The impact of trade liberalisation on exports, imports and the balance of payments of developing countries

This paper uses panel data and times series/cross section analysis to estimate the effect of trade liberalisation on export growth, import growth, the balance of trade and the balance of payments for a sample of 22 developing countries that have adopted trade liberalisation policies since the mid-1970s. We find that liberalisation stimulated export growth but raised import growth by more, leading to a worsening of the balance of trade and payments. To the extent that this has constrained the growth of output and living standards, the findings have important implications for the sequencing and degree of liberalisation.     

Trade protection and balance of payments problems

A model to be used for planning short-term in-patient medical care is presented. The individual clinic is treated as a production unit which produces different kinds of treated wardcases with a given technique of production (given production-cost-structure). It is assumed to maximize the yearly number of treated wardcases under the constraints of (1) The yearly demand for different kinds of treated wardcases, which is assumed to be proportional to the number of citizens within the area which the clinic serves (the clinics population), (2) The yearly budget which is assigned by public authorities and has to cover all costs as the medical care is supplied free of charge, (3) The clinics physical capacity, measured by the number of beds.

The model has been applied to the branch of general medicine using the estimated production-cost-structure at an existing clinic within this branch. The kind of information that one can get is illustrated, for example: Given a clinic with a certain technique of production (production-cost-structure) which optimizes its production in the way that the model assumes, what is the marginal effects of changes in the size of budget, physical capacity or the size of population? In the case of an existing clinic, perhaps it serves too big a population (the marginal effect of reducing this constraint is zero)? or, when establishing a given kind of clinic what is the best combination of population size, size of budget and physical capacity? How much of the demand will be unsatisfied with different combinations, i.e. how large will the queues become?     

De-industrialisation and the balance of payments in advanced economies

This paper defines de-industrialisation as a secular declinein the share of manufacturing in national employment. De-industrialisation,in this sense, has been a widespread feature of economic growthin advanced economies in recent decades. The paper considersbriefly what explains this development and quantifies some ofthe factors responsible. It then examines the experience ofBritain and America, which are two countries that have combinedrapid de-industrialisation with a strong overall economic performance.The paper considers both the domestic situation of manufacturingindustry in these countries and its foreign trade performance.It concludes by examining in detail the British balance of payments,and documenting how improvements in the non-manufacturing spherehave helped offset a worsening performance in manufacturingtrade.     

Finance,power, and the British balance of payments

ABSTRACT

The Brexit referendum marks a critical juncture in Britain’s political economy. Benjamin Cohen argues that a nation’s monetary sovereignty lies in its balance of payments (BoP) flexibility (2008, 2015). I argue that a country’s position in the global financial régime must also be accounted for when explaining its BoP dynamics. This allows us to understand why, while sterling has long lost its ‘world currency’ status, Britain’s BoP exhibits some of the same features associated with American ‘exorbitant privilege’. To appreciate the UK’s own BoP flexibilities as well as to flesh out the Anglo-American axis in the international financial order, I compare the UK’s external balance sheets with those of the US. Given the complexities and uncertainties inherent in BoP analyses, I advise against micro-analyses of the BoP in favour of a broader approach that takes into account macro-dynamics as well as the International Political Economy (IPE) concerns outlined above. Elaborating such an analysis for the UK BoP, I explore the potential implications of Brexit for Britain’s external balance sheets and its political-economic future. While Britain’s financial power has helped insulate its balance sheets from external shocks, Britain’s impending departure from the European Union heralds a period of considerable uncertainty.     

中国国际收支平衡:模式选择与目标方向

改革开放以来,随着我国积极参与国际分工合作,工业化和市场化进程不断加深,我国的国际收支状况发生了根本性的变化,主要矛盾由外汇短缺转为贸易顺差过大和外汇储备增长过快.自2001年中国加入WTO以来,国际收支"双顺差"高速增长所带来的人民币升值压力及其他相关负面影响已引起国家的高度关注(见图1),虽然采取了一系列旨在促进国际收支平衡的政策,但从效果来看尚未达到预想的目标,中国国际收支继续保持经常项目和资本项目"双顺差"持续快速增长格局.     

The Yugoslav deficit on balance of payments

The article sets out to analyse what measures would have been necessary to remove the persistant post-war Yugoslav deficit on balance of payments, and the problems and constraints, both economic and more broadly socio-political, that any given policy measure, or set of measures, might have run into. On the basis of this some conclusions are drawn on the nature of Yugoslav economic development since the war, and the relevance of Yugoslav experience to developmental problems in general. The article includes detailed statistics on the Yugoslav balance of payments.     

Capital movements, growth, and balance of payments

This paper develops a stylized model to examine how the adjustments of balance-of-payments accounts along with the growth path depend on capital mobility, investment behavior, saving behavior, and the magnitude of stock variables. The dynamic investment theory developed by Uzawa and the dynamic portfolio behavior model developed by Metzler are the two building blocks of our model. A two-panel diagram is developed to illustrate the flow and stock aspects of short-run equilibrium. To analyze the pattern of economic growth, we employ dynamic phase diagrams.     

Growth promoting policies,distribution, and the balance of payments

This paper studies the consequences of growth promoting policies for income distribution, aggregate savings, and the balance of payments in a small open economy. We focus on the case of a reduction in capital income taxation. Then the traditional OLG model, which emphasizes the inter-generational distribution, predicts that both investment and consumption are boosted. It is obvious then that the trade balance deteriorates. However, we show that this result is no longer robust if one allows for heterogeneity of agents within each generation. Then the intra-generational distribution effect, which implies a negative relationship between the share of capital income and aggregate consumption, may cause consumption to decline, and the trade balance to improve. This effect concurs with the classical, or post-Keynesian view on the relationship between distribution and savings. This post-Keynesian effect is, however, important for the short run only; the long-term result for the trade balance is not essentially changed by allowing for intra-generational heterogeneity.     

Exchange rate differential and balance of payments under dual exchange markets

This paper develops a model of an economy that uses two exchange markets: an official market in which the exchange rate is determined by central bank intervention, and a free market in which the exchange rate is determined by market forces. The official market handles selected imports and exports, while the free market handles the remaining imports and exports, and capital transactions. The model is used to discuss the effects of various policies on the differential between the free and the official exchange rates and on the balance of payments.     

A model for capital movements in Finland's balance of payments

In this paper a disaggregated quarterly model for capital movements in Finland's balance of payments is presented. This model is one block of the Bank of Finland quarterly econometric model of the Finnish economy.The structural equations are seen, in the case of Finland, mainly from the demand side. These equations are derived using the expected utility framework. However, supply conditions, in the form of domestic credit rationing and especially in the form of extensive controls on international capital movements, also play a considerable role.     

Causality and the structure of Canada's balance of payments: Evidence from time series

Recent historical data on Canada's balance of payments reveals a persistent pattern of current account deficits and capital account surpluses. The theoretical interpretation and significance of this recurrent pattern are controversial issues among economists. The essence of this debate is, in our view, a disagreement of a more fundamental nature concerning the underlying causal relationship between the current and capital accounts. Three different causal viewpoints are identified and discussed. Then, an empirical investigation using both bivariate and multivariate time series analysis is conducted in order to help discriminate among the viewpoints. Our findings strongly suggest a feedback relation between the current and the long-term capital account indicating that unidirectional causal viewpoints are inconsistent with the Canadian experience. We are grateful to the editor and two anonymous referees for their valuable comments.     

On causality and the monetary approach to the balance of payments: The European experience

Using Sims causality test it is shown that the negative relationship between the rate of domestic credit creation and the rate of change of foreign exchange reserves is consistent with the direction of causality proposed by the monetary approach to the balance of payments and it is not simply the result of central bank sterilization or private bank credit policy. Evidence of such opposite causality is present in Sweden and the United Kingdom but it is part of a two-way feedback structure still consistent with the monetary approach.     

New light on the 'impressionistic view' of the balancing item in Australia's balance of payments accounts

Recently, Fausten and Brooks offered (what they refer to as) an ‘impressionistic view’ of the temporal evolution of Australia's balancing item, which is a measure of the accuracy of the balance of payments accounts. They claim that the balancing item ‘has been increasing in magnitude and volatility, violating with increasing frequency internationally agreed acceptability criteria for smallness. In the present paper it is shown that Fausten and Brooks results derive from data that incorporates excessively a dynamically asymmetric concentration of revisions and is therefore unsuitable for statistical analysis. This paper develops, and empirically evaluates, a model of the process of revisions of balance of payments data. This model illustrates that dynamically inconsistent time series of the balancing item, such as that employed by Fausten and Brooks, are bound to generate an artificial impression that it follows an ‘explosive’ time trend. Subsequently, it is illustrated that when alternative, dynamically consistent editions of the balancing item data for the same period as that examined by Fausten and Brooks are employed, their results are reversed. Indeed, the findings here contradict diametrically the conclusions of these authors by suggesting that the decline in the frequency of balancing item ‘violations’ observed in the latter portion of the relevant time period is unparalleled in the history of the balance of payments accounts.     

Pitfalls in the Theory of Growth: An application to the balance of payments constrained growth model

In 1851 the French Social economist Auguste Ott discussed the problem of gluts and commercial crises, together with the issue of distributive justice between workers in co-operative societies. He did so by means of a ‘simple reproduction scheme’ sharing some features with modern intersectoral transactions tables, in particular in terms of their graphical representation. This paper presents Ott's theory of crises (which was based on the disappointment of expectations) and the context of his model, and discusses its peculiarities, supplying a new piece for the reconstruction of the prehistory of input–output analysis.     

Is there a rationale for output-based rebating of environmental levies?

Political pressure often exists for rebating environmental levies, particularly when incomplete regulatory coverage allegedly creates an “unlevel playing field” with other, unregulated firms or industries. This paper assesses the conditions under which rebating environmental levies is justified for the regulated sector, combining a theoretical approach with numerical simulations parameterized to reflect the Regional Greenhouse Gas Initiative. Rebates are undesired if one can instead tax the production of the unregulated sector. Otherwise, rebating is justified only when the goods of the competing sectors are close substitutes with similar emissions profiles. Policy constraints are costly in terms of welfare and environmental effectiveness.     

Global imbalances and asymmetric returns to US foreign assets: fitting the missing pieces of the US balance of payments puzzle

The issue of whether the US earns a persistently higher return on its foreign direct investment (relative to returns to foreign-owned direct investment in the US) has received considerable attention but little closure in the ‘global imbalances’ debate. Measuring the rate of returns to US direct investment abroad and foreign direct investment in the US we find higher returns to US foreign direct investment relative to its foreign counterparts in the US. Given the evidence indicating higher returns to US direct investment overseas, we link the irresolution in the contemporary literature regarding the existence of these returns to the unsettled debate over the origin of global imbalances. Reviewing the macro-financial literature on global imbalances, we find a failure to acknowledge that the US current account deficit is, in part, the outcome of transnational production networks in a global economy under-pinned by dollar hegemony. Given the growth in US multinational supply chains, we argue that the US trade deficit is consistent with asymmetric returns to US direct investment and that the sustainability of these return differentials rests on the stability of the status quo.     

Stabilization of the balance of payments in a small,planned economy,with an application to ethiopia

We construct a macroeconomic model of a planned economy and derive a currency basket that will stabilize the current account. The exchange rate is incorporated in a monetary system so as to derive consistent money and price targets. If the planners have access to foreign loans, they may target a negative current account. The model is estimated for Ethiopia. Having derived weights for the currency basket corresponding to 1980, a simulation is carried out in which macroeconomic targets for 1980 are derived, based on past information.     

Financial liberalization and the relationship-specificity of exports

We investigate the causal impact of equity market liberalizations on sectoral export performance across 91 countries (1980–1997). The increased availability of external finance has boosted trade of industries that intensively use relationship-specific inputs, and lowered exports of industries using standardized inputs.     

A varying-parameter emprical model of balance of payments determination under fixed exchange rates: results for the UK and West Germany

The post-war period and particularly the 1960s witnessed a marked increase in the degree of international capital mobility due to various factors. Empirical studies of international financial flows during the 1960s generally balance model of the external account is developed which structural instability. A portfolio balance model of the external account is developed which allows a varying level of capital mobility and which nests the pure monetary model (perfect capital mobility). The upshot is a varying-parameter empirical specification. This is estimated for the UK and West Germany using Kalman filtering techniques. The model performs well and indicates an upward trend in capital mobility over the period, particularly after 1968.