Tariff Preferences,WTO Negotiations and the LDCs: The Case of the ‘Everything But Arms’ Initiative

By assessing the impact of the recently adopted ‘Everything But Arms’ (EBA) initiative of the EU on the Least Developed Countries (LDCs) and by showing how further multilateral trade liberalisations erode the EBA preferences and impact the LDCs, this paper attempts to uncover the LDCs’ difficult positions in the WTO trade negotiations. Due to its limited product coverage and previous preferences granted by the EU, welfare impacts of the EBA on the LDCs are shown to be small and the bulk of these gains are associated with the ‘sensitive’ products that are subject to gradual liberalisations. Moreover, these small gains are likely to disappear if the EU conducts trade policy reforms in fulfilling its WTO obligations, resulting in an actually worse‐off situation for the LDCs. Extending the analysis to a multilateral trade liberalisation scenario reinforces the above results that the LDCs may well lose due to preference erosion and higher world market prices. It concludes that other development assistance measures from developed countries should be made available to the LDCs to ease their dependency on trade preferences and to foster their supply capacities. The LDCs themselves should attempt to integrate the duty and quota‐free market access status contained in the EBA into a binding WTO agreement to secure a stable trading environment. But more importantly, in order to solve the difficulties at the root these countries should actively engage in reforming their own trade policies.     

入世十年来中国与LDC国家贸易新发展及展望

中国与最不发达国家间的经贸关系日益紧密,但是针对中国在这些国家的"新殖民主义"活动的指责声日益高涨,在中国加入世界贸易组织十周年之际,文章通过对比分析中国、美国以及欧盟与最不发达国家间的贸易商品结构的演变,发现中国自LDC国家的进口商品结构严重偏向于资源类商品的事实,探讨了中国在未来经贸合作中更应注重对LDC国家自我发展能力的培养以及中方的投资开发行为应遵循的原则,从而构建新型的双边经贸合作前景。     

贸易条件、技术进步与发展战略选择

本文在Cypher&Dietz(1998)模型的基础上进一步讨论了存在贸易的技术进步效应时,发展中国家贸易条件恶化的经济增长效应。我们分析的结论是,在出口部门存在很强的技术进步效应时,贸易条件恶化不会引发“贫困化增长”,Cypher&Dietz(1998)的结论只是在不存在技术进步效应或该效应很小时才成立。由初期比较优势决定的自由贸易模式即使最终会引发“贫困化增长”,但存在一个时间过程,在此之前贸易仍能促进经济的发展,因此最适合的发展战略应为“动态比较优势战略”。     

The Choice between Bank Debt and Trace Credit in Business Start-ups

This paper investigates the choice between bank debt and trade credit in business start-ups. While trade credit is more expensive than bank debt, suppliers tend to follow a more lenient liquidation policy when client firms encounter financial distress. As a result, suppliers are more willing to renegotiate the outstanding debt or grant additional debt whereas banks are more likely to liquidate borrowers upon default. Given the risky nature of business start-ups, we argue that the entrepreneur’s choice of debt instruments reflects these differences in liquidation policy between lenders and is thus determined by the venture’s failure risk, the entrepreneur’s private control benefits that are lost upon liquidation and the liquidation value of firm assets. Using unique data on 325 first-time business start-ups, we find that firms in industries with high historical start-up failure rates and entrepreneurs who tend to highly value private benefits of control use less bank debt. These effects are especially prevalent in start-ups where assets have a high liquidation value and thus banks are more likely to liquidate the venture following default. An erratum to this article can be found at     

The Dismantling of CONASUPO,a Mexican State Trader in Agriculture

In the 1990s, Mexico gradually dismantled and ultimately liquidated CONASUPO, its state enterprise in agriculture. CONASUPO was a typical less developed country (LDC) parastatal, exacting control over an important component of Mexico's food chain. This paper examines the demise of CONASUPO in the context of domestic economic reforms and trade liberalisation. It documents the process by which CONASUPO was eleminated, the political environment that made this possible, and the implications for agricultural production and trade. The paper concludes by distilling lessons from Mexico's experience for other LDCs as the liberalisation of domestic and international markets continues to unfold.     

The trade credit channel revisited: evidence from micro data of Japanese small firms

It is suggested that trade credit can be a substitute for bank loans for small- and medium-sized enterprises (SMEs) that have little access to external funding sources. Using unique cross-sectional survey data of Japanese SMEs, we conduct a deep investigation into the substitutability between bank loans and trade credit. This survey contains rich information on the suppliers of trade credit to SMEs, thus enabling the examination of the channel through which credit is provided from suppliers to customers. We find that SMEs with little access to bank credit depend more on large suppliers for trade credit. We also find that when a purchase is made from a large supplier, more credit is indeed provided in the form of trade credit. Furthermore, this channel of credit from large suppliers to SMEs is only observed for solvent customers, not for insolvent customers. Our findings suggest that trade credit plays an important role for entrepreneurial firms over the financial growth cycle. For young and small firms with little access to bank loans trade credit is an important funding source.     

Exporters versus importers: LDCs,agricultural trade,and the Uruguay Round

The agricultural trade issue in the Uruguay Round highlights the trend towards fragmentation among LDCs: the fundamental underlying differences between the interests of agricultural exporters and food importers are hard to reconcile. These differences are analysed in the following article.     

Product market imperfections and customs unions theory

The purpose of this paper is to analyze the welfare implications of trade creation and trade diversion within the context of the standard model of customs unions to which increasing returns and domestic monopoly have been added. The problem we consider is particularly important to the less-developed countries in which both types of product market imperfections are encountered. It is shown that, in the presence of product market imperfections, trade creation I and trade creation II may entail welfare loss, while trade diversion I and trade diversion II may be welfare-improving.     

The Factor Content of Heterogeneous Firm Trade

The present paper studies the factor content of heterogenous firm trade in the presence of market imperfections and transaction costs. The conceptual framework builds on a relative factor endowment model, which we extend to account for firm heterogeneity and transaction costs. Using a large panel of firm‐level data for the EU, we are able to examine not only the aggregate factor content of trade but also to identify differences in the factor of trade between heterogenous firms. Our empirical results suggest that because of transaction costs and market imperfections, the factor content of agricultural trade is heavily distorted in the CEE transition economies. To increase the gains of trade and the employed factor rewards, the policy should first address the transaction costs and market imperfections.     

Rags to riches? Entrepreneurs' social classes,resourceful time allocation,and venture performance

Social classes shape entrepreneurial pursuits in that entrepreneurs from lower social class groups face more resource deficiencies compared to those from higher social class groups. In this study, we theorize that being resourceful with a particular resource—time—helps ventures run by lower-class entrepreneurs achieve better performance. However, we further argue that the extent to which entrepreneurs use time resourcefully is affected by the cognitive schemas stamped on them by their social class backgrounds. Our empirical analysis of 8663 Chinese private entrepreneurs between 2006 and 2010 lends robust support to these arguments. By revealing both material and cognitive constraints stemming from entrepreneurs' social classes, our study contributes to research on social classes and entrepreneurial resourcefulness and has important implications for understanding the persistence of inequality in entrepreneurship.     

Trade Credit,Bank Credit,and Flight to Quality: Evidence from French SMEs

This paper investigates the impact of the global financial crisis on the allocation of credit to small and medium‐sized enterprises (SMEs). Using samples of French SMEs from four industries, we found support for the prediction of the flight‐to‐quality hypothesis that in bad times, credit flows away from smaller constrained firms to larger, higher grade firms. We also examined the relation between bank credit and trade credit in terms of two hypotheses: the substitution hypothesis and the complementary hypothesis. The results of fixed effects panel regressions showed that trade credit for small firms during periods of tight money acts generally as complement rather than substitute to bank credit, thus providing empirical support for the redistribution view of trade credit.     

Better marketing to developing countries: Why and how

Managers have long understood the rationale for investing in new products. Now, however, they face an even more compelling need: to invest in targeting new markets, specifically those in less developed countries (LDCs). The argument presented in this article, for initiating or increasing marketing efforts in these nations, makes two related points. First, a healthy world economy requires consumers in developing nations—particularly China—to spend more, because trade imbalances between the United States and LDCs cannot be sustained. Second, in order to foster consumption in LDCs and to profit from it, marketing expertise in the developed world must refocus. Success will require devising, promoting, and distributing products that will overcome economic constraints in some markets, and in others will overcome an understandable reluctance to spend rather than save. We suggest that lessons may be gleaned from examples regarding recent efforts targeting LDCs by a pharmaceutical company (Pfizer) and a food supplement marketer (Procter & Gamble), as well as efforts pioneered in less developed countries themselves (including low-cost private schools and $2,500 automobiles).     

Marketing and distribution systems

Economic growth of LDCs depends decisively on the volume of foreign currency avaliable to them. Apart from financial aid, such currencies can only be earned by exports. However, almost 90 p.c. of all export revenue of LDCs flows from shipments of raw and base materials, and thus, increasing these earnings will always be the main point of departure for any trade policy which does not aim at changing the structure of a given country’s exports.     

上市公司提供商业信用的影响因素研究

我国企业在交易中采用赊销的比例低于欧美国家。以"应收账款/流动资产"作为商业信用水平的度量指标,对影响上市公司提供商业信用的因素进行研究发现:上市公司较少依赖提供商业信用来进行质量信号传递;拥有较高存货水平的上市公司为了减低存储成本、促进销售,会采用较为宽松的信用政策,从而导致应收账款的增加;在信用普遍缺失的环境下,对坏账损失的担忧抑制了企业主动通过提供商业信用为客户融资,进而来扩大或保护自己竞争优势的行为;在行业景气的情况下,对未来的乐观预期降低了经营者对坏账的担忧,进而倾向于采用较为宽松的信用政策,导致应收账款水平提高。     

Innovative opportunity pursuit, human capital and business ownership experience in an emerging region: evidence from Ghana

This study explores whether an entrepreneur??s ability to assemble and leverage human capital, particularly specific human capital relating to prior business ownership experience, is associated with seven types of product and work practices innovation in an emerging region, namely, Ghana. Logistic regression estimation revealed that portfolio entrepreneurs were more likely than novice entrepreneurs to report ??innovation tried??. Multinomial logistic regression analysis revealed that portfolio entrepreneurs were more likely than other entrepreneurs to report ??innovation tried and introduced??. If the goals of policy are to increase the ??quality?? of new business start-ups and maximize investment returns, there is a case to target assistance to portfolio entrepreneurs.     

An Empirical Investigation of Trade Credit Demand

This paper investigates the motivations for a firm's demand for trade credit. Demand for credit is modelled as a function of transaction costs motivations, financing motivations, operational considerations, seller compliance issues and supplier marketing, whilst controlling for the firm's business environment and for firm characteristics such as size and industry. This paper builds on previous studies by considering a wider range of factors that can affect trade credit demand holistically on a single sample. It appears that the use of trade credit is widespread, and that it is generally perceived as an important short term financing option, although the availability of trade credit is not a major influence on supplier choice. The level of a firm's trade credit demand is found to be significantly influenced by transaction costs, financing, operational issues, marketing activities by suppliers, the firm's investment in trade debtors and firm size.     

Banking globalization and international business cycles: Cross-border chained credit contracts and financial accelerators

This paper constructs a two-country DSGE model to study the nature of the recent financial crisis and its effects that spread immediately throughout the world owing to the globalization of banking. In the model, financial intermediaries (FIs) enter into chained credit contracts at home and abroad, engaging in cross-border lending to entrepreneurs by undertaking cross-border borrowing from investors. The FIs as well as the entrepreneurs in two countries are credit constrained, so all of their net worths matter. Our model reveals that under FIs' globalization, adverse shocks that hit one country affect the other, yielding business cycle synchronization on both the real and financial sides. It also suggests that the FIs' globalization, net worth shock, and credit constraints are key to understanding the recent financial crisis.     

Trade strategy towards the third world

It is of paramount importance to expand the trade of less developed countries (LDCs). The Federal Government of Germany, being fully aware of this vital need, has created a number of effective instruments designed specifically to promote imports from these countries. The policy underlying all these measures is one of progressively liberallsing foreign trade by the removal of barriers obstructing that trade.     

Market imperfections,opportunity and sustainable entrepreneurship

This research develops the argument that four types of market imperfections (i.e., inefficient firms, externalities, flawed pricing mechanisms and information asymmetries) at once contribute to environmental degradation and that they also provide significant opportunities for the creation of radical technologies and innovative business models. We show that these opportunities establish the foundations for an emerging model of sustainable entrepreneurship, one which enables founders to obtain entrepreneurial rents while simultaneously improving local and global social and environmental conditions. To advance this new field, we offer suggestions for a research agenda focusing on two areas: the relationship between market imperfections and entrepreneurial opportunities, and the emerging field of sustainable entrepreneurship.