In this situation, Ukraine can choose between the two alternative regional economic blocks for its full integration -- either the European Union or the Single Economic Area. At that, Ukraine has to take into consideration not the ill-founded political arguments, not the Ukraine's unnatural tendency to economic growth based on the inefficient economic model and undeniably short-lived in nature, but the model of economic development that would objectively be capable of ensuring higher welfare of the nations in the modern world economy. In view of all the aforementioned theoretical postulates and empirical findings, we can conclude that Ukraine, as a country in transition, should commit itself to formation of the model of economic development based on the New Trade Theory postulates. This model will better exert itself if Ukraine intensifies its integration processes within the European economic area. At the same time, we should keep in mind that, while elaborating such a far-reaching economic development model, Ukraine must use its potential immediately and most efficiently within the scope of Traditional Trade Theory, realizing the principle of comparative advantage in its production and trade relations with the EU countries.
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This paper develops a demand function for Greece’s exports of manufactures according to New Trade Theory. The sample covers a rather long period of four decades with exports aggregated based on industrial rather than on trade classification. The study contributes to a better understanding of the effects of export prices, domestic and competitors’, as well as of non-price competitiveness approximated with capital stock, on export performance. The empirical estimation uses the Johansen maximum likelihood approach in the long run and a dynamic error-correction equation in the short run. The estimated long-run and short-run relationships follow the economic theory and are remarkably stable. It is shown that non-price competitiveness plays a vital role in explaining export performance in the long run as well as in the short run and that failure to include it in the export equation may lead to mis-specification error. As opposed to conventional models of export demand where income effects are very high, in the present study foreign income has a moderately high effect on exports in the long run and no effect in the short run. Exports are also sensitive to domestic and competitors’ prices in the long run, but cost and price competitiveness elasticities are close to one, indicating that Greek exporters have some ability to compete on the basis of prices.
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We conclude that the new theory enriches the theory of international trade because it analyses the role of additional causes of trade, but at the cost of increasing the number of factors responsible for the indeterminacy of the pattern of trade. From this perspective the assessment of progress in the new trade theory cannot be separated from the assessment of OhlinÕs research programme that recommends extending the theory of international trade along the WalrasÐCassel guidelines and to including also the institutional factor; and in turn the assessment of the OhlinÐSamuelson research programme, as Blaug (1992) has already pointed out, cannot be separated from the assessment of the modern general equilibrium programme. Then, if explanation of trade means prediction of the pattern of trade, progress by the new trade theory is very limited indeed. The new theory shares the lack of predictive content of the general equilibrium theory for an integrated economy, in which the existence of multiple equilibria and path dependency becomes the rule, in so far as it imposes no testable restrictions on the pattern of exchange and specialization among many agents. ÔAlmost anything might happen as regards the pattern of international tradeÕ is the motto that can be written at the end of the above quotation from Krugman.
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New Trade Theory mentioned that the abilities of firms to obtain economies of scale will have important implication for international trade (Hill, 2013). The term “economies of scale” is referred to the unit cost reduction with a large scale of production. This theory says that firm who able to gain economies of scale can increase the variety of goods manufactured to consumers by reducing the average cost. It also represents the significant proportion of total world demand. For example, China economy is soon overtaking the US to become the world’s largest. The country already became the world’s largest manufacturing base and also world’s largest consumer of energy with the growing demand of 5.6% per annum (Lockie, 2014).
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I used a GAMS model to solve for the set of all (pure strategy) Nash equilibria at five different values of G. This is also a quick numerical check that there are no mistakes in the construction of Figure 3.1. The equilibria that emerged were as predicted by Figure 3.1. The values of G and the resulting equilibria are shown in Table 3.1. It is particularly interesting and important for policy to note the large difference between the two countries’ welfare levels in the asymmetric equilibria. G = 14 is in region A of Figure 3.1. Country i enjoys a much higher welfare level at (2,0) than at (1,1) which is in turn much higher than in (0,2). Blockading entry has a very beneficial effect and being blockaded a very detrimental effect. A higher value of G = 18 creates an even worse outcome for country i in (0,1), since it now pays the transport cost on X in addition to the high monopoly price. I will make additional comments about the implications of this for strategic trade policy in the next section.
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Firms can acquire technology via licensing contracts from abroad. Licensing includes buying the product and property right for one commodity and goods and the required technical information and knowledge for its production (see Markusen, 1995; Dunning, 1993). Patent grant of technology, allows countries to access the developed technology, quickly and cheaply. Importing Technology is relatively easier than developing a new one, because developing a new technology, requires technological mastery while its importing doesn’t need it. (Westphal, 1982). Lall (2000) is of the view that that the imported technology provides the most important primary input for the technological learning in developing countries. Therefore according to him, imported technology is crucial for technological progress. Patent grant can benefit the concessionaire and also other firms in the country. Westphal (1982) has shown that mastery in one technology causes the increase of the productivity but most of its effects spill over to the related activities. However; most technologies are not accessible through licensing. The important reason of firms which acquire their most technology through other methods is that they want to overcome the problems of writing and implementing the patent grant.
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to reap the benefits of economies of scale. Zissimos (2011) develops a similar theory of endogenous formation of regional PTAs in an oligopolistic model of trade based on Brander and Spencer (1984) and Yi (1996). In his framework, transport costs may be used to coordinate on a unique equilibrium in which trade agreements are regional. The absence of transport costs give rise to a coordination failure where any one of many possible trade agreements can form. Unlike the present paper, how- ever, Zissimos (2011) does not consider the variety component. Papers that are also closely related to the present one include Collie (1993) and Saggi (2006). In the first paper, the sustainability of trade agreements is analysed in the presence of trade costs. It is shown that free trade can be sustained if countries are sufficiently similar and sufficiently patient. No explicit distinction, however, is made between political and natural trade costs, a distinction which is central to the model presented in this paper. The second paper studies the sustainability of trade agreements in the presence of asymmetric production costs, but unlike the present paper, no distinction is made between production costs and trade costs.
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The scientific discoveries in Europe helped the development of mercantilism in many ways. Rapid increase in production and availability of surplus product for trading purpose was the most important benefit of scientific discoveries, use of machines, and changes in production techniques. 'A surplus of exports from a country was necessary if payments were to be received in hard money' (Oser and Blanchfield, 1975, p. 9). Appleby reports: 'By the beginning of the seventeenth century, however, a significant number of landlords and husbandmen had begun changing their ways of farming, greatly enhancing England's agricultural productivity (Appleby, 1978, p. 54). 'The well- established European market in foodstuffs had created an incentive for the adoption of new techniques. The encoding, ditching, draining, irrigating, rotating, and planting of new crops, which contemporaries lumped together as 'improvements' (ibid. p. 55). Such improvements are not reported in Ottoman economy. It is said that Muslim countries lacked surplus production to carry a large scale foreign trade (Cahen, 1970, p. 35). Surprisingly, sometimes they discouraged surplus produce. Here is an example. In Aleppo, during the late seventeenth century increased production of atlas cloth led to a fall in imports from Europe. Instead of being pleased as any European mercantilist would have been, the Ottoman officials were alarmed. This is because the fall in the imports meant a reduction in import duties. To make up for the loss of revenue, these officials imposed an internal tariff of 3% to 5% on all such cloth produced in the city. In short, the local industries were punished for increasing their production and causing a fall in the imports (Masters, 1988: 198, cited by Çizakça, 2000, p. 17). According to Çizakça, ‘these differing attitudes towards craft production, constitutes one of the sharpest contrasts between European mercantilism and the Ottoman doctrine. As it is well known, European governments directly encouraged and protected their infant industries by imposing high tariffs on imports. In this way, the Ottoman and Indian clothes were subjected to high customs duties and thus their competitiveness was hindered in the English and Dutch markets, while the nascent industries of London and Leiden were given a boost. By contrast, the Ottoman state did not hesitate to punish its own producers, with fiscalist considerations, because they were (successfully) reducing the imports’ (Çizakça, 2000, pp. 17-18).
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The second group is opponents of free trade and is divided into two categories: 1) Friedrich List, the founder of the German historical school and his followers do not deny the system of free trade in general, but seeking appropriate circumstances to employing it such as: in the case of same monopoly and economy power of involved countries. They believe that in the conditions other than this, trade causes to destroy domestic industries. 2) Economists such as Singer consider free trade to developing countries and they recommend these countries should devote a period to implement the business strategy to minimize negative effects of trade on their development (Jalaei et al., 2008).
A few days prior to sailing, two incidents occurred that I suggest indicate that the Islanders’ desire for firearms was still strong some eight years after the ban. All of the trade boxes on Foam were inspected and two rifles and 23 lbs (10.4 kg) of shot were discovered in one of the trade boxes. It had been fitted with a false bottom to conceal the firearms. These items were confiscated and the Foam was cleared to depart (Corris 1973; Maryborough Chronicle 1892k; Matthews 1995). This clearly illustrates the lengths that some Islanders were prepared to go to obtain firearms. The second incident supports the earlier assertion that some Islanders were not purchasing large quantities of goods but returning to their islands with European money to purchase firearms. When one of the returns suddenly died on board, his trade box was examined and found only to contain: eight new large knives, 18 pieces of wire, a few yards of red tape and a quantity of dress material (Maryborough Chronicle 1892i). The minimal quantity of goods in the box is at odds with the quantity and type of goods reported as purchased by the returns in chapter three, especially as the Maryborough Chronicle (1892k) reported that the 102 returns on the Foam were departing with over £500 worth of goods in their trade boxes. An exchange on Tanna Island during the next voyage of the Foam clearly indicates that Islanders were purchasing ammunition with European currency.
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Table 5.11 provides average Grubel-Lloyd indices of intermediates trade for each country after these are divided into horizontal and vertical trade according to the method described in section 4.1.3. Notice that the level of total IIT reported in Table 5.11 is slightly different from that in Table 5.10. The reason is that some trade flows at the 6- digit level of HS intermediate products are omitted because of the lack of quantity information. At the more aggregated level, vertical IIT in intermediates is consistently higher than horizontal IIT for both types of country groups and all individual countries. Table 5.11 also illustrates the difference between the country groups. Average shares of total, vertical, and horizontal IIT in intermediate goods for the core countries are higher than for the periphery countries although the relative significance of VIIT in the periphery countries’ total IIT is slightly higher than that for the core countries. The only exception to this conclusion is Mexico. These results are consistent with the predictions of the two models presented in previous sections: the share of horizontal IIT will be greater when trading partners are similar in terms of economic development, incomes, market sizes, and tastes and cultures while the share of vertical IIT will be higher when trading partners have significant differences in capital/labor stocks, human capital stocks, market sizes, and etc.
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This study tests whether the static trade off theory can explain the capital structure of German firms. As the static trade off theory along with the pecking order theory are currently the leading, and competing, models in finance literature (Fama & French, 2002). This study researches the static trade off theory, this theory states that firms will balance their capital structure on the basis of the benefits of debt which is: the tax shield from interest payments (Myers, 1984). And the cost of debt which consists of: bankruptcy costs (Myers, 1984). The opposing capital structure theory is the pecking order theory, which states that due to adverse selection managers will choose the financing policy with the least amount of risk, thus favouring internal financing over external financing (Myers, 1984). Complementary to both the static trade off- and the pecking order-theory, the agency theory is often used to explain deviations from the main theory. In accordance with recent literature on the subject, the current research will also include both static trade off theory and agency theory. Agency theory predicts differences in the goals of shareholders and bondholders, in defining these differences three forms of agency costs a distinction between three forms of agency costs are made: risk shifting, the underinvestment problem and the free cash flow hypothesis.
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veloped economy. The countries of the central and Eastern Europe, CIS (Commonwealth of the Independent States), the developing countries of Asia (27), Latin America and Caribbean (32), the Near East and North Africa (20) and the states of Africa to the south of the Sahara (45) (IMF, 2012) are included in this list. On the share of the limited number of the states is coming the richest part of natural and hu- man resources. At this stage, in the foreign trade of those states, the portion of the intermediate production reaches 50-60%, and imported component in the export goods in- creased from 20% into the 1970, to 40% at present (WTO, 2013). It is gradually increasing the number of those eco- nomically developing states, where it is fixed the growth of the share of the final product in the export structure (it has increased almost for the three times: with 10% in 1980 to 28% at present). About third of world export of middle- and of high-tech goods, computer technologies etc. is coming to the companies of this group of the countries (International Trade, 2017).
The essays in John LinarelliÕs Research Handbook on Global Justice and International Economic Law range across these three areas. Only one is concerned primarily with the first, economic, challenge (Maneschi, ÔInternational trade theory and comparative advantageÕ). Five address, to varying degrees, the second challenge, of elaborating and defending theoretical approaches tailored to critiquing IEL (Brock, ÔTheories of global justiceÕ; Petersmann, ÔHuman rights and international economic law in the 21 st centuryÕ; Garcia and Ciko, ÔTheories of justice and international economic lawÕ; Chimni, ÔCritical theory and international economic law: a theird world approach to international law (TWAIL) perspectiveÕ; and Linarelli, ÔLaw rights and developmentÕ). The remaining five fall under the third heading, building bridges between theory and practice (Lim, ÔRegional trade agreements and the poverty agendaÕ; Clements ÔMultilateral development banks and the International Monetary FundÕ; Lundan, ÔHuman rights issues in multinational value chainsÕ; Correa. ÔIntellectual property rights and international economic governanceÕ; He and Murphy, ÔGlobal social justice at the WTO? The role of NGOs in constructing global social contractsÕ).
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Introduction Working Capital Level (WCL) denotes the financial amount injected to Working Capital (WC) that a firm may choose to operate with. Large amounts of Current Assets (CA) can cause a firm to realize low returns on the venture made if not well managed. Nevertheless, units with very low current assets may suffer inadequacies and challenges in upholding fair operations (Van - Horne & Wachowicz, 2000). It is therefore important that financial managers focus their attention to determining an optimal level, which maximizes return on investment without putting the firm to a high liquidity risk. The management of the WCL is a tool used to safeguard firms against financial disruptions and when managed purposefully can enhance a firm’s competitive position and profitability (Gill, 2011). Management of working capital level is very crucial in determining firm performance since it has an effect on the liquidity and profitability levels (Vahid, Mohsen & Mohammadreza, 2012). Working capital level may be grounded by the Baumol Theory, the Net Trade Cycle Theory, Agency Theory and Resource – Based Theory.
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The results for profitability, risk, growth opportunities and tangibility are mostly the same. However, size has a weak negative relationship with the short-term debt, irrespective of the company type. This results support the argument made by Titman and Wessels (1988), that smaller firms are more levered than large firms. They prefer to use short-term leverage, due to the higher cost of issuing equity for small firms (Smith, 1977) and lower fixed cost associated with this source of funds. From Table 3 it can be observed, that there is a significant difference in the influences of size on debt of listed and unlisted firms. Short-term debt of private firms is less sensitive to size. This result is likely to occur due to the higher cost of issuing external capital faced by the unlisted companies (Brav, 2009) and as was previously discussed lower sensitivity of unlisted firms to factors commonly associated with the Trade-off Theory, such as size and tangibility.
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As far as intra-industry specialization and exchange is concerned, it is solely a matter of more efficient deployment of resources within the South, and it should raise productivity and not direct resources. This is a form of trade creation. If countries in the South specialized on particular differentiated variety of final products and then exchanged them each country should be able to use its resources more efficiently, raising output without resource diversions. As the South moves into `manufactured exports, as we will see in the subsequent chapters, the need for analyzing this kind of specialization and gains from exchange is looming large. The most general conclusion, following Stewart, is that while the theories explain N-N trade, S-S trade offer a potential way for the South to gain from the trade in products for countries with identical demand structure, in differentiated products and in intermediate goods. All of the models discussed in Section II postulate an equivalence between scale economy and IIT in the sense that for individual product varieties within an industry (e.g., car) having a common technology there are scale economies (internal to the firm), giving rise to IIT or `non-comparative' advantage trade. This equivalence does not necessarily hold for the LDC because for small open economies the realization of it requires inter-industry trade. It is due to the fact that scale economies apply to large product lines and also a single scale efficient plant often exceeds the domestic market size of many LDCs. To take advantage, many industrial complexes will concentrate in a single country giving rise to IIT and specialization. Since the domestic markets for the South are so small that the range of goods for which minimum efficient scale of production is large enough compared to home markets is much broader than a fully integrated plant at efficient scale.
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North American transportation systems and logistics are becoming both global and continental with goods moving across internal borders and around the world. Further integration and harmonisation of continental transportation will require major changes to the policy and regulatory frameworks facing all modes across the continent. Development of transportation capacity to serve global trade will involve substantial public and private infrastructure commitments. If the Gateway and Corridor strategy is to succeed, it will take more than simply investing in infrastructure at ports, airports and roads. In our view the gateway and corridor strategy should not simply be about facilitating transshipment in moving goods through the region, it should also be about creating value added services and the development of a significant logistics industry that among other things reduces the cost of the border to shippers. The strategy must work to harmonize the large number of federal, state, provincial and municipal jurisdictions in three countries to simplify the regulatory logistics of movement.
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Since the early 1990s, the countries of central and eastern Europe have approached reform and greater openness to international trade with varying degrees of commitment. To date the results have revealed a degree of unevenness in progress towards convergence to Western levels of income and development. Ukraine and Slovakia are examples of such variance. Economic theory indicates that the dissimilar outcomes will be accompanied by distinctions in the pattern of trade that reflect underlying demand and supply side conditions. To verify this assumption, the study decomposed trade activity in Ukraine and Slovakia relative to the flows to subgroups of EU and CIS member states. Regional indexes of intra-industry trade were constructed and compared with theoretical predictions on market characteristics and institutional development.
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The DDA is especially complex, not only because 153 countries must reach a consensus, but also because there are so many trade-related issues under discussion. Countries discuss not only tariff reductions on manufactured goods but also changes in agricultural support programs, regulations affecting services trade, intellectual property rights policy and enforcement, and procedures involving trade remedy laws, to name just a few. Reaching an agreement that every country is happy about across all these issues may be more than the system can handle. We’ll have to wait to see whether the Doha Round ever finishes to know if it is possible. Even then, there is some chance an agreement that is achievable may be so watered down that it doesn’t result in much trade liberalization.
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