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Article
Publication date: 13 August 2018

Sena Kimm Gnangnon

The purpose of this paper is to examine the behavior of governments in terms of trade policy design when they experience a lack of foreign resources from international trade after…

2884

Abstract

Purpose

The purpose of this paper is to examine the behavior of governments in terms of trade policy design when they experience a lack of foreign resources from international trade after ensuring the sustainability of their external debt. To do so, the paper defines two concepts of trade space: “De Facto Trade Space” and “De Jure trade space.”

Design/methodology/approach

To conduct this study, the author relies on a panel data set comprising 109 countries over the period 1998–2014. To perform the empirical analysis, the author has mainly used the system generalized methods of moments approach.

Findings

The empirical analysis suggests evidence that trade space matters significantly for trade policy. Indeed, “De Facto Trade Space” is consistently associated with greater trade policy liberalization, with this positive effect being higher, the higher the development level – proxied by the real per capita income – of the concerned country. “De Jure Trade Space” tends to lead to greater trade policy liberalization in less advanced developing countries, but is associated with the adoption of trade restrictive measures in more advanced countries. Additionally, results suggest different impacts on trade policy of “Positive De Jure Trade Space” and “Negative De Jure Trade Space.”

Research limitations/implications

These findings suggest that the trade space, as defined in this study, plays a key role in trade policy design by policymakers.

Practical implications

The current study shows that trade space could significantly matter for trade policy design by policymakers.

Originality/value

To the best of the author’s knowledge, this is the study dealing directly with the “trade space” concept as well as its impact on trade policy.

Details

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

Keywords

Article
Publication date: 12 January 2015

Michael Enowbi Batuo and Simplice A. Asongu

The purpose of this paper is to investigate the impact of liberalisations policies on income inequality in African countries. Examining whether the liberalisations policies have…

2106

Abstract

Purpose

The purpose of this paper is to investigate the impact of liberalisations policies on income inequality in African countries. Examining whether the liberalisations policies have affected the income distribution of everyone equally or they only assist those who are already relatively well off; leaving the poor behind. The authors also examine how they affect income distribution in the various countries within the continent, and their effect on short and long runs?

Design/methodology/approach

First, The authors used the before and after comparison, to examine the response of the level of income inequality and the volatility of income inequality from the time that financial or trade liberalisations took place in each country. Next, the authors used the panel data techniques model for a sample of 26 African countries spanning the period 1996-2010 to investigate the effect of liberalisation policies on income distribution.

Findings

The authors find that financial liberalisation has a levitated income-redistributive effect with the magnitude of the de jure measure (KAOPEN) higher than that of the de facto measure (FDI); that exports, trade and “freedom to trade” have an equality incidence on income distribution; and that institutional and/or political liberalisation has a negative impact and; economic freedom has a negative income-redistributive effect, possibly because of the weight of its legal component.

Practical implications

In general, this study provides a variegated picture, findings tend to suggest that overall the reforms have increased income inequality in African countries. It would be risky to prescribe a general policy because of the diversity of the country. However, African countries’ better performance can be attributed to a combination of policies. For example avoiding the Marco price mixture of real exchange rate appreciation and high domestic interest rates; having capital controls and prudential financial regulations which would enable them to contain the negative consequence of capital flows; putting a system in place to direct export between African countries and encouraging sub regional integration agreement. The government should put in place countervailing social policies in order to withstand social coherence and smooth the adverse transition of liberalisation policies.

Originality/value

Three main elements of originality clearly standout: first, the estimation approach used in the paper considers both short- and long-run effects of in empirical strategy; second, an exhaustive plethora of liberalisation policies (trade, financial, political and institutional are considered); and third, recent data are used to appraise second generation reforms for more updated policy implications.

Details

Journal of Economic Studies, vol. 42 no. 1
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 17 November 2008

Alina Mihaela Dima, Radu Muşetescu and Cristian Păun

The purpose of the paper is to prove that the abandonment of the issues of competition in the multilateral framework is not an ultimate verdict that strictly separates the two…

557

Abstract

Purpose

The purpose of the paper is to prove that the abandonment of the issues of competition in the multilateral framework is not an ultimate verdict that strictly separates the two public policies: trade and competition policy.

Design/methodology/approach

The paper critically examines the conflicts between the two policies (competition and trade), through an insight analysis and case interpretation, evaluates different opinions and makes some suggestions to support the logical conclusion that these two fields cannot be separated.

Findings

The final consideration is the synergy between the two is an imperative; or in other words, any specific policy dealing with only one of the fields will be successful in the long term only by taking into consideration the effects in the other field.

Practical implications

The World Trade Organization had to make a choice not between the half full or the half empty glass but between a full glass – difficult to manage because of the danger to spill over – and a half‐full glass – easy to manage because of the large margin.

Originality/value

The paper critically examines the conflicts between the two policies (competition and trade), through an insight analysis and case interpretation.

Details

Journal of International Trade Law and Policy, vol. 7 no. 1
Type: Research Article
ISSN: 1477-0024

Keywords

Article
Publication date: 24 August 2021

Wenshou Yan and Kaixing Huang

During world price spike periods, the government is more likely to apply trade distortions to stabilize domestic prices, but the trade distortions would amplify fluctuations of…

Abstract

Purpose

During world price spike periods, the government is more likely to apply trade distortions to stabilize domestic prices, but the trade distortions would amplify fluctuations of international market prices. Which type of policy may stabilize the domestic market price, but not disturb the international market? This paper answers the question by taking public storage policy as a case study in the context of trade policy. Specially, this paper tries to identify the effect of domestic public storage on the world market price.

Design/methodology/approach

This article extends a standard theoretical model of trade policy through incorporating domestic public storage policy and makes the model more applicable in the context of China. The extended model is then applied to analysis how domestic public storage policy affects the international market price in the context of trade policy. Finally, a properly identified structural vector auto-regression technique is applied to test the effect of domestic public storage on the world market price by using cotton data from China.

Findings

The theoretical model indicates that China's public storage policy could stabilize the international market price. In order to test the working mechanisms, China's soaring public storage between 2010 and 2014 is employed to identify the effects of China's cotton storage on the volatility of the world price. The empirical findings show that China was able to stabilize the international price of cotton to a non-trivial extent through alteration of its public stockpile.

Originality/value

The first contribution is that this paper extends a standard theoretical model of trade policy to incorporate domestic public storage policy, which enables us to explore the effects of domestic public storage policy on the world price in the context of China. The second major contribution is that this paper provides evidence that, as a large player in the world market, China's public storage policy could stabilize the international agricultural price to a substantial degree.

Details

China Agricultural Economic Review, vol. 13 no. 4
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 28 September 2010

Meeta Keswani Mehra

The purpose of the paper is to examine the interdependencies between trade and environment policies, as they get jointly determined in a political‐economy model of a small open…

1980

Abstract

Purpose

The purpose of the paper is to examine the interdependencies between trade and environment policies, as they get jointly determined in a political‐economy model of a small open economy. In theoretical literature, government is usually modeled as benevolent. In real economies, however, it is not a pure social welfare maximizer. Lobbies have stakes in the specific policies, and they negotiate with/bribe the government over the latter's policy stance. The influence of industry lobbying on both trade and the environment policies at the political equilibrium is the focus of the paper.

Design/methodology/approach

Concepts from non‐cooperative game theory are used to incorporate a Nash‐bargaining game between the industry lobby and government. Government is not benevolent. Campaign contributions help win elections and provide incentive to distort policies to attract lobby contributions. Several situations are modeled. Given a politically set environment policy, tariffs may be zero in view of the free trade agreements. Or, a sequential game is modeled where environment policy is set to maximize social welfare, given a politically determined trade policy. Alternatively, in the full political equilibrium, government and lobby bargain simultaneously over tariff and the environmental tax.

Findings

Lobbying implies that government may trade‐off one policy for another. When only environment policy is politically manipulable by the lobby, pollution tax is lower than the Pigouvian tax. If, instead, the lobby can influence trade policy only, government provides protection to domestic import‐competing sector. In a sequential game, the trade policy outcome does not change, but pollution tax is always higher than the Pigouvian level, even with the environmental lobby absent. With both the policies political, the government “concedes” and offers positive tariff protection, but, not on environment policy; that is, imposes a pollution tax higher than the Pigouvian level.

Originality/value

The paper provides useful insights into how, under the influence of special‐interest politics, and bargaining between the government and lobbies, the trade and environment policies interact with each other. In comparison with the existing literature on this issue, it derives several stronger and (apparently) counter‐intuitive conclusions.

Details

Indian Growth and Development Review, vol. 3 no. 2
Type: Research Article
ISSN: 1753-8254

Keywords

Open Access
Article
Publication date: 5 August 2021

Ye Duan, Zenglin Han, Hao Zhang and Hongye Wang

Environmental problems such as CO2 (Carbon Dioxide) emissions have seriously affected the development of the steel industry, which has urged the industry to adopt a more effective…

1539

Abstract

Purpose

Environmental problems such as CO2 (Carbon Dioxide) emissions have seriously affected the development of the steel industry, which has urged the industry to adopt a more effective emission reduction policy. This paper aims to analyze the impact of various CO2 emission reduction policies combinations on the economic benefits and environmental changes of the steel industry and to determine the scope of application.

Design/methodology/approach

To compare the impact and applicable implementation conditions, a production decision game model that incorporates these two policies has been constructed. Short-, medium- and long-term constraints are set on the emission reduction indicators and the indicators’ changes under various scenarios are compared.

Findings

In the case of a single emission reduction policy, the carbon trading (CT) mechanism is better than the carbon tax mechanism. The mixed carbon trading mechanism is superior to the mixed carbon tax mechanism in terms of total output and subsidies, but worse in terms of overall social welfare, producer surplus and macro losses.

Originality/value

This paper constructs multiple emission reduction and production backgrounds and discusses the impact of the comprehensive implementation of these policies, which is practically absent in previous studies. It is in line with the current industrial policy for stable production and environmental protection and also provides a reference for the formulation of detailed policies in the future.

Details

International Journal of Climate Change Strategies and Management, vol. 13 no. 3
Type: Research Article
ISSN: 1756-8692

Keywords

Article
Publication date: 25 June 2020

Onur A. Koska, Frank Stähler and Onur Yeni

In a simple reciprocal dumping model of trade, this study scrutinizes the strategic role of trade and commodity taxes as environmental instruments when consumption of an imported…

Abstract

Purpose

In a simple reciprocal dumping model of trade, this study scrutinizes the strategic role of trade and commodity taxes as environmental instruments when consumption of an imported product generates pollution. The results suggest that for sufficiently small values of the marginal disutility from pollution, commodity taxes can be preferred over import tariffs, and compared to the case of trade policies, free trade can be welfare dominating even for higher values of the marginal disutility from pollution when commodity taxes are used strategically as environmental instruments.

Design/methodology/approach

The authors employ a reciprocal dumping model of trade.

Findings

A sufficiently high marginal disutility from pollution (or sufficient asymmetries between the countries in terms of their marginal disutility from pollution) may jeopardize bilateral trade, especially if countries are given the option to set tariffs freely for imported goods (consumption of which generate environmental pollution). For sufficiently weak transboundary pollution and sufficiently low marginal disutility from pollution, (1) both Nash trade and domestic policies may prove to be helpful in addressing consumption-based pollution, and (2) it is possible to show in such a case that Nash domestic policies may be preferred over Nash trade policies, especially when both transboundary pollution and the trading partner's marginal disutility from pollution are sufficiently low.

Originality/value

The novel contribution of this paper is (1) to capture asymmetries among trading partners in terms of how much they account for environmental pollution when deciding on their (domestic/trade) policy measures and (2) to focus on environmental degradation that is caused by final consumption of a product imported from a trading partner.

Details

Journal of Economic Studies, vol. 48 no. 2
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 26 February 2021

Imlak Shaikh

Trade uncertainty does influence the firm’s new investment, profitability and supply chain finance. Consequently, it results in decreased consumption and low consumer confidence…

Abstract

Purpose

Trade uncertainty does influence the firm’s new investment, profitability and supply chain finance. Consequently, it results in decreased consumption and low consumer confidence and eventually disrupts global economic activity. This paper aims to propose a model to uncover the effects of trade policy uncertainty (TPU) on the real economic activity and economy’s health measured in terms of the purchasing manager’s index (PMI).

Design/methodology/approach

This study uses the PMI, trade policy uncertainty index, economic policy uncertainty index and short-term interest rate. The relation between economic activity and uncertainty was studied using nested regression and vector autoregressive model.

Findings

The empirical results show that PMI of China and Japan were more responsive to the TPU of the USA and remained more fluctuating during the year 2018–2019. Importantly, this paper notices that the US’s PMI reached a low historically subject to its own trade policy and tension with China. Overall, TPU has shown more pronounced effects on PMI across China, Japan and the USA, followed by important economic and political events and major trade tariff uncertainty deals.

Practical implications

The empirical outcome holds some practical implications trade uncertainty affects not only the economic health of the economy but also market participants, global investors and international political environment, recent trade barriers, tariff wars and ambiguity raise question about free and fair global trade and competitiveness of the member country of the world trade organization.

Originality/value

The work is a novel that attempts to explain economic activity and supply chain through PMI. Unlike conventional economic indicators, e.g. gross domestic product, producer price index, consumer price index, employment, etc. PMI measures manufacturing industries’ overall status concerning the number of orders, inventory levels, productions, supplier deliveries and employment.

Details

Journal of Chinese Economic and Foreign Trade Studies, vol. 14 no. 2
Type: Research Article
ISSN: 1754-4408

Keywords

Article
Publication date: 1 January 2013

Desi Peneva and Rati Ram

The purpose of this research is to study the relation between “restrictiveness” of a country's trade policy and its socio‐economic well‐being as reflected in the indicators of…

2473

Abstract

Purpose

The purpose of this research is to study the relation between “restrictiveness” of a country's trade policy and its socio‐economic well‐being as reflected in the indicators of human development.

Design/methodology/approach

A recently‐developed trade‐restrictiveness‐index (TRI), which seems superior to almost all existing indexes of trade policy or “outward orientation”, is related with infant‐mortality, child‐mortality, maternal‐mortality, access to safe water, access to basic sanitation, and secondary‐school enrollment, which are well‐known and important measures of a country's human development and are closely related to several Millennium Development Goals. In addition to a consideration of the covariation between TRI and the six human‐development measures, estimates from parsimonious regression models are studied. Sensitivity checks are conducted by considering covariations and regression estimates for another trade‐policy index and different country groups.

Findings

The evidence overwhelmingly shows that, contrary to the position shared and disseminated widely, there is no indication that a more restrictive international trade policy has a significant negative association with human development or socio‐economic well‐being. Every correlation between trade restrictiveness index and human‐development measures is close to zero. Almost every regression coefficient of trade‐restrictiveness‐index lacks statistical significance at any meaningful level, and a consistent pattern is noted across two measures of trade policy and different country groups.

Social implications

The evidence suggests much caution in the articulation and dissemination of the widely‐shared view that a more restrictive trade policy is detrimental to a country's socio‐economic well‐being. In particular, it implies that international organizations and developed‐country governments may not force developing‐country governments to adopt more “outward‐oriented” trade policies, but may let them choose the trade‐policy stance they find appropriate for their country. The estimates also reinforce the view that great care be exercised by scholars in the choice of trade‐openness measures for studying the relation between trade policy and economic well‐being.

Originality/value

In the vast literature on the nexus between trade policy and economic well‐being, this is probably the only study that relates six important measures of human development with what seems to be the best available index of restrictiveness of a country's trade policy. Therefore, the research, which is based on a fairly large cross‐country sample, may be deemed as highly significant on a topic of much scientific and policy relevance.

Details

International Journal of Social Economics, vol. 40 no. 1
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 1 April 2003

Georgios I. Zekos

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some…

87002

Abstract

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

Details

Managerial Law, vol. 45 no. 1/2
Type: Research Article
ISSN: 0309-0558

Keywords

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