabriela Ortiz Valverde and Maria C. Latorre

The purpose of this paper is as follows: first, it aims to explain the overall economic implications of the trans-pacific partnership (TPP). Second, it aims to provide an…

Abstract

Purpose

The purpose of this paper is as follows: first, it aims to explain the overall economic implications of the trans-pacific partnership (TPP). Second, it aims to provide an in-depth analysis of the TPP’s quantitative impact on an upper-middle economy such as Mexico, as well as on the USA.

Design/methodology/approach

The analysis is performed using a computable general equilibrium (CGE) model.

Findings

The results suggest that in the short run, both Mexico and the USA would slightly benefit from the TPP. Tariff reductions would lead to less bilateral trade between Mexico and the USA and the stronger integration of both countries with the rest of the TPP members. The opposite is true after a decrease in non-tariff barriers (NTBs). Overall, in terms of the impact on Mexico, trade integration with the rest of the TPP members prevails. This suggests that a TPP without the USA could still be beneficial.

Originality/value

Previous studies on the TPP have mainly focused on its impact for the USA, which is also analysed in the present study. The effects of the TPP are estimated for a broad set of micro and macroeconomic variables, paying particular attention to the reductions of NTBs.

Details

Journal of International Trade Law and Policy, vol. 16 no. 2
Type: Research Article
ISSN: 1477-0024

Keywords

Content available
Article
Publication date: 1 February 2022

Ryuichi Shibasaki, Masahiro Abe, Wataru Sato, Naoki Otani, Atsushi Nakagawa and Hitoshi Onodera

This study predicts the growth of Africa's international trade from 2011 to 2040 by accounting for the uncertainties in the continent.

Abstract

Purpose

This study predicts the growth of Africa's international trade from 2011 to 2040 by accounting for the uncertainties in the continent.

Design/methodology/approach

This study applies a scenario planning method (SPM) to develop multiple future scenarios considering uncertainties inherent in African socio-economies related to the success or failure of economic and industrial policies (EIPs) and economic corridor development policies (ECDPs). Subsequently, based on these future scenarios, the growth of African international trade from 2011 to 2040 is predicted using the Global Trade Analysis Project (GTAP) model.

Findings

The predictions reveal that if the EIPs and the ECDPs are successfully implemented, Africa, as a whole, will experience a significant increase in trade, estimated at US$ 1,905 billion and US$ 1,599 billion for exports and imports, respectively, compared to the scenario in which they fail. However, the effects vary greatly by country or region and industrial sector. The results also show that African intra-regional trade is rapidly expanding and is the second-largest after trade with Europe followed by other continents.

Originality/value

SPM, which allows us to reflect the uncertainties affecting African international trade prediction, is applied to build the future scenarios. The study comprehensively predicts African future international trade by setting a wide range of exogenous variables and parameters (input conditions for the GTAP model) related to EIPs and ECDPs.

Details

Maritime Business Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2397-3757

Keywords

Article
Publication date: 6 November 2017

Fan Yang, Kirsten Urban, Martina Brockmeier, Eddy Bekkers and Joseph Francois

The purpose of this paper is to develop a modelling approach that enables the analysis of long-term food security policies. Specifically, the authors explore the effect of…

1881

Abstract

Purpose

The purpose of this paper is to develop a modelling approach that enables the analysis of long-term food security policies. Specifically, the authors explore the effect of China’s agricultural domestic support on its agricultural and food market by also considering the impact of incomplete price transmission.

Design/methodology/approach

The authors extend the standard Global Trade Analysis Project (GTAP) modelling framework. First, the authors incorporate incomplete price transmission into the GTAP model by generating tariff-equivalent price transmission elasticities. Second, the authors improve the current representation of China’s agricultural domestic support in the GTAP model and the underlying database by considering the production requirements and the trade-distorting effect of different policy instruments. Running a set of simulations, the authors examine first how the incorporation of incomplete price transmission affects the model’s results and second how increased agricultural domestic support affects China’s agricultural and food market accounting for incomplete price transmission.

Findings

Considering incomplete price transmission mitigates the domestic price increases as responses to high international agricultural prices, which also lead to an increase in China’s trade deficit and prohibits net food sellers from receiving high prices. In the long term, an increase in China’s agricultural domestic support to its World Trade Organisation de minimis commitment level would increase domestic agricultural production and reduce its demand pressure on the international market.

Originality/value

This paper contributes to the literature by examining the impact of increased agricultural domestic support on the domestic market while innovatively accounting for incomplete food price transmission. The authors combine econometric estimated price transmission elasticities and an extended GTAP framework to underscore the importance of enhancing the model’s ability in accounting for incomplete price transmission when analysing the impact of agricultural policies.

Details

China Agricultural Economic Review, vol. 9 no. 4
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 14 June 2018

Jae-whak Roh and Hyunjae Kim

During the Paris Convention, Korean Government made commitment to curb carbon emission by 37 percent by the year of 2030. Since then there has been constant debate, both…

Abstract

Purpose

During the Paris Convention, Korean Government made commitment to curb carbon emission by 37 percent by the year of 2030. Since then there has been constant debate, both in media and academia, as to whether attempts to reduce carbon emission would spell the concomitant economic slowdown. The purpose of this paper is to build a Computable General Equilibrium (CGE) model to see the effects of emission decrease on Korea economy.

Design/methodology/approach

To answer the above question, we build a comprehensive framework to gauge the economic impact of Paris Convention through the lens of Computable General Equilibrium (CGE) model using Armington and Melitz model.

Findings

Contrary to conventional wisdom, Korea’s economic performance in terms of welfare remains robust when the carbon emission is reduced. Broadly speaking, Korea’s welfare does not contract significantly in part due to expansion at the export market. For instance, the energy intensive industry (EIT) is affected most directly from the Paris Convention commitment and yet it experiences growth in export. On the contrary, the authors find that the general economic impact on Korea’s output is negative. The additional experiment using Melitz model shows that as the carbon reduction is enforced, both the number and the average productivity of the exporting firms increase in the EIT sector, which the authors refer in the paper as the “Melitz Effect.”

Practical implications

This paper shows that what can be occurred in Korean industries by emission decrease commitment.

Social implications

One byproduct from restricting carbon emission is the surge in the electricity price. This is due to the fact that industries have to shift away from traditional fuels such as oil to electricity for energy. Therefore the authors propose that industrial policies aimed at balancing electricity price should accompany the plan to reduce carbon emission.

Originality/value

For Korean economy, the effects of emission reduction is researched using Armington and Melitz model at the same time. Especially, this is the first research case using the Melitz model in this Korean topic.

Details

Journal of Korea Trade, vol. 22 no. 3
Type: Research Article
ISSN: 1229-828X

Keywords

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