Estimating the export and import demand for manufactured goods: The role of FDI

In this paper we estimate the demand for exports and imports of manufactured goods for a panel containing the majority of the EU countries as well as the United States and Japan. The model includes as explanatory factors both the traditional determinants of trade and also the stock of foreign direct investment (FDI). We apply panel unit root and cointegration tests allowing for heterogeneity. Whereas there is no evidence of cointegration when using just the traditional formulation, the results are favorable to the existence of long-run relationships linking the variables of the augmented model. Moreover, the results point mainly to a complementary relationship between trade and FDI.     

Estimating the export and import demand for manufactured goods: The role of FDI

In this paper we estimate the demand for exports and imports of manufactured goods for a panel containing the majority of the EU countries as well as the United States and Japan. The model includes as explanatory factors both the traditional determinants of trade and also the stock of foreign direct investment (FDI). We apply panel unit root and cointegration tests allowing for heterogeneity. Whereas there is no evidence of cointegration when using just the traditional formulation, the results are favorable to the existence of long-run relationships linking the variables of the augmented model. Moreover, the results point mainly to a complementary relationship between trade and FDI.     

Promotion of manufactured exports as development strategy of semi-industrialized countries: The Brazilian case

Zusammenfassung Die F?rderung der Industriewarenausfuhr als Entwicklungsstrategie halbindustrialisierter L?nder: Das brasilianische Beispiel. — In einigen bereits weiter fortgeschrittenen Entwicklungsl?ndern l?\t sich die auf ImportSubstitution basierende Wachstumsstrategie nicht l?nger verfolgen, da die M?glichkeiten der Umlenkung der Importnachfrage auf den heimischen Markt nahezu ersch?pft sind. Damit ergibt sich die Notwendigkeit der Wahl einer neuen Wachstumsstrategie. Da\ diese mit Erfolg eine Exportf?rderungspolitik sein kann, wird am Beispiel Brasiliens gezeigt. Die brasilianischen Ma\nahmen (Wechselkurspolitik, steuerliche Ma\nahmen, kreditpolitische Entscheidungen und direkte Unterstützung der Exporteure bei ihren Verkaufsbemühungen auf dem Weltmarkt) werden im einzelnen beschrieben und ihre Effekte abgesch?tzt. Die sehr hohen Zuwachsraten der industriellen Exporte und die zunehmende Diversifikation (im Hinblick auf L?nder und Produkte) lassen sich — zumindest teilweise — mit der neuen Strategie erkl?ren.

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Résumé L’encouragement de l’exportation de produits industriels comme stratégie de développement des pays semi-industrialisés: Le cas du Brésil. — Certains pays moins développés, qui ont basé leur stratégie de développement sur la substitution de l’importation, ne peuvent pas continuer dans cette voie, étant donné que les possibilités de tourner la demande d’importations vers le marché du pays ont été pratiquement épuisées. Il leur faut donc choisir une autre stratégie de développement. En examinant le cas du Brésil, cet article veut démontrer qu’on peut, avec succès, choisir une politique d’encouragement de l’exportation. Les mesures prises au Brésil comprennent une politique des changes, des mesures fiscales, une politique des crédits et d’autres mesures pour aider les exportateurs à réussir dans le marché mondial. Toutes ces mesures sont décrites en détail, et leurs effets sont calculés. Les taux d’accroissement toujours montants des exportations industrielles et la diversification, quant aux pays et quant aux produits, qui va en augmentant, doivent être attribués, au moins en partie, à la nouvelle stratégie.

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Resumen El fomento de la exportación manufacturera como estrategia de desarrollo en países semi-industrializados: El caso del Brasil. — En algunos países en desarrollo ya mas avanzados no es posible continuar persiguiendo una estrategia de crecimiento económico basada en la sustitución de importaciones, debido a que las posibilidades de tal sustitución han sido casi completamente consumidas. De ahí resulta la necesidad de adoptar una nueva estrategia de crecimiento. Que esta puede consistir en una política de promoción de las exportaciones, lo demuestran las recientes experiencias hechas en Brasil. El autor describe las diferentes medidas brasile?as al respecte (política cambiaria, medidas impositivas, decisiones crediticias, y asistencia directa para el marketing de los exportadores), y trata de evaluar su impacto. Sostiene el autor que las extraordinarias tasas de incremento de las exportaciones industrials y la creciente diversificación de productos y mercados es — al menos en parte — fruto de la nueva estrategia.

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Riassunto L’incremento delle esportazioni di merci industriali come strategia di sviluppo di Paesi semindustriali: l’esempio brasiliano. — In alcuni Paesi in via di sviluppo già molto progrediti, la strategia della crescita che si basa sulla sostituzione dell’importazione non si può seguire più a lungo, giacchè le possibilità di dirigere altrove sul mercato indigeno la domanda d’importazione sono press’ a poco esaurite. Con ciò si dà la necessità della scelta di una nuova strategia della crescita. Che questa possa essere con successo una politica di incremento dell’esportazione, viene mostrato in base all’esempio del Brasile. Le misure brasiliane (politica dei cambi, misure fiscali, decisioni di politica creditizia e appoggio diretto agli esportatori nei loro sforzi di vendita sul mercato mondiale) vengono singolarmente descritte e sono valutati i loro effetti. Il tasso d’incremento assai alto delle esportazioni industriali e la crescente diversificazione (in considerazione di Paesi e prodotti) si può —per lo meno in parte — spiegare con la nuova strategia.

     

Learning and the capital goods sector under free trade: The case of Hongkong

Attention is focused on technological change and attendant learning processes in the more industrialized Third World countries. The importance of relatively simple learning processes is stressed and the conditions necessary for facilitating more complex forms of learning - particularly protection and promotion - are examined. Here it is shown that the capital goods sector is of central importance. The case-study material deals with the machine- producing sector in Hong Kong, chosen as the representative case of free trade and minimal government intervention, and comparison is made with learning processes in a number of other more industrialized Third World Countries including India, Argentina and Taiwan. In the final section the implications of the discussion of learning for theories and techniques of investment allocation - including social cost-benefit analysis, the effective rate of protection and the related domestic cost of foreign exchange - are examined.     

Trade in manufactured goods: patterns of change

This paper looks at the changing pattern of trade in manufactured goods between the developed industrial countries and the developing countries. It first reviews recent changes in this trade and the policies applied. Then it analyses the comparative advantages of the industrial and the developing countries and indicates the commodity composition of this trade. The implications of the results are drawn with reference to the benefits of trade in manufactured goods for the participants.     

A reapraisal of the capital goods sector in Hong Kong: The case for free trade

This paper was provoked by an earlier one by Fransman (1982) in which he examined the functioning of the capital goods sector in Hong Kong and came to the conclusion that it needed special protection by the government to allow it to reap the benefits of externalities essential for increasing its design and production capabilities. Statistical evidence is provided indicating that the capital goods sector as conventionally defined is prospering. Even following Fransman (1982), and equating the capital goods sector with the machine-producing sector, the latest survey of production indicates considerable dynamism. His case for infant industry protection is further weakened by consideration of the nature of the particular industrial structure of Hong Kong and the quality of the social relations that prevail between entrepreneurs. It is argued that the costs of singling out the capital goods sector for special treatment in terms of the impact of the highly competitive export-oriented manufacturing sector are likely to be high, while the theoretical benefits from externalities are liable to be illusory in a small economy.     

Trade preferences and exports of manufactures: A case study of Bolivia and Brazil

Trade Preferences and Exports of Manufactures: A Case Study of Bolivia and Brazil. — This paper analyzes the impact of the U.S. Generalized System of Preferences (GSP) on the exports of Bolivia and Brazil, whose levels of economic development differ substantially. While Brazil’s exports under GSP were larger than Bolivia’s, the preferences had a significant impact only on Bolivian exports. These results are consistent with the hypothesis that certain low-income countries have benefitted from trade preferences. Since the GSP is not costly to the U.S. economy, continuation of the program with some modifications to benefit the least developed countries is recommended.     

Trade policies,macroeconomic adjustment,and manufactured exports: The Latin American experience

Conclusions Changes in trade policy, especially in quantitative import restrictions, have played an important role in the macroeconomic adjustment in all six countries. For long periods, trade policy tightenings and occasional liberalizations were the main instruments of balance-of-payments policy. Most tightenings were preceded by a deterioration in the current account. In several cases tight import restrictions had adverse effects on output and, hence, on investment and growth. Since changes in trade policies, referred to here as episodes, were usually part of a policy package, it is difficult to isolate the effects of the episodes themselves. Sometimes they have been followed by current account improvements and other times by deteriorations.     

The economic consequences for Israel of free trade in manufactured goods with the EEC

Zusammenfassung Die wirtschaftlichen Auswirkungen des Freihandels mit Industrieerzeugnissen mit der EWG für Israel. — Die Freihandelszone zwischen Israel und der EWG in Industriegütern wird betr?chtliche Netto-Wohlfahrtsgewinne für Israel mit sich bringen, besonders langfristig, wenn die induzierten Erh?hungen von Faktormengen und Produktivit?t wirksam geworden und die kurzfristigen Anpassungskosten und negativen Handelswirkungen überwunden worden sind. Die Vorteile der EWG-Pr?ferenzen sind gr?\er als diejenigen, die sich aus den Senkungen des israelischen Zolltarifs ergeben, und die Gewinne aus der Freihandelszone sind erheblich gr?\er als diejenigen, die entstehen würden, wenn Israel seine Z?lle einseitig abschaffen würde. Obwohl Israels verh?ltnism?\ig fortgeschrittener Industrialisierungsgrad das Land besonders geeignet macht, den leichteren Zugang zu den EWG-M?rkten auszunutzen, ergibt sich doch allgemein, da\ ein pr?ferentieller Zugang zu den M?rkten von Industriel?ndern für ein Land, das eine exportorientierte Entwicklungspolitik betreibt, beachtliche Vorteile mit sich bringen kann.

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Résumé Les conséquences économiques pour l’Israel du libre-échange avec la CEE en produits manufacturiers. — La zone de libre-échange entre l’Israel et la CEE veut rapporter des nets gains de ?welfare? substantiels pour l’Israel, particulièrement à long terme si les accroissements induits des quantités de facteur et de la productivité deviennent influents et si les frais d’ajustements à court terme et les effets d’échange négatifs sont surmontés. Les bénéfices des préférences accordées par la CEE sont plus grands que ceux des réductions du tarif Israelien, et les gains dérivant de la zone de libre-échange sont considérablement plus grands que ceux qui résulteraient d’une élimination tarifaire unilaterale par l’Israel. Bien que le niveau d’industrialisation relativement avancé d’Israel le rende particulièrement capable de bénéficier plus facile aux marchés de la CEE, nous concluons que l’accès préférentiel aux marchés des pays industrialisés peut rapporter des bénéfices significatifs pour un pays poursuivant une stratégie de développement orientée à l’exportation.

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Resumen Las consecuencias económicas para Israel del libre comercio en manufacturas con la CEE. — El área de libre comercio de manufacturas entre Israel y la CEE traerá ganancias de bienestar netas sustanciales para Israel, especialmente en el largo plazo, cuando incrementos inducidos en las cantidades de factores y en la productividad adquieran influencia y los costos de ajuste de corto plazo y los efectos comerciales negativos hayan sido superados. Los beneficios de las preferencias otorgadas por la CEE son mayores que los de las reducciones en las tarifas israelíes, y las ganancias del área de libre comercio son considerablemente mayores que las que habrían resultado de una eliminación unilateral de tarifas por parte de Israel. A pesar de que el nivel de industrialización relativamente avanzado de Israel le coloca en una posición particularmente ventajosa para aprovechar el acceso preferencial a los mercados de la CEE, la implicación es que el acceso preferencial a los mercados de los países industrializados puede rendir beneficios significativos a un país que persigue una estrategia de desarrollo orientada hacia la exportación.

     

The expansion of manufactured exports in developing countries: An empirical assessment of s upply and demand issues

Zusammenfassung Die Expansion der Industriegüterausfuhr aus Entwicklungsl?ndern: Eine empirische Analyse von Angebots- und Nachfragefaktoren. — Gegenstand der Untersuchung, die im wesentlichen auf den Ergebnissen von fünfzehn am Institut für Weltwirtschaft durchgeführten L?nderstudien aufbaut, ist die Frage, ob das Exportangebot von Entwicklungsl?ndern an Halb- und Fertigwaren elastisch auf staatliche Exportf?rderungsmaβnahmen reagiert und ob der Exportexpansion und -diversifizierung, von der Aufnahmef?higkeit der Industriel?nder her gesehen, enge Grenzen gezogen sind. Es wird gezeigt, daβ eine Exportf?rderungspolitik, die sich im realen effektiven Wechselkurs niederschl?gt, exportstimulierend wirkt. In übereinstimmung mit der Heckscher-Ohlin-Hypothese übernehmen dabei arbeits- und/oder rohstoffintensive Produkte die Rolle des Vorreiters; mit fortschreitender weltmarktorientierter Industrialisierung entstehen Spezialisierungsschwerpunkte dann im Bereich von Produktions- und Investitionsgütern mit standardisierter Technik. Daβ ein solcher Prozeβ der Exportdiversifizierung die Industriel?nder vor groβe strukturelle Anpassungsprobleme stellt, braucht, im ganzen gesehen, nicht befürchtet zu werden. Doch k?nnte in produktspezifischer Sicht hier und da der von Entwicklungsl?ndern ausgel?ste Angebotsdruck fühlbar werden und in Industriel?ndern protektionistische Abwehrmaβnahmen heraufbeschw?ren.

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Résumé L’expansion des exportations de produits manufacturiers des pays en voie de développement: Une analyse empirique des facteurs d’offre et de démande. — Le sujet de cette analyse, qui base généralement sur les résultats de quinze études de pays faites à l’Institut für Weltwirtschaft, est la question si l’offre d’exportation des pays en voie de développement concernant les produits demi-finis et finis réagit élastiquement aux mesures publiques de l’encouragement à l’exportation et s’il y a des barrières étroites pour l’expansion et la diversification des exportations de la part de la capacité d’absorption des pays industrialisés. Nous démontrons qu’une politique de l’encouragement d’exportation qui se traduit en réel taux de change effectif a de l’influence stimulante sur les exportations. Conformé à l’hypothèse de Heckscher-Ohlin les produits intensifs à main-d’oeuvre et aux premières matières jouent le r?le de l’avant-courrier, puis, suivant l’industrialisation avan?ante et orientée au marché mondial, il y a des points capitaux de spécialisation en domaine des biens de production et d’investissement avec une technique standardisée. En général il ne faut pas craindre qu’un tel procès de la diversification d’exportation mette les pays industrialisés en problèmes d’ ajustement. Cependant il est possible que la pression d’offre suscitée par les pays en voie de développement se manifeste en vue spécifique au produit ?a et là et provoque des mesures défensives protectives dans les pays industrialisés.

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Resumen La expansión de la exportatión de productos manufacturados de países en vía de desarrollo: Un análisis empírico de factores de la oferta y de la demanda. — El presente estudio, basado en investigaciones realizadas en el Institut für Weltwirtschaft sobre 15 países, tiene por objetivo analizar la elasticidad de la productión de manufacturas para la exportatión con respecto a medidas estatales de fomento y examinar la capacidad de absorción por parte de los países industrializados. Queda evidente que una política de fomento a la exportación, que se refleja en el tipo de cambio efectivo real, surte efectos positivos. De acuerdo con la hipótesis Heckscher-Ohlin se adelantan los productos intensivos en el uso de mano de obra y/o de primeras materias; a medida que avanza el proceso de industrialización hacia afuera surge la especialización también en los sectores de productos intermedios y de bienes de capital fabricados con una tecnología estandardizada. Ko hay por qué temer, desde un punto de vista macroeconómico, que este proceso de diversificación de exportaciones cause a los países industrializados serios problemas de reajuste estructural. Pero es posible que en el caso de algunos productos determinados la presión competitiva ejercida por los países en vía de desarrollo se haga sentir y origine medidas proteccionistas por parte de los países industrializados.

     

Promoting exports: the role of inward FDI in China

Since the late 1970s, exports and inward foreign direct investment (FDI) in China have risen dramatically under the open-door policy. The critical role of FDI in China's exports may be indicated by the fact that exports by foreign affiliates in China in 1998 were US$81 billion, comprising 44% of China's total exports in that year. While there is considerable evidence on the FDI export linkage in China, systematically empirical analyses have been limited. This paper investigates the issue using panel data at the provincial level in the period of 1986–1997. The findings support the widely held belief that increased levels of FDI positively affect provincial manufacturing export performance.     

The impact of capital goods prices on Africa's economic performance

Over the last four decades, the relative price of investment goods in Africa has gone through a relatively large decrease, resulting in a steady convergence towards the levels recorded in high-income countries. This fact begs the following question: To what extent might the relative price decrease be a driving force behind the economic performance of this continent? The paper addresses this question from the perspective of a panel ARDL approach, using the Solow growth model—augmented with barriers to investment—as a framework. The results reveal that a one-unit decrease in the relative price of investment leads, in the long term, to a 4% increase in per capita GDP, an increase that could be neutralised by a 6.5 percentage points decrease in the savings rate. The findings contribute to the case for a policy mix that combines policies geared towards reducing investment distortions with those promoting savings mobilisation.     

The role of services for manufacturing firm exports

Manufacturing firms have been increasingly focusing on services, a trend that is evident in their composition of bought-in input and in-house production. The services intensity of firms may affect their productivity and thereby their competitiveness abroad; services are also instrumental in connecting firms to foreign markets and can help them to differentiate their offerings from those of other firms. However, the relation between services and manufacturing exports has only been partially analysed in the previous literature. This study contributes to the field by discussing the role of services for firms and empirically testing a set of related conjectures. Export intensity is regressed on two services input parameters, applying a fractional model to a rich panel of firms in Sweden in the period 2001–2007. The microeconometric results suggest that, after controlling for covariates and heterogeneity, service inputs affect a firms’ export capabilities: raising the proportion of services in in-house production yields higher export intensity on average. Furthermore, buying-in more services is associated with higher export intensity for firms in some industries. Overall, the study provides new firm-level evidence of the role of services as inputs in manufacturing.     

The role of foreign direct investment in Indonesia's manufacturing exports

This article examines whether foreign direct investment (FDI) has contributed to the changing structure of Indonesia's manufacturing exports. It uses industry-level data from 1990 to 2008, classified by factor intensity. Our analysis reveals that FDI promotes exports in most panel observations, especially exports from physical-capital-intensive (PCI), human-capital-intensive (HCI) and technology-intensive (TI) industries. Yet by applying a differentiated cross-section-effect model, we determine that the export-generating potential of FDI is stronger in PCI, HCI and TI industries than in natural-resource-intensive or unskilled-labour-intensive industries, in which Indonesia has a comparative advantage. We also assess the influence of other determinants of export performance – namely, private domestic capital investment, GDP growth and exchange rates. Our findings have implications for policymakers seeking to sustain Indonesia's export performance.     

Reputation and learning: Japanese car exports to the United States

This paper incorporates learning and reputation building into a simple dynamic stochastic model with asymmetric information. We use the model to study a bilateral trade flow influenced significantly by learning and reputation, namely U.S. imports of Japanese cars over the period 1961–2004. Numerical simulations replicate the trade flow in a robust fashion. Including the Voluntary Export Restraint in our simulations predicts U.S. imports decreased by 2.46 million cars over the years 1981–1984. Since learning and reputation building require time, predicted short run trade patterns can be quite different than those predicted in the long run. We apply this idea to understand the change in Japanese market share in the U.S. automobile market. We also explore the importance of sectorial differences in the speed of learning and reputation building on predicted trade patterns. Lastly, we examine how the extent of asymmetric information existing between importers and exporters changes under different trade policies.     

Import instability and LDCs’ response: The destabilization of the inflow of capital and intermediate goods

Zusammenfassung Importinstabilit?t und die Reaktionen der Entwicklungsl?nder: Die DeStabilisierung der Einfuhr von Kapital- und Vorleistungsgütern. — Anhand von modifizierten Importnachfragefunktionen für sieben Entwicklungsl?nder wird empirisch die Hypothese untersucht und best?tigt, da\ instabile Rohstoffimportpreise die Importmengen von Kapitalgütern im Sinne eines Verdr?ngungsvorgangs destabilisieren. Dies ist ebenso festzustellen, wenn die Ausgaben für Nahrungsimporte aufgrund heimischer Erntefluktuationen schwanken. Bezüglich der Instabilit?t von Importpreisindizes und Gesamtimportausgaben reagieren die Importmengen von Kapitalgütern und industriellen Vorleistungen elastisch, w?hrend die Stabilit?t von Rohstoffeinfuhren hiervon wenig berührt wird. Die H?he der Destabilisierangseffekte ist abh?ngig von dem Ausma\ der internationalen Liquidit?t, über welche das betroffene Entwicklungsland verfügt. Diese Ergebnisse werden damit erkl?rt, da\ in den Entwicklungsl?ndern die M?glichkeiten der kurzfristigen Importsubstitution, der Wechselkursanpassungen und der internationalen Finanzierung begrenzt sind und dadurch die Transmission internationaler Preisinstabilit?ten auf die Importstrukturen erleichtert wird.

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Résumé L’instabilité des importations et les réactions des pays en voie de développement: La déstabilisation de l’importation des produits d’investissement et intermédiaires. — Au moyen de fonctions d’importation modifiées pour sept pays en voie de développement l’hypothèse est confirmée que les prix instabiles à l’importation des matières premières déstabilisent les quantités d’importation des produits d’investissement au sens d’un processus de déplacement. C’est constaté également, si les importations alimentaires flottent à cause de fluctuations de récolte locale. Au sujet des prix directs à l’importation et des dépenses totales d’importation les volumes d’importation des produits d’investissement et des produits intermédiaires manufacturiés réagissent souplement, tandis que la stabilité des importations des matières premières est peu touchée. Les effets de déstabilisations dépendent de l’ampleur de liquidité internationale de laquelle les pays concernés disposent. Ces résultats sont expliqués par la possibilité limitée de substitution d’importations, d’ajustements des cours de change et de financement international pour les pays en voie de développement; ainsi la transmission des instabilités des prix internationaux aux structures d’importation est facilitée.

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Resumen Inestabilidad de las importaciones y las reacciones de los países en desarrollo: la desestabilización de la importación de bienes intermedios y de capital. — A través de funciones de demanda de importación modificadas para siete paises en desarrollo se somete empfricamente a test y se confirma la hipótesis que precios de importación inestables para las materias primas desestabilizan los volúmenes de importación de bienes de capital en el sentido de un proceso de desplazamiento. Esto también se puede constatar, cuando el gasto para la importación de productos alimenticios oscila como consecuencia de fluctuaciones en las cosechas domésticas. Los volúmenes de importación de bienes intermedios industriales de capital reaccionan en forma elástica frente a inestabilidades de índices de precios de importación propios y gastos totales en importación, mientras que la estabilidad de las importaciones de materias primas prácticamente no se ve tocada por ello. La importancia de los efectos desestabilizadores que provienen de fluctuaciones en los precios de importación propios y de materias primas, depende de la magnitud de la liquidez internacional de que dispone el país en desarrollo afectado. Estos resultados tienen su explicación en el hecho, que los paises en desarrollo, debido a sus posibilidades limitadas de sustituir importaciones, ajustar las tasas de cambio y obtener financiamiento internacional en el corto plazo, facilitan las transmisiones de inestabilidades de precios internacionales hacia las estructuras de importación.

     

International subcontracting: Improved prospects in manufactured exports for small and very poor LDC's

In recent years one of the most dynamic manufactured export sectors in developing countries has been the assembly and processing operations subcontracted from multinational firms. The paper analyzes this relatively new phenomenon as a possible opportunity for the small and very poor developing countries to increase their manufactured exports. After making a case that domestic size and level of economic development are not preconditions of success in exporting manufactures, it is further argued that small and very poor countries may even have a comparative advantage in international subcontracting. Not only does international subcontracting avoid some of the traditional obstacles which these countries experience in exporting manufactures, but the gains from this activity seem to be particularly beneficial to them.     

Development and prospects of capital goods production in revolutionary Cuba

Capital goods have played an important role in the industrialization process of the leading industrial nations of today and the absence of a capital goods sector is often considered a serious handicap to industrialization in the developing countries. Cuba had practically no capital goods industries prior to the Revolution in 1959 and in the 1960s much hope was vested in the rapid creation of such a sector. As this study shows, however, this was a much more complicated process than envisaged. After much frustration in the 1960s, Cuba managed in the 1970s to create the base for a dynamic capital goods industry, but only subsequent to a trial and error process of “learning by doing,” especially as concerned spare parts. Today Cuba has a relatively important capital goods industry, considering the limited size of the country, and is particularly strong in the production of agricultural machinery. The prospects for the future are quite good in light of the existence of a highly skilled and adequately trained labor force.