Trade openness,foreign direct investment,and finance-growth nexus in the Eurozone countries

The paper investigates causal relationships between trade openness, foreign direct investment, financial development, and economic growth in 19 Eurozone countries over the period 1988–2013. Using a panel vector error-correction model (VECM), the empirical results show that these variables are cointegrated. The study shows that a combination of opening the Eurozone countries for trade and fostering their financial and economic development have elevated inflows of foreign direct investment into the region in the long run. At the same time, increasing inflows of foreign direct investment in the short run have propelled economic growth, which in return has strengthened the role of financial development and international trade to sustain economic growth in the region through feedback effects. The empirical results have important policy implications for countries in the Eurozone, especially those who face challenges as a result of lack of confidence in their financial system and those who face a sovereign debt crisis.     

Impact of trade openness on GDP growth: Does TFP matter?

ABSTRACT

The objective of this study is to empirically explore the impact of trade openness on GDP growth initiating with the idea that trade openness cannot be fully characterized through the different openness measures only, we propose to account for total factor productivity (TFP) development level as an additional dimension of countries’ trade integration. Our empirical application is based on 35 years’ balanced panel of 82 countries spanning 1980–2014. To address the potential endogeneity issue, we use the system GMM estimator developed for dynamic panel data models. The results outline that there exists an interesting non-linear pattern between trade openness and GDP growth when TFP development level is taken as an intervening variable into account: trade may have a negative impact on GDP growth when countries have specialized in low-TFP development level; trade openness clearly boosts GDP growth once countries exhibit a minimum threshold of TFP development level. Therefore, there is some pattern of complementarity between trade openness and TFP development level so that the higher the TFP development level, the higher the impact of the trade openness on GDP growth.     

FDI、金融发展与地区经济差异

本文利用中国29个省份1987~2007年的面板数据,考察了金融市场发展在推动FDI促进经济增长中的作用,以及这种作用在各个地区之间的差异。实证结果显示：在全国范围内,金融发展本身虽能促进经济的增长,但是其水平还未达到推动FDI促进经济增长的要求。在东部地区,金融市场对FDI经济增长效应产生了显著的促进作用,而在中、西部地区金融发展却没有成为推动FDI促进经济增长的良性机制。文章还同时分析了国内投资、人力资本投资、贸易开放度以及政府支出等变量对地区经济增长的影响。最后,在实证分析的基础上提出了若干政策建议。     

Dynamic openness and finance in Africa

This study assesses dynamics of openness and finance in Africa by integrating financial development dynamics of depth, activity and size in the assessment of how financial, trade, institutional, political and other openness policies (of second generation structural and institutional reforms) have affected financial development. The empirical evidence is based on Generalized Method of Moments with data from 28 African countries for the period 1996–2010. The following findings are established. (1) While the de jure (KAOPEN) indicator of financial openness improves financial depth, the de facto (FDI) measurement decreases it, with the effect of the latter measure positive on financial size. (2) Whereas trade openness improves financial depth, its effect on financial activity and size is negative. (3) Institutional openness has a positive effect on financial dynamics of depth and activity, while its effect on financial size is negative. (4) Political openness and economic freedom are detrimental to financial depth and activity. Justifications for these nexuses are discussed.     

What factors explain stock market retardation in Islamic Countries

Stock markets have been recognized in literature as a source of financial development and economic growth. Notwithstanding the recent trend of the stock market development in emerging countries, some argue that Islamic countries' stock exchanges are still infantile. The central aim of this research, therefore, is to investigate factors impeding stock market development (SMD) in Islamic countries. We explore a panel annual data of 11 main Islamic countries vis-à-vis the developed countries for the period of 1996–2011. The findings show that all of our concerned macroeconomic determinants play a major role in the developed countries. On the other hand, financial openness has substantially less contribution in Islamic countries, while the financial intermediary development plays a major role. The results are also indicative of the need for the Islamic countries to improve their legal environment and economic freedom. Lastly, we also attempt to measure the integration level, where the findings tend to indicate a relatively lower and unstable pattern of integration for the Islamic countries, suggesting the impact of volatile inflows.     

The ‘amelioration’ of child labor, ‘a modest proposal’

More than 317 million children between the age of 5 and 17 are working in the world. Child labor is a persistent phenomenon, even though its incidence has subsided with economic development. In this paper, we conduct a panel study of 101 countries from 1980 to 2004 where child labor is proxied by the labor force participation of children aged 10–14. We look at the relationships between child labor and investments in human capital, foreign direct investments, countries’ openness to trade, and credit market constraints. We depart from the contributions of cross-country studies by employing a fixed effects instrumental variable (FE-IV) panel data model by employing a fixed effects instrumental variable (FE-IV) panel data model to account for unobserved heterogeneity and endogeneity of child labor and individual country-specific effects. We find support for the conclusions of the above-mentioned studies: countries that trade more and have a higher stock of foreign direct investment have less child labor. More generally, we find that trade openness, investments in human capital, and financial development are associated with a reduction of child labor. Child labor persists but tailored policies on trade, investment, and financial reform can lessen child labor along with economic growth, improvements in health, and rising standards of living.     

Stock Returns,Productivity, and Corruption in Eight European Fast-Emerging Markets

This article addresses the impact of productivity, corruption, and trade openness on the stock returns of 265 industrial companies listed in eight Eastern European fast-emerging markets, over the 2004-2013 period. Through a three-factor model that includes both measures at firm level and macro-level control variables, our findings suggest that country corruption index is negatively correlated with the total annual return of the stocks of the listed industrial companies of our sample. Moreover, the most productive firms are featured by higher stock returns, while leverage seems not to be a key predictor of stock returns. In addition, the article uncovers innovative evidence about trade openness that is negatively correlated with stock returns due to its connection with the recent financial crisis. That is, firms operating in markets that are more open to trade show a higher degree of interconnection with other economies and are more likely to undergo the effects of negative fluctuations from foreign markets during the economic crisis. © 2015 Wiley Periodicals, Inc.     

Trade policy,export expansion,human capital and growth

This paper empirically investigates the impact of trade policy on export expansion and on GDP growth in developing countries while controlling for the human capital stock and the initial level of development. By using a simultaneous system estimation we unite the approach found in the export expansion and growth literature with the approach found in papers that estimate the effect of trade policy on growth, while also making several improvements in the estimation of the underlying relationships. The results obtained from our estimation are more credible because of these improvements and therefore have stronger policy implications. We find that outward-oriented trade policies substantially and significantly impact growth in developing countries not only by directly enhancing exports but also through a feedback (or multiplier) effect.     

贸易开放、人力资本与中国能源消耗

文章从贸易开放对中国能源消耗产生的影响这一基本问题出发,将人力资本纳入分析视角,研究了贸易开放、人力资本对中国能源消耗的直接效应和交互效应。利用中国2001-2012年30个省份的统计数据,运用固定效应回归模型和面板门槛回归模型进行了实证研究,结果表明：贸易开放对能源消耗的直接效应呈倒“U”型曲线关系,即在贸易开放水平较低时,提高贸易开放水平将增加能源消耗量并提高能源消耗强度;当贸易开放水平较高时,提高贸易开放水平反而能促使能源消耗量和能源消耗强度降低。人力资本对能源消耗的直接效应显著为负,提高人力资本要素积累将促进地区经济增长从物质资本驱动型向人力资本驱动型转变。贸易开放与人力资本对能源消耗的交互效应在人力资本处于较高的门槛区间时显著为负,说明贸易开放在人力资本较高的地区将促进该地区专业化生产节能降耗的人力资本密集型产品,从而降低地区能源消耗量并提高能源利用效率。     

Trade openness and financial development in sub-Saharan Africa: The role of institutional structures

This article examines the role of institutional structures in the relationship between trade openness and financial development in sub-Saharan economies. The study is based on empirical data from sampled sub-Saharan African countries for a period of 1996–2017. The system generalized method of moment was employed to estimate the models. The findings suggest that, even though trade openness has a positive significant influence on the level of financial development in sub-Saharan African economies, this relationship is enhanced through the presence of good institutions in these economies. Thus, for these economies to realize the full benefit of the effect of trade openness on financial development, they need to strengthen their institutions.     

Globalisation and Corruption,Revisited

This paper presents new empirical evidence on the determinants of corruption, focussing on the role of globalisation and inequality. The estimates for a panel of 102 countries over the period 1995–2005 point to three main results: (i) Detection technologies, reflected in a high level of development, human capital and political rights reduce corruption, whereas natural resource rents increase corruption; (ii) Globalisation (in terms of both trade and financial openness) has a negative effect on corruption, which is more pronounced in developing countries; (iii) Inequality increases corruption, and once the role of inequality is accounted for, the impact of globalisation on corruption is halved. In line with recent theory, this suggests that globalisation – besides reducing corruption through enhanced competition – affects corruption also by reducing inequality.     

Intellectual Property Rights,FDI, R&D and Economic Growth: A Cross‐country Empirical Analysis

This paper aims to empirically examine how intellectual property rights (IPRs) protection, foreign direct investment (FDI) and research and development (R&D), along with other possible variables, may affect the economic growth of the host country. Using the panel data of 92 countries during 1970–2007, I conclude from the system generalised method of moments estimation that domestic investment share, FDI, R&D capacity, openness to trade, human capital and IPRs protection all have statistically significant and positive impacts on economic growth. A further investigation of countries at different levels of development suggests two striking findings. First, besides the domestic investment, openness, human capital and IPRs protection, R&D is the key to drive economic growth in the higher‐income countries, while FDI is the engine of growth in both higher‐income and middle‐income countries. Second, a positive and significant impact of IPRs protection on economic growth is found in both higher‐income and lower‐income countries. However, such an impact is not detected in the middle‐income countries.     

The impact of trade and financial openness on bank loan pricing: Evidence from emerging economies

In this paper, we examine the impact of trade and financial openness on bank loan pricing. Using data from 35 emerging economies, we first document that higher trade and financial openness lower interest rates on gross bank loans using country-specific measures for trade and financial openness. We then confirm our findings using firm-specific measures for trade and financial openness and individual loan spread. Exploiting the accession to World Trade Organization (WTO) as a quasi-natural experiment, we observe loan interest rates declined in countries after joining the WTO. Overall, we imply that openness is beneficial for financial development in emerging economies.     

贸易开放度、经济增长与劳动密集型产业结构调整

本文通过构建联立方程模型对贸易开放度、劳动密集型产业结构和经济增长之间的统计关系进行实证,同时利用VAR模型检验三者之间的相互作用。研究结果表明:经济增长不利于劳动密集型产业的发展,同时劳动密集型产业的发展也不利于经济增长;但贸易开放促进经济增长的同时阻碍了劳动密集型产业的发展。本文研究的政策含义是,当前政府应该优化劳动密集型产业结构,促进要素资源的合理配置;政府外贸政策的重心应该放在改变出口产业结构,使之朝着有利于转变经济增长方式的方向转变。     

汇率、贸易开放度与经济增长:短期波动与长期均衡——基于自回归分布滞后模型的经验研究

文章通过构建自回归分布滞后模型研究了汇率波动情况下贸易开放度与经济增长的长期关系,然后建立误差修正模型对两者之间的短期关系进行了刻画,重点考察了1978-2008年我国贸易开放度与经济增长在不同阶段的影响机制。经验分析结果表明,外商直接投资和贸易开放度对经济增长的短期效应大于长期效应;而人民币实际汇率对于经济增长的效应,则是长期效应大于短期效应。当外商直接投资、贸易开放度和人民币实际汇率造成的短期波动偏离长期的均衡时,经济增长能够通过自动调整趋于稳定。     

贸易开放度与经济增长:基于中国与印度的比较研究

本文基于新经济增长理论,从贸易开放度视角对中国与印度经济增长进行了比较分析。结果表明:两国贸易开放度存在明显结构差异,中国以商品贸易为主,而印度服务贸易份额远高于中国;中国的总体贸易开放度高于印度,但两者之间的差距随着印度外贸加速发展而缩小;两国贸易开放度与经济增长存在长期均衡关系,中国贸易开放度对经济增长的促进效应略高于印度,但中国面临着由贸易引发的人民币升值和外部失衡冲突问题。     

The relationship between trade openness and economic growth: Some new insights on the openness measurement issue

Empirical results on the links between trade openness and economic growth often suggest that, in the long run, more outward‐oriented countries register better economic growth. However, a similar level of trade openness can hide different types of trade structures. The aim of this paper was to enrich the way of measuring trade openness taking into account two different dimensions of countries’ integration in world trade: export quality and export variety. Based on the estimation of an endogenous growth model on a panel of 169 countries between 1988 and 2014 using a generalised method of moments estimator, our results confirm that countries exporting higher quality products and new varieties grow more rapidly. More importantly, we find a non‐linear pattern between the export ratio and the quality of the export basket, suggesting that openness to trade may impact growth negatively for countries which are specialised in low‐quality products. A non‐linear relationship between export variety, the export ratio and growth is also found, suggesting that countries increasing their exports will grow more rapidly after reaching a certain degree of the extensive margin of exports.     

Financial sector ups and downs and the real sector in the open economy: Up by the stairs,down by the parachute

We examine how financial cycles affect the broader economy through their impact on real economic sectors in a panel of countries over 1960–2005. Periods of accelerated growth of the financial sector are more likely to be followed by abrupt financial contractions than are periods of slower financial sector growth. Sharp fluctuations in the financial sector have strongly asymmetric effects, with the majority of real sectors adversely affected by contractions, but not helped by expansions. The adverse effects of financial contractions are transmitted almost exclusively through the financial openness channel, with precautionary foreign exchange reserve holdings serving as a key buffer.     

What Explains Cross‐country Industry Growth Patterns? Trade,Development and the Equity Financing Channel

We test theories that examine how economic and financial development affect cross‐country industry growth patterns. Finance theory suggests that financial development affects growth by lowering the cost of external finance. This has the implication that industries in more finance‐hungry sectors will grow faster in countries where financial markets are more developed. In addition, if financing constraints are lessened when stock market performance is high, firms in sectors more dependent on external finance should grow more rapidly following periods of good stock market performance. Trade and development theories, on the other hand, imply that a country's product‐mix and the pattern of industrial growth reflect which stage of development it is in and its factor endowments. Thus, one implication of trade/development theories is that countries that are close to each other in terms of GDP per capita should have similar patterns of industrial growth. Our tests find support for each of these theories.     

混业经营下金融发展与经济增长——基于亚洲地区的非稳定面板数据分析

文章使用面板单位根与面板协整方法，实证研究混业经营条件下金融发展与经济增长的关系。研究表明：混业经营条件下金融发展与经济增长存在面板协整关系。即金融发展与经济增长有长期均衡关系；银行发展水平质量的提高与经济增长有显著正相关关系．然而银行发展水平数量的提高，阻碍经济增长；股票市场与经济增长有显著正相关关系，而且这种关系比较稳定。