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The Gains and Pains of Financial Integration and Trade Liberalization
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ISBN: 978-1-83867-004-7

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Suvayan Neogi and Chandni Dawani

Any country including India which has registered remarkable growth has done so by participating in the economic integration process led by global and regional trade…

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Any country including India which has registered remarkable growth has done so by participating in the economic integration process led by global and regional trade liberalization. India has an emerging web of cooperation with East Asian countries, especially Association of South East Asian Nations (ASEAN) through the ASEAN–India dialogue process, the bilateral free trade agreement with Malaysia, Singapore, and Thailand and subregional initiatives such as the Mekong–Ganga Cooperation and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC; Yong 2005).

India's free trade agreements and regional trade agreements with countries in this region have not been models of success in their implementation even when there were benefits. The main idea of the formal trade negotiation was to enhance ASEAN-India partnership, specifically in the economic arena. However, India's position in ASEAN's external trade and investment flows has not yet experienced any special momentum. The two-way trade between India and ASEAN is tilted toward ASEAN with the trade gap expanding rapidly.

Thus, to understand India's trade with ASEAN, the chapter would examine India's trade prospects with the ASEAN-5 (Indonesia, Malaysia, Thailand, Philippines, and Vietnam) particularly in merchandise trade. This chapter would identify new products that India can export to the ASEAN, which will increase its share in ASEAN's market. In order to achieve this, the chapter seeks to discuss the detailed microanalysis at HS 6-digit level to capture the trade creation effects based on lower unit value items for estimating product-specific potential exports and imports to/from ASEAN.

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The Gains and Pains of Financial Integration and Trade Liberalization
Type: Book
ISBN: 978-1-83867-004-7

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The Gains and Pains of Financial Integration and Trade Liberalization
Type: Book
ISBN: 978-1-83867-004-7

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Dipyaman Pal, Chandrima Chakraborty and Arpita Ghose

The present study aims to determine the existence of simultaneous relationship between economic growth, income inequality, fiscal policy, and total trade of the 13…

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The present study aims to determine the existence of simultaneous relationship between economic growth, income inequality, fiscal policy, and total trade of the 13 emerging market economies as a group for the period 1980–2010. After establishing the existence of simultaneity between the above relationships, a simultaneous panel model has been formulated and estimated incorporating the nonlinearity among the variables as suggested by the existing literature. An inverted U-shape relationship is evident between (1) economic growth, income inequality, and total trade in economic growth equation, (2) income inequality, economic growth, and per capita income in income inequality equation, and (3) total trade and economic growth in total trade equation. Thus, the existence of a two-way nonlinear relationship is highlighted between economic growth, income inequality, and total trade. Apart from these nonlinear relationships, positive and significant effect of (1) gross capital formation, inflation, population growth, human capital, fiscal policy, monetary policy, and domestic credit to private sector on economic growth; (2) civil liabilities on income inequality; (3) gross capital formation and inflation on total trade; (4) total trade, population growth of those aged 65 years and above, political system on fiscal policy is highlighted. Also, negative and significant effect of (1) fiscal policy on income inequality and (2) income inequality on fiscal policy is revealed.

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The Gains and Pains of Financial Integration and Trade Liberalization
Type: Book
ISBN: 978-1-83867-004-7

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The Impacts of Monetary Policy in the 21st Century: Perspectives from Emerging Economies
Type: Book
ISBN: 978-1-78973-319-8

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Mainak Bhattacharjee, Jayeeta Roy Chowdhury and Dipti Ghosh

The emerging market economies, in particular, have become victim to the laundering activities which have damaged investment potentials, undermined governance, fostered…

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The emerging market economies, in particular, have become victim to the laundering activities which have damaged investment potentials, undermined governance, fostered crime and corruption, and decreased tax revenues. In this chapter, we construct a macrotheoretic framework to analyze money laundering in the form of tax evasion by individuals in an economy in the events of financial autarky and free trade. In other words, our theoretical model allows us to examine if movement from autarky to a state of financial integration whets the degree of financial malpractice like money laundering.

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The Gains and Pains of Financial Integration and Trade Liberalization
Type: Book
ISBN: 978-1-83867-004-7

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Trupti Upadhyay and Subhankar Parbat

Vietnam is a land that has seen turbulent past and has faced huge damage as being a land for proxy war between the USA and the USSR, but yet it has risen and liberated…

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Vietnam is a land that has seen turbulent past and has faced huge damage as being a land for proxy war between the USA and the USSR, but yet it has risen and liberated itself out by adapting renovation or Doi-Moi as it is formally called in Vietnam. The purpose of this chapter is to identify the major impact of trade liberalization and trade integration on the Vietnamese economy. Through this chapter we have tried to bring out the changes that took place in the Vietnamese economy post liberalization. The structural change that took place in the Vietnamese economy due to liberalization is analyzed in this chapter. We have used paired sample T-test and Chow Test (F-Test) to observe the change as Vietnam joined the WTO. The effect that the various policy and FTA that Vietnam had after joining the WTO will be analyzed through this chapter.

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The Gains and Pains of Financial Integration and Trade Liberalization
Type: Book
ISBN: 978-1-83867-004-7

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The Gains and Pains of Financial Integration and Trade Liberalization
Type: Book
ISBN: 978-1-83867-004-7

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Anindita Sengupta

Financial liberalization is assumed to be the integration of a country's local financial system with international financial markets and institutions. This integration…

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Financial liberalization is assumed to be the integration of a country's local financial system with international financial markets and institutions. This integration usually requires that governments liberalize the domestic financial sector and the capital account. Financial sectors were liberalized in most of the developing countries in Asia, Africa, and Latin America within the early 1990s. Among these countries, emerging economies are those who promise huge potential for growth but also pose significant political, monetary, and social risks. Brazil and India are often compared among the major emerging economies. Despite these general similarities between them, there are notable differences in various aspects of opening the balance of payments capital account in both countries. In this chapter, we have tried to analyze the long-run as well as short-run relationship between quarterly growth rate of GDP with the stock market, real market, and money market macroeconomic variables in India and Brazil during the period from the first quarter of 1996–1997 to the second quarter of 2018–2019. To estimate the cointegration relationship between growth rate of GDP and its determinants, we employ the bounds testing procedure (modified-ARDL) developed by Pesaran, Shin, and Smith (2001, Journal of Applied Econometrics, 16(3), 289–326). According to our results, stock market plays a positive role in long-term growth in India. Although during the beginning period of the neoliberal reforms, India faced strong domestic political opposition, our study shows that liberalizing the financial market has been fruitful for long-term growth. Our results in case of Brazil show that inflation has a negative and significant impact on long-run growth rate of GDP. The results further show that the share of gross fixed capital formation in GDP in Brazil has a positive and significant long-run relation with the growth rate of GDP. The empirical results further indicate that just like India, liberalization of the financial market and allowing foreign capital inflows have been beneficial for the economy of Brazil in the long run.

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The Gains and Pains of Financial Integration and Trade Liberalization
Type: Book
ISBN: 978-1-83867-004-7

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Partha Gangopadhyay, Mamun Billah and Siddharth Jain

Economic and financial integration (hereafter, economic integration) among economies has been a fertile area of research. Yet, what we argue is that economic integration…

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Economic and financial integration (hereafter, economic integration) among economies has been a fertile area of research. Yet, what we argue is that economic integration needs new thoughts to adequately model the recent challenges to the global economy by developing a new index/measure of economic integration. The new index will not only shed invaluable insights into the drivers of economic integration between Australia and the Middle East but will also help craft economic, trade, and commercial policies to achieve the desired type of integration with Australia's trading partners. Our analysis is undertaken on a cross section of 140 countries for the year 2011, to understand the causes and indicators of integration. Our model combines changes in real GDP, per capita GDP, percentage of educational expense, and gender inequality as causal factors to explain integration as a latent variable. We use three indicators of integration: (1) a standard measure of economic integration, (2) exports and imports as a percentage of GDP, (3) flows of foreign direct investment. We then explore the linkages between these indicators, or manifestations of integration, and a number of its possible causes. In terms of the new index we rank 140 nations and note that Australia is ranked among the top 20 nations in terms of integration with the global economy. Except Israel and Oman, Australia's trade partners in the Middle East have little integration with the global economy. In a similar vein, we also find that Australia's northern neighbors – especially Indonesia, Malaysia, Thailand, Cambodia, Myanmar, Sri Lanka, India – are yet to get well-integrated with the global economy. As a result, we argue, Australia can lead these countries from Southeast Asia and the Middle East to form closer ties with the global economy via Australia and, by doing so, Australia can create unprecedented economic and social benefit.

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