Top PDF Are Chinese Trade Flows Different?

Are Chinese Trade Flows Different?

Are Chinese Trade Flows Different?

We find that Chinese trade flows respond to economic activity and relative prices – as represented by a trade weighted exchange rate – but the relationships are not always precisely or robustly estimated. Chinese exports are generally well-behaved, rising with foreign GDP and decreasing as the Chinese renminbi (RMB) appreciates. However, the estimated income elasticity is sensitive to the treatment of time trends. Estimates of aggregate imports are more problematic. In many cases, Chinese aggregate imports actually rise in response to a RMB depreciation and decline with Chinese GDP. This is true even after accounting for the fact a substantial share of imports are subsequently incorporated into Chinese exports. We find that some of these counter-intuitive results are mitigated when we disaggregate the trade flows by customs type, commodity type, and the type of firm undertaking the transactions. However, for imports, we only obtain more reasonable estimates of elasticities when we allow for different import intensities for different components of aggregate demand (specifically, consumption versus investment), or when we include a relative productivity variable.
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Transparency of Chinese aid : an analysis of the published information on Chinese external financial flows

Transparency of Chinese aid : an analysis of the published information on Chinese external financial flows

Each almanac/yearbook published by China’s Ministry of Commerce reports on several different components of Chinese aid giving. These components include such categories as number of medical teams dispatched (中国派遣医疗队), number of technical assistance projects aided by China (中圈援建成套项目技街合作情况), comprehensive projects assumed/undertaken (对外承担成 套项目), and comprehensive projects completed (对外援助成套项目建成). While these reports contain much interesting data, the only category for which project-level data was available was the “comprehensive projects completed” section of each report. Thus our dataset from 1990 to 2005 (excluding 2002) contains information taken exclusively from the “comprehensive projects completed” section of each year’s almanac.
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Trade Flows in Developing Countries: What is the Role of Trade Finance?

Trade Flows in Developing Countries: What is the Role of Trade Finance?

In general, the different strands of literature entail different methodological strengths and weaknesses. The first strand of literature only measures the supply effect of financing conditions indirectly, thereby making a convincing identification of the exact effects of trade finance on trade flows difficult. Compared to the first strand of literature, the second strand  with its focus on bank-firm-relations  is more successful in doing that. On the basis of their detailed data sets, the latter type of studies succeeded in showing which specific effect trade finance conditions had on specific firms or export sectors. On the other hand, the explanatory power of these studies regarding aggregate effects with a view to international trade is relatively limited since these studies could only focus on one country (so far the United States, Italy, Columbia, Peru) due to issues of data availability The third strand is able to include a larger number of exporting and importing countries; but since the respective data sets are limited to one product of one single company, it is usually possible to assess only a small share of overall aggregate trade finance.
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Estimating Trade Finance and Financial Development on Trade flows of Albania

Estimating Trade Finance and Financial Development on Trade flows of Albania

Niepmann and Schmidt- Eisenlohr (2013) [6] show in addition that the supply shocks of individual banks regarding letters of credit do not only affect overall export growth in the United States but also have heterogeneous effects for different export destinations. They also showed that a supply shock regarding trade finance has stronger effects on the exports of smaller and more risk-prone countries and larger effects in times of general insecurity.

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The ASEAN Free Trade Agreement: Impact on Trade Flows and External Trade Barriers

The ASEAN Free Trade Agreement: Impact on Trade Flows and External Trade Barriers

This is even more important because, unlike multilateral liberalization, which most economists believe to be largely beneficial for both liberalizing countries and bystanders, preferential liberalization is controversial. The reason comes from its inherent discriminatory nature: when forming an RTA, members agree to lower trade barriers to each other but their tariffs on imports from outsiders remain unconstrained. This can induce members to substitute inefficiently produced imports from bloc members for imports previously sourced efficiently from nonmember countries. Such trade diversion harms the nonmembers through lost markets, as well as the members through reduced tariff revenue. However, like broader trade liberalization, the RTA is also likely to enhance trade of the goods that are efficiently sourced within the bloc. This trade creation will enhance welfare. These two forces suggest that preferential liberalization can in principle be either welfare-enhancing or welfare-reducing. Ultimately, the verdict must be empirical, and may be different for different trading blocs. Trade creation forces may prevail over trade diverting ones in some cases, but the reverse could be true in other cases.
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Trade Cooperation Indicators: Development of BRIC Bilateral Trade Flows**

Trade Cooperation Indicators: Development of BRIC Bilateral Trade Flows**

Comparing the results from intra-trade intensity figures and TCI tables it is evident that there is a decrease of TCI and also of ITI for the examined cross-pair Brazil- Russia. The situation in the case of Brazil-India is opposite, ITI and TCI both increased. Significant TCI growth of India-Brazil gave a substantially great potential for future trade expansion. Brazil-China ITI grew while the TCI of China (as exporter) was more or less stable and TCI of Brazil (as exporter) increased. Quite a different situation occurs for cross-pairs Russia-India and Russia-China. In both cases the changes in cross-pairs of TCI are either similar or increase but their ITI plunges. As for EU-Brazil the TCI slightly increases and for Brazil-EU TCI rapidly falls. This behavior corresponds with the downward trend of ITI. As far as the Russia-EU cross- pair similar situation occurs. The TCI of Russia-EU heavily decreases while the TCI of the EU-Russia increases. At the same time trend of ITI is slightly growing. The different situation arises for two cross-pairs EU-China and EU-India. In the first case the TCI falls but ITI increases and in the second case (EU-India) TCI growths while ITI decreases.
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The Impacts of Free Trade Agreements on Trade Flows: An Application of the Gravity Model Approach

The Impacts of Free Trade Agreements on Trade Flows: An Application of the Gravity Model Approach

To discern the impacts of FTAs on foreign trade, we undertake the analysis by using two approaches. One approach is to examine the changes in trade patterns before and after an FTA. Specifically, we measure the extent of dependency in foreign trade between and among FTA members. This approach is admittedly simplistic, but it provides useful information on the extent of trade dependency for different FTAs and its changes over time. The second approach is a more vigorous one, namely, the estimation of a gravity model to discern the impact of FTAs on bilateral trade flows, i.e. trade creation and diversion effects. The gravity model, which is built on the assumption that bilateral trade flows depend on the economic size of the two countries and the distance between them, has been used to assess the impacts of FTAs on bilateral trade flows. We extend the previous studies by enlarging the sample size both in terms of the number of countries and in terms of the time-period. We also undertake the analysis by disaggregating the trade data into five sub-sectors with a presumption that the impacts of FTAs would be different among different sectors, mainly because the removal of trade barriers under FTAs is different for different sectors. Specifically, agricultural products are prone to be excluded from the free trade list. Furthermore, we examine explicitly the impacts of trade-diversion of FTAs by taking account of trade between FTA members and non-members.
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Gestimate Of Value Added And Gross Trade Flows

Gestimate Of Value Added And Gross Trade Flows

The availability of global input-output tables has sparked a growing literature on global value chains and has rendered it possible to compute the value added content of trade (Dietzenbacher et al., 2013; Johnson and Noguera, 2012; Koopman et al., 2014). Value added trade between two countries describes in which country the particular parts of a good consumed in one country are produced. Value added trade flows can differ from gross trade flows due to trade in intermediate goods which are used as inputs to produce final goods. This is because an intermediate good, such as a subcomponent of a car engine, might cross several international borders until the final good, in this case the car, is purchased by a client abroad. Intermediate goods trade also leads to considerable discrepancies between bilateral value added and gross trade balances, which are a sensitive topic in the economic policy debate. For example, Johnson and Noguera (2012) find that in 2004 the trade deficit of the US with Japan was approximately 33% larger when measured on a value added basis, whereas the US trade deficit with China was approximately 30- 40% smaller. Value added measures of bilateral trade arguably better reflect which countries benefit from trade in terms of income and employment (Foster-McGregor and Stehrer, 2013; Timmer et al., 2013). In contrast, measures of bilateral trade flows based on gross concepts can lead to misjudging the influence of domestic demand and relative price adjustments on bilateral trade balances (Bems and Johnson, 2012). Despite the importance of bilateral trade balances in policy debates, the proximate factors that explain why value added and gross trade balance are different have so far not been investigated. Therefore, in this article we first identify to what extent gross and value added concepts overlap, which is a conceptual contribution to the trade in value added literature in general. Second, we describe the factors that account for the differences
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The Impact of FOCAC on African countries Trade Flows

The Impact of FOCAC on African countries Trade Flows

Our contribution is mainly in two parts. Firstly, the increasing importance of FOCAC is remarkable from both Africa and China side. However, empirical research on the impact of the partnership especially on African countries is lacking. As such, we aim to bridge this gap. Secondly, more than ever before, policy makers are questioning whether indeed trade partnerships offer trade benefits calling for more robust empirical research. This is because studies have produced mixed results. All these have happened because of the different methodologies and samples used. As such, we seek to make a contribution by estimating a theoretically correct study which is robust as well. The remainder is as follows: section 2 presents the literature review; section 3 is about the research methodology; sections 4 discusses results from our main estimation techniques and robustness results; and 5 provides a conclusion.
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Determinants of AFTA Members’ Trade Flows and Potential for Trade Diversion

Determinants of AFTA Members’ Trade Flows and Potential for Trade Diversion

The dummy ‘ASEAN’ is also included to capture the effect of the cultural affinities between ASEAN countries. Cultural affinities may affect how the ASEAN countries trade that could lead to an increase their bilateral exports despites common factor endowment that could respectively lead to a decrease in the bilateral trade for some members. The result shows that ASEAN variable is positive and significant affecting the bilateral trade for ASEAN member at 1 % level of significance. Aside the cultural affinities, there is a prospect of intra-regional exports supported by the empirical result as ASEAN variable, which included to capture country group effects, shows a positive and significant effect at 1% level of significance. Eliliot and Ikemoto (2004) also find that country-group dummy for ASEAN is positive, implying that countries located within the regions do trade more with each other and even above the levels predicted by basic explanatory variables 11 . The result of positive and significant effect was different from a number of previous studies such as Sarma and Chua (2000) and Soloaga and Winters (2001), who both observe a negative relationship, albeit for a different estimating equation and country coverage, but similar to Frankel and Endoh (2000) who recorded also positive and significant coefficients. One possible explanation is that it took a regional economic shock of the form of the Asian currency crisis to trigger the latent forces of ASEAN regional integration that could not be stimulated by mere political rhetoric.
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Chinese Capital Flows and Capital Account Liberalisation

Chinese Capital Flows and Capital Account Liberalisation

It appears that the Chinese authorities are likely to continue using different schemes to gradually open up portfolio flows, rather than immediately offering direct access to its financial markets. For example, the authorities have been developing an extension to the QDII program (known as QDII2) that will reportedly allow individual investors with at least CNY1 million in financial assets to directly purchase a broad range of overseas financial assets (up to 50 per cent of their net assets’ worth). The government recently announced that it is considering launching a QDII2 pilot in the Shanghai FTZ. Other potential reforms include giving firms in the Shanghai FTZ greater access to domestic financial markets and a supplementary Stock Connect scheme between Shenzhen and Hong Kong.
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Capital Flows, Trade and the Role of the Financial System

Capital Flows, Trade and the Role of the Financial System

This paper also contributes to the literature on trade and capital account se- quencing. Chinn and Ito [17] examined the issue of sequencing by investigating whether opening trade was a pre-condition for financial liberalisation. Using the Chinn-Ito capital account index as the dependent variable they examined the impact of trade openness on current capital account openness. They obtained a positive relationship between financial openness and trade openness. This means that openness in goods transactions is a precondition for financial openness. Again, they identified that the capital account index does clearly distinguish be- tween financial capital and FDI. The role of financial developments in this rela- tionship was not considered which we do in our paper. As an additional contri- bution in the above study, Aizenman and Noy [16] also investigated the rela- tionship between trade and capital at a much disaggregated level. They focus on capital flows in the form of FDI and studied how these disaggregated trade in- fluenced the level of FDI. They obtained a significantly positive relationship for developing and developed countries in the case of total trade, goods and income but no significant relationship in the case of services. Once again, we add to this study by looking at the role of financial development in this relationship directly and investigate capital flows under the different types of capital flow. This over- comes the concerns raised by Chinn and Ito [17] as we separate financial capital from FDI in our study.
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Trade reform and trade flows in South Africa: a product level analysis

Trade reform and trade flows in South Africa: a product level analysis

Analysing the impacts of tariff liberalisation, focusing on import trade margins and tracking different products is important for the South African economy. South Africa’s tariff liberalisation has not been uniform across countries and products. For example, some countries with trade agreements with South Africa, such as the countries of the South African Development Community (SADC), the European Union (EU) and the European Free Trade Association (EFTA) face preferential tariffs, while other countries face Most Favoured Nation (MFN) rates 12 . In the pre-trade agreements era (pre-2001), South Africa used MFN Principles as dictated by the World Trade Organization (WTO) tariff decrease. On a much broader note, South Africa’s average tariff was approximately 23% in the early 1990s and by 2010 it stood at 8.2% (Department of industry and Trade, 2010). Furthermore, tariffs vary across products, giving differential effects across products and hence economy-wide differential effects. For example, in theory, more variety in consumer goods is associated with an increase in welfare effects (Brander & Krugman, 1983), while more intermediate inputs may aid production and improve product quality (Amiti & Konings, 2007), more capital goods may enhance the country’s technology and change the country’s production (Frensch & Gaucaite Wittich, 2009). Further, more manufacturing varieties may also enhance domestic competition and hence force firms to innovate and produce high-quality products (Fernandes & Paunov, 2013). On the flip side, if there are excessive imports, this may force domestic firms to close business. For example, Bernard, Redding and Schott (2011) established that excessive imports can push out of business low productivity firms and hence leading to an increase in overall productivity in the economy (see also Melitz, 2003).
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External Balances, Trade Flows and Financial Conditions

External Balances, Trade Flows and Financial Conditions

Three aspects of this reverse engineering procedure deserve comment. First, equation (18) doesn’t necessarily identify a unique SDF that satisfies the no-arbitrage conditions for a set of returns. In- deed, we know as a matter of theory that many SDF exist when markets are incomplete. Rather the specification in (18) identifies one specification for the SDF that satisfies the no-arbitrage condi- tions. Second, this reverse engineering approach makes no attempt to relate the SDF to underlying macro factors. This complex task is unnecessary if our aim is simply to identify how prospective future financial conditions affect external positions. The third aspect concerns the use of instru- mental variables to control for conditioning information. In principle the conditional expectations of market participants that appear in the no-arbitrage conditions equal expectations conditioned on every instrumental variable in their information set. In practice, there is a limit to the number of instruments we can incorporate into the log SDF specification. I chose instruments that have forecasting power for log excess portfolio returns and I examine the robustness of my results to alternative specifications for the log SDF based on different instrument choices.
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Expanding RTAs, Trade Flows, and the Multinational Enterprise

Expanding RTAs, Trade Flows, and the Multinational Enterprise

The estimated αs of the random effects model of equation (2) appear to be in line with those reported in the literature. The per capita income variable has the predicted sign, in contrast to the fixed model. The size of the elasticity of bilateral imports with respect to income is less than one; the elasticity with respect to distance is numerically larger than one and confirms to be a powerful force in the gravity equation; geographical proximity and cultural affinity variables enhance trade. Countries that share a common currency do not trade any more than those that have different currencies (the coefficient of common currency is not different from zero at the 10 per cent significance level). This result may be surprising given that Rose (2000) has reported that countries with a common currency trade three times as much as countries with different currencies (and fluctuating exchange rates). However, Rose’s (2000) finding has been met with skepticism from the start; see the comments to Rose by Persson (2001). From the viewpoint of this paper, the serious problem with Rose’s GE equation is the omission of multilateral trade factors. Baldwin and Taglioni (2006) focus on Rose’s finding to demonstrate the distortion that such an omission can create. To check on this point, when we estimated (2) with fixed
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National income distributions and international trade flows

National income distributions and international trade flows

Although the ambiguity in the results so far is relatively unsatisfactory, it does prove the relevance of incorporating nonhomotheticity in preferences in the dynamic analysis of global trade. As observed by Linder (1961) in his classic study, once the difference in expenditure decisions between rich and poor consumers is acknowledged, we conclude that the trade pattern between industrialized and developing regions is determined not only by factor endowment and cross-regional income differentials, as in the Hecksher-Olin-Samuelson and intra-industry trade models, but also by the income distribution within each region. The incorporation of Engel's Law into the preference structure has dramatic implications regarding the importance of income distribution within regions over both the technology diffusion and trade patterns. This feature introduces an aggregate demand channel which raises the possibility of multiple steady states as well as different converging paths even under \QTR{it}{common initial conditions}. As discussed in Section 4, stability of the integrated economy generically implies the existence of multiple equilibria. The latter tend to be Pareto rankable. Equilibria exhibiting high growth in the developing region also display high wages. In spite of the higher production costs entailed by high wages, higher growth is sustainable in view of the demand expansion associated with higher income as well as the ensuing rise in labor supply. The prosperous region should also benefit in view of a higher volume of trade which translates into higher growth.
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Trade flows and the exchange rate in South Africa

Trade flows and the exchange rate in South Africa

Furthermore, different sectors are not uniformly affected by exchange rate movements. In resource abundant economies, such as South Africa, a commodity price boom can lead to a Dutch disease effect where non-commodity exports decline while commodity exports rise (Bell et al., 1999). International evidence on developing countries, including Africa, also indicates that the level, variability and misalignment of the real exchange rate strongly influence non-commodity and non-traditional export performance (Elbadawi, 2005). A real depreciation may therefore facilitate diversification, although the ability to do so may be constraine d by a country‟s natural resource endowment (Wood and Mayer, 2001).
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GlobalGAP Certification and International Trade Flows

GlobalGAP Certification and International Trade Flows

Certification schemes such as ISO, British Retailers Consortium and GlobalGAP are seen as organizational innovations 2 . Over the past decades, there have been studies on the diffusion of innovation (e.g. Ryan and Gross, 1943; Fisher and Pry, 1971). There is a wide range of recent literature mostly focusing on ISO standards. Some studies analyze different factors that affect the adopters’ motivations (e.g. Bansal and Hunter, 2003; Boiral, 2007; Gavronski et al., 2008; Prajogo et al., 2012). The perceived benefits from the adoption of a standard are a major factor of motivation. There are several studies which prove potential benefits associated with the adoption of a standard. These benefits include reduction in the consumption of resources and improved competency (Bansal and Bogner, 2002; Melnyk et al., 2002). Other studies (e.g. Terziovski et al., 2003; Casadesús and Karapetrovic, 2005) indicate that standardization helps improving operational performance and results in greater customer satisfaction. There are a number of studies that analyze global diffusion of ISO standards (Corbett and Kirsch, 2001; Viadiu et al., 2006; Albuquerque et al., 2007; Nishitani, 2010; Corbett and Kirsch, 2001) and establish a positive relationship between ISO 14001 certification and export propensity and environmental attitudes. Potoski and Prakash (2004) find that there is a direct relationship between the level of macroeconomic development of a country and the intensity of ISO certification. Neumayer and
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Exchange Rate Volatility and Trade Flows

Exchange Rate Volatility and Trade Flows

Baak (2008) examines the impacts of the real exchange rates between the renminbi and the US dollar on the trade between the two countries. The impacts of the real bilateral exchange rate on the Chinese exports to the US and on the US exports to China were measured by estimating cointegrating vectors and error correction models. The impact of other variables, such as the exchange rate of a competing country, the real gross domestic product (GDP) of the importing country, the volatility of the exchange rate between the renminbi and the dollar, were also measured by including them as explanatory variables along with the exchange rate between the renminbi and the dollar in the export functions. The results show that volatility of exchange rates turned out to negatively influence the Chinese exports to the US, but not to have any influences on the US exports to China. The coefficient values of the real GDP’s were estimated to be positive and bigger than the coefficient values of the exchange rates, implying income elasticity is higher than price elasticity in the export functions.
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The evolution of agricultural trade flows

The evolution of agricultural trade flows

Aksoy (2004), in a summary paper on trade flows, concluded that while there has been tremendous change in the past 20 years in global specialization and trade in manufacturing, there has been relatively little structural change in global agricultural trade flows. His data started in 1980 and ended in 2001. Since then, world trade has expanded at a faster rate, and the period around the year 2001 was a period of declining agricultural prices. For most agricultural commodities, 2002 is the bottom of the price cycle. The late 2000s, on the other hand, have seen very different developments. Towards the end of this period there was a major agricultural price spike, shortage of commodities, and reevaluation of the basic hypotheses about agricultural surpluses (World Bank, 2008). New developments such as such using grains for bio-fuels, export controls, and greater demand by China and other developing countries for meats, grains etc, have led to agricultural, and especially food prices increasing very rapidly.
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