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Article
Publication date: 13 August 2018

Deeparghya Mukherjee

The purpose of this paper is to investigate and assess the trends of bilateral services trade in the world segmented by trade for final consumption and intermediate usage…

Abstract

Purpose

The purpose of this paper is to investigate and assess the trends of bilateral services trade in the world segmented by trade for final consumption and intermediate usage across several service sectors. The differential trends, if any, are studied while examining the role of free trade agreements which have a chapter on services trade as well as the role of services trade restrictions. The study unravels differences across service sectors in this respect.

Design/methodology/approach

The author uses an augmented gravity model to address the above using OECD- World Trade Organization (WTO) TiVA data for bilateral trade in intermediates and final products (October 2015 release) and World Bank Services Trade Restrictions Index (STRI). The poisson pseudo maximum likelihood estimation technique is used in light of the structure of the data. Trade creating and diverting effects are identified controlling for time and country-time specific effects. The following sectors are specifically looked at: total business sector services, computer and related services, financial intermediation, post and telecommunication, transport and storage, R&D and other business services, hotels and restaurants, construction, and wholesale and retail trade.

Findings

First, services free trade agreements (FTAs) have had a trade creating impact with no trade diverting impact for services trade in aggregate with stronger effects on services traded for intermediate usage. Second, financial intermediation and post and telecommunication have been left unaffected by services FTAs. While no trade diversion is concluded for any sector, R&D and other business services, transport and storage and wholesale retail trade show maximum trade creation effects in response to FTAs. Third, trade restrictions of mainly OECD countries are responsible for lowering exports for most sectors. Finally, in terms of policy implications, at a general level, the author does not find a significant difference in the author’s results for services traded for intermediate usage or final consumption except for a stronger effect of FTAs on intermediate services trade. Hence, the policies to foster services trade on both counts are concluded to be the same and deal with behind-the-border policies of domestic industrial policy reforms like national treatment of foreign firms, licensing requirements, FDI policies, etc.

Research limitations/implications

Statistics for services trade are limited. The data are only available for the years 1995, 2000, 2005, 2008, 2009, 2010 and 2011. Additionally, the conclusions on services trade restrictions are based on statistics for 2011 alone, since this is the only year for which the statistics are available. A complete time series for the entire sample period would increase robustness of the study with a better time variant version of the trade restrictiveness variable. Finally, in the construction of the OECD-WTO-TiVA database of a world IO table, there may have been approximations in constructing statistics for services traded for intermediate usage and final consumption. The results remain sensitive to the same but this is the best possible statistics available for the purposes.

Originality/value

This is the first study which looks at services trade segmented by trade for final consumption and intermediate usage taking advantage of the available data for a number of service sectors. The role of restrictions is also studied for the first time segmented by trade in intermediates and final consumption. The stronger effects of FTAs on intermediate services trade as well as financial intermediation and post and telecommunication services being insulated from effects of FTAs are important findings, especially since services are mainly thought to be traded for final consumption. Similar trends of results for services traded for intermediate usage and final consumption and restrictions affecting exports from exporter countries and imports by importer countries highlight the importance of behind-the-border domestic policies in facilitating or inhibiting services trade on both counts and more importantly for intermediate usage which, in turn, would improve goods tradability.

Details

Journal of Economic Studies, vol. 45 no. 3
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 19 December 2018

Martina Francesca Ferracane

The paper aims to explore the national security implications of a potential for a World Trade Organization (WTO) dispute on data flow restrictions. It proposes a basic…

Abstract

Purpose

The paper aims to explore the national security implications of a potential for a World Trade Organization (WTO) dispute on data flow restrictions. It proposes a basic conceptual framework to assess data flows’ restrictions under General Agreement on Trade in Services (GATS) security exception.

Design/methodology/approach

If a case were to be brought before the WTO dispute settlement, the defender could support its case by invoking the security exception. This paper analyzes three main arguments that could be brought up: protection from cyber espionage, protection from cyberattacks on critical infrastructure and access to data needed to prevent terrorist threats. These three cases are analyzed both legally and technically to assess the relevance of restrictions on data flows under GATS security exception. This analysis can, more generally, inform the debate on the protection of national security in the digital era.

Findings

In the three cases, restrictions on data considered critical for national security might raise the cost of certain attacks. However, the risks would remain pervasive and national security would not be significantly enhanced both legally and technically. The implementation of good security standards and encryption techniques appears to be a more effective way to ensure a better response to cyber threats. All in all, it will be important to investigate on a case by case basis whether the scope of the measure (sectors and data covered) is considered proportionate and whether the measure in question in practice reduces the exposure of the country to cyber espionage, cyberattacks and terrorist threats.

Originality/value

This paper represents a contribution to the literature because it is the first paper to address systematically the issue of data flows and national security in the context of a GATS dispute and because it provides a unique perspective that looks both at legal and technical arguments.

Details

Digital Policy, Regulation and Governance, vol. 21 no. 1
Type: Research Article
ISSN: 2398-5038

Keywords

Book part
Publication date: 24 September 2010

Philippa Dee and Ndiame Diop

The purpose of this chapter is to benchmark Tunisia against other emerging economies in terms of the regulatory barriers affecting particular services sectors and to…

Abstract

The purpose of this chapter is to benchmark Tunisia against other emerging economies in terms of the regulatory barriers affecting particular services sectors and to assess the economy-wide effects of further liberalizing these services trade restrictions, compared with reducing the dispersion in barriers to its merchandise trade. On the basis of a rather restricted sample of services sectors, partial regulatory reform would yield gains roughly equivalent to full unilateral reform of manufacturing tariffs, but roughly one-tenth the gains from full bilateral reform of border protection in agriculture with the European Union. The adjustment costs associated with these services trade reforms would be minimal. The chapter identifies the reasons why the gains from these services reforms are relatively small and argues that a wider set of reforms could provide win-win outcomes and even fewer adjustment costs. By contrast, the gains in agriculture and manufacturing tend to come at the expense of domestic output in the reforming sectors – the gains are greater, but so too are the adjustment costs.

Details

New Developments in Computable General Equilibrium Analysis for Trade Policy
Type: Book
ISBN: 978-0-85724-142-9

Keywords

Article
Publication date: 1 January 1999

Fredda E. Ackerman, R. Darrell Mounts and David U. Thomas

In recent years, investment management companies and other financial service entities have placed an increasing emphasis on strengthening their compliance departments and…

Abstract

In recent years, investment management companies and other financial service entities have placed an increasing emphasis on strengthening their compliance departments and systems. Factors contributing to this heightened emphasis on compliance include the globalisation and growth of the financial services industry; the development of new and more complex financial instruments; increased scrutiny, higher standards, and tougher sanctions from regulators; and several high‐profile failures that resulted, at least in part, from inadequate compliance. To meet the heightened demands placed on compliance personnel, most investment managers have, to a degree utilised advances in technology to ease the burdens and to improve overall compliance. One of the main uses of technology has been to monitor compliance of securities transactions with regulatory and client‐imposed investment requirements and limitations prior to the execution of the transactions (so‐called ‘pre‐trade compliance’). This paper examines automated pre‐trade compliance systems, focusing on the reasons such systems are needed, the types of systems that are available and the benefits and limitations of such systems.

Details

Journal of Financial Regulation and Compliance, vol. 7 no. 1
Type: Research Article
ISSN: 1358-1988

Article
Publication date: 19 December 2018

Karl Grindal

This research develops a framework for assessing international trade regimes which could be used to address global cybersecurity challenges based on the corresponding…

Abstract

Purpose

This research develops a framework for assessing international trade regimes which could be used to address global cybersecurity challenges based on the corresponding costs of implementation and their distribution. Trade regimes, such as export controls, tariffs, investment restrictions and localization requirements, have disparate effects on foreign and domestic producers and consumers.

Design/methodology/approach

These trade regimes and their effects are explored through a literature review and conceptual framework. A case study then assesses trends in the use of the Committee on Foreign Investment in the United States (CFIUS).

Findings

CFIUS investment restrictions have justified blocking specific Chinese acquisitions of American companies, at least partially, on cybersecurity grounds using a targeted and evidence-based approach. Because of its targeted effect, CFIUS is the least likely of these trade regimes to block legitimate international trade. Restrictions on international trade, without sufficient cause, produce dead weight loss under the theory of comparative advantage.

Originality/value

These costs should be accounted for in any policy-based decision, particularly as policy entrepreneurs increasingly push for embedding cybersecurity reforms into these trade regimes. While the literature on trade regimes and cybersecurity is growing, this paper advances this research with its comparative framework.

Details

Digital Policy, Regulation and Governance, vol. 21 no. 1
Type: Research Article
ISSN: 2398-5038

Keywords

Article
Publication date: 23 March 2021

Daniel Dupuis, Virginia Bodolica and Martin Spraggon

Volume-based liquidity ratios suffer from potential measurement bias due to share restriction and may misrepresent actual liquidity. To address this issue, the authors…

Abstract

Purpose

Volume-based liquidity ratios suffer from potential measurement bias due to share restriction and may misrepresent actual liquidity. To address this issue, the authors develop two modified metrics, the free-float liquidity and the alternative free-float illiquidity ratios. These measures are well suited to estimate liquidity in the presence of trading constraints, as can be found in closely held/state-owned entities, IPOs/SEOs with lockup restrictions, dual-class share structures and family-owned businesses.

Design/methodology/approach

The authors modify the turnover illiquidity ratio, where the number of outstanding shares is scaled by the public free float, and use natural log transformation to normalize free-float liquidity. Our dataset is composed of daily observations for US stocks included in the S&P 500 index over the 2015–2018 period. To test the validity of free-float (il)liquidity ratios, the authors perform a correlation analysis for various liquidity metrics. To examine their empirical efficiency, the authors employ pooled OLS regression models for family firms as a subsample of liquidity-constrained entities, relying on five different identifiers of family-owned businesses.

Findings

The authors’ empirical testing indicates that the proposed free-float (il)liquidity ratios compare favorably with other volume-based methods, such as Amihud's ratio, liquidity ratio and turnover ratio. For the subsample of family organizations as a restricted-share setting, the authors report significant coefficients for our free-float measures across all the family firm identifiers used. In particular, as free-float decreases with progressive family influence, the advanced ratios capture an increase (decrease) in perceived liquidity (illiquidity) that is absent in the other benchmarks.

Originality/value

This study allows the authors to inform the ongoing debate on the management and governance of publicly listed companies with various impediments to trade. Traditional measures understate illiquidity (overstate liquidity) as the fraction of free trading shares is limited by design or circumstances. The authors’ proposed free-float metrics offer informational gains for family leaders to aid in their financing decisions and for non-family outsiders to guide their investment choice. As a constrained free float inhibits price discovery processes, the authors discuss how restricted stock issuers may alleviate the attendant negative effects on governance and information opacity.

Book part
Publication date: 9 March 2021

Richardson Kojo Edeme, Ebikabowei Biedomo Aduku, Nwokoye Ebele Stella and Chigozie Nelson Nkalu

Taking global economic integration into consideration, this study investigates the effects of the imposition of the tariff. For every tariff increase, a percentage of the…

Abstract

Taking global economic integration into consideration, this study investigates the effects of the imposition of the tariff. For every tariff increase, a percentage of the trade volume is reduced. This means, there is a tradeoff between globalization and restricted trade. This chapter presents empirical evidence from the European Union and the Sub-Saharan Africa region using annual times series for the period, 1980–2019. Result indicates that with coefficient of 4.31 percent, the tradeoff in European Union is higher than Sub-Saharan Africa region with coefficient of 2.66 percent. Implied is that developing countries are more likely to suffer more from the negative effect of globalization due to trade restrictions than the developed countries of the world. This is an indication that whether in developed or developing countries, a tradeoff exists between globalization and restricted trade. Hence, the imposition of tariffs and counter-tariffs is capable of shutting down globalization.

Details

Global Tariff War: Economic, Political and Social Implications
Type: Book
ISBN: 978-1-80071-314-7

Keywords

Article
Publication date: 20 January 2021

Louise Curran, Jappe Eckhardt and Jaemin Lee

This paper aims to explore trade policy measures taken in response to COVID-19 and analyses in detail their extent and nature. It assesses their compatibility with World…

3107

Abstract

Purpose

This paper aims to explore trade policy measures taken in response to COVID-19 and analyses in detail their extent and nature. It assesses their compatibility with World Trade Organisation (WTO) agreements: specifically, whether they were necessary and justifiable efforts to protect the security and health of populations and asks how this widespread recourse to trade barriers may impact on international business?

Design/methodology/approach

This paper analyses an extensive database from the International Trade Centre of trade measures taken in response to COVID-19. It differentiates by type of country, nature and coverage of measures (imports or exports, type of product…). On the basis of existing jurisprudence, this paper analyses whether restrictive measures were likely to be judged legal under WTO rules.

Findings

This paper finds that, although the majority of trade measures are probably justifiable, there were nevertheless many measures whose coverage and/or nature was such that a justification under existing WTO exceptions is, at the very least, arguable. Such widespread and intense instigation of potentially WTO incompatible measures in such a short period of time undoubtedly undermines the global trade rules on which international business has relied for decades.

Originality/value

There is little existing analysis of the legality of measures taken under the security exceptions and no substantial analyses of the measures taken in response to COVID-19. Furthermore, little scholarly attention has been paid to the impacts on international business of the increasing use of WTO “exceptions” to justify trade measures to protect national industries and populations.

Details

critical perspectives on international business, vol. 17 no. 2
Type: Research Article
ISSN: 1742-2043

Keywords

Article
Publication date: 1 August 1996

Carsten Helm

Increased environmental pollution and the globalization of economies have initiated an academic debate on the relationship between international trade and the environment…

2061

Abstract

Increased environmental pollution and the globalization of economies have initiated an academic debate on the relationship between international trade and the environment. Addresses the question of whether the present GATT/WTO regime conflicts with effective policies to cope with transboundary environmental problems, including the protection of global commons. Analyses the welfare effects of transboundary pollution tariffs by using a simple partial equilibrium framework. Contrasts the results with an assessment of the existing GATT/WTO regime, in which no distinction between national and transboundary environmental problems has been made. Outlines, in conclusion, some basic elements of a necessary reform of the GATT/WTO regime. These proposals would allow border tax adjustment for certain types of production‐related environmental charge without undermining an open and non‐discriminatory multilateral trading system.

Details

International Journal of Social Economics, vol. 23 no. 8
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 18 January 2008

Carina Sponholtz

The purpose of this paper is to examine the reaction to earnings announcements in a small stock market.

1290

Abstract

Purpose

The purpose of this paper is to examine the reaction to earnings announcements in a small stock market.

Design/methodology/approach

The paper uses the traditional event study method to examine the information content of annual earnings announcements in the small Danish stock market from 1999‐2004.

Findings

The paper finds abnormal volatility in the days surrounding the announcements, indicating that they contain relevant information for the stock market. The abnormal volatility persists several days after the announcement, suggesting that the information environment of this small stock market works to decrease the speed of adjustment. In addition to this sign of inefficiency, the paper finds significant positive abnormal returns accompanying the announcements. These results are robust across various methodologies. Surprisingly, the paper finds a positive correlation between the information content and predisclosure information. This contradicts previous studies, and it is interpreted as evidence of a low level of pre‐announcement information. Confirming the results of similar studies, the paper finds that unexpected earnings are best proxied using a model based on consensus analyst forecasts.

Originality/value

This paper contributes to the existing literature by analyzing the information content of earnings announcements in a small stock market with accounting standards that are congruent with the International Accounting Standards.

Details

International Journal of Managerial Finance, vol. 4 no. 1
Type: Research Article
ISSN: 1743-9132

Keywords

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