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922. The Impact of Foreign Direct Investment on Developing Countries' Terms of Trade
- Author:
- Konstantin M. Wacker
- Publication Date:
- 01-2011
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- This paper first shows that important economic arguments in favor of the Prebisch- Singer hypothesis of falling terms of trade of developing countries have implicitly relied on the role of multinational corporations and foreign direct investment. As of yet, the relationship between the latter and terms of trade has not been empirically investigated. In order to start closing this gap in research, data on 111 developing countries between 1980 and 2008 is analyzed using panel data methods. The empirical results suggest that there is no reason to believe multinationals' activities were responsible for a possible decrease of the developing countries' net barter terms of trade. On the contrary, foreign direct investment seems to play a positive role for developing countries' terms of trade.
- Topic:
- Development, Economics, International Trade and Finance, and Foreign Direct Investment
923. Growth and Recovery in a Time of Default: Lessons from the Role of the Urban Sector in Argentina
- Author:
- Michael Cohen
- Publication Date:
- 03-2011
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- International narratives on Argentina's recovery from the crisis of 2001-02 tend to emphasize the role of rising commodity prices and growing demand from China. Argentina is said to have been 'lucky', saved by global demand for its agricultural exports. The international narrative has also been used by local agricultural exporters to justify their objections against higher export taxes during periods of high commodity prices. These narratives are not correct. Data on the country's recovery show that it was not led by agricultural exports but was fuelled by urban demand and production. When the Convertibility period ended and the peso was devalued in 2002, price increases for imports stimulated the production of domestic goods and services for consumers. This production in turn generated multiplier effects which supported small and medium-sized firms and helped to create many new jobs. This later produced a revival of the construction and then the manufacturing sectors as well.
- Topic:
- Agriculture, Economics, International Trade and Finance, Markets, and Financial Crisis
- Political Geography:
- China, Argentina, and Latin America
924. Exchange Rate Regimes and Trade: Is Africa Different?
- Author:
- Mahvash Saeed Qureshi and Charalambos G. Tsangarides
- Publication Date:
- 03-2011
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- This paper revisits the link between exchange rate regimes and trade in the context of Africa's exchange rate arrangements. Applying an augmented gravity model that includes measures of currency unions and pegged regimes, the paper compares Africa's experience with that of the world. Our results suggest that both currency unions and direct pegs promote bilateral trade in Africa vis-à-vis more flexible exchange rate regimes,and that their effect is almost double for the region than that for an average country in the world sample. Further, we find evidence that the effect of conventional pegs is at least as large as that of currency unions in Africa, and that the benefits of fixed exchange rate regimes stem through channels in addition to reduced exchange rate volatility.
- Topic:
- Economics, International Trade and Finance, Bilateral Relations, and Monetary Policy
- Political Geography:
- Africa
925. Globalization Crises, Trade, and Development in Vietnam
- Author:
- Philip Abbott and Finn Tarp
- Publication Date:
- 03-2011
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- Vietnam has been among the most successful East Asian economies, especially in weathering the external shocks of recent globalization crises—the 1997-98 Asian financial crisis and the 2008-09 great recession, financial crisis and collapse of global trade. Its success contradicts its characterization as an example of export-led growth and highlights the role of the state, particularly in maintaining and influencing investment. Examination of economic performance and policy responses shows rising dependence on foreign finance around each crisis, and actions by the government to counteract that dependence and bolster the domestic economy while continuing to restructure the economy toward greater emphasis on the private sector. Growth, employment and poverty alleviation have been maintained at the expense of renewed inflation, larger budget deficits, and currency depreciation. The 'stop-go' nature of present …
- Topic:
- Development, Economics, Globalization, and International Trade and Finance
- Political Geography:
- Asia
926. Future Perspectives of U.S.-Czech Relations
- Author:
- Ondřej Ditrych and Nik Hynek
- Publication Date:
- 03-2011
- Content Type:
- Policy Brief
- Institution:
- Institute of International Relations Prague
- Abstract:
- In the area of security, the Czech Republic and the U.S. should build closer cooperation around President Obama's Prague Agenda, NATO Ballistic Missile Defence project and in the field of post-conflict reconstruction while working together to mitigate obstacles to constructive NATO-EU relations. In economic relations, they should enhance cooperation taking full advantage of the Strategic Dialogue framework both in terms of discussing global and transatlantic trade issues, and in boosting bilateral commerce. Regarding values, they should cooperate more on democratic transition in Eastern Europe, including through the framework of Eastern Partnership in which the U.S. should become involved.
- Topic:
- Security, Economics, International Trade and Finance, and Bilateral Relations
- Political Geography:
- United States and Europe
927. China in the Pacific: the new banker in town
- Author:
- Fergus Hanson and Mary Fifita
- Publication Date:
- 04-2011
- Content Type:
- Policy Brief
- Institution:
- Lowy Institute for International Policy
- Abstract:
- What is the problem? China is now one of the Pacific\'s major donors. An analysis of its aid program in the region from 2005 to 2009 suggests it is reducing the grant component of its aid and increasing the soft loan proportion. China has pledged over $US 600 million to the Pacific since 2005 and debt burdening will become increasingly pressing as Chinese loans accumulate and the five-year grace periods expire. There appears to have been limited progress improving transparency.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- China, Asia, and Australia/Pacific
928. A New Framework for Euro-Med Cooperation on Micro, Small and Medium-Sized Enterprise Support: The Role of the Union for the Mediterranean
- Author:
- Rym Ayadi and Antonio Fanelli
- Publication Date:
- 05-2011
- Content Type:
- Policy Brief
- Institution:
- Centre for European Security Studies
- Abstract:
- Micro, small and medium-sized enterprises (MSMEs) are the driving force behind economic development in the Mediterranean. They perform an essential role as providers of employment and innovation opportunities and act as key players for regional and local development and social cohesion.
- Topic:
- Industrial Policy, International Trade and Finance, and Regional Cooperation
- Political Geography:
- Europe
929. Capital Controls: Myth and Reality-A Portfolio Balance Approach
- Author:
- Carmen M. Reinhart, Nicolas E. Magud, and Kenneth S. Rogoff
- Publication Date:
- 03-2011
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- The literature on capital controls has (at least) four very serious apples-to-oranges problems: (i) There is no unified theoretical framework to analyze the macroeconomic consequences of controls; (ii) there is significant heterogeneity across countries and time in the control measures implemented; (iii) there are multiple definitions of what constitutes a "success" and (iv) the empirical studies lack a common methodology-furthermore these are significantly "overweighted" by a couple of country cases (Chile and Malaysia). In this paper, we attempt to address some of these shortcomings by: being very explicit about what measures are construed as capital controls. Also, given that success is measured so differently across studies, we sought to "standardize" the results of over 30 empirical studies we summarize in this paper. The standardization was done by constructing two indices of capital controls: Capital Controls Effectiveness Index (CCE Index), and Weighted Capital Control Effectiveness Index (WCCE Index). The difference between them lies in that the WCCE controls for the differentiated degree of methodological rigor applied to draw conclusions in each of the considered papers. Inasmuch as possible, we bring to bear the experiences of less well known episodes than those of Chile and Malaysia. Then, using a portfolio balance approach we model the effects of imposing capital controls on short-term flows. We find that there should exist country-specific characteristics for capital controls to be effective. From this simple perspective, this rationalizes why some capital controls were effective and some were not. We also show that the equivalence in effects of price- vs. quantity-capital control are conditional on the level of short-term capital flows.
- Topic:
- Development, Economics, International Trade and Finance, and Markets
- Political Geography:
- Latin America and Southeast Asia
930. Integrating Reform of Financial Regulation with Reform of the International Monetary System
- Author:
- Morris Goldstein
- Publication Date:
- 02-2011
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- This paper links reform of the international financial regulatory system with reform of the international monetary system because as this recent global crisis demonstrates so vividly, the root causes can come from both the financial and monetary spheres and they can interact in variety of dangerous ways. On the financial regulatory side, I highlight three problems: developing a better tool kit for pricking asset-price bubbles before they get too large; shooting for national minima for regulatory bank capital that are at least twice as high those recently agreed as part of Basel III; and implementing a comprehensive approach to "too-big-to-fail" financial institutions that will rein-in their past excessive risk-taking. On the international monetary side, I emphasize what needs to be done to discourage "beggar-thy-neighbor" exchange rate policies, including agreeing on a graduated set of penalties for countries that refuse persistently to honor their international obligations on exchange rate policy.
- Topic:
- Economics, International Trade and Finance, Monetary Policy, and Financial Crisis