Stimulating Non-Energy Exports in Trinidad and Tobago: Evidence from a Small Petroleum-Exporting Economy Experiencing the Dutch Disease

The motivation for this study hinges around the fact that Trinidad and Tobago (T&T) is suffering from the Dutch disease which inadvertently hinders the growth of non-energy exports. This paper examines measures that can be adopted for a small petroleum-exporting economy to dampen the effect of Dutch disease by promoting non-energy trade. This paper is novel and contributes to the literature in using panel data for the T&T case, as it investigates the effect of a devaluation of the TT dollar in order to stimulate non-energy exports (a combination of agriculture and manufacturing trade). Note that previous studies would have examined the Marshall–Lerner condition on the aggregate trade balance which is heavily influenced by energy revenues. The panel autoregressive distributed lag (ARDL) method is used for ten of T&T’s main trading partners for the period 1991 to 2019 to establish findings. The results show that the Marshall–Lerner condition does not hold for aggregate trade in the long run, as expected. However, when non-energy trade is isolated, it is found that a devaluation of the TT dollar does have a positive impact on non-energy trade and the Marshall–Lerner condition holds. Other measures are also recommended to stimulate non-energy exports in the long run.

The Impact of Trade Deficit in Nepalese Economy

The objective of this paper is to study and analyze the growth and direction of Nepalese foreign trade along with the causes and recommendations of trade deficit. Efforts have been made to sort out the principal sources of the trade deficit in Nepal. Landlockedness, political instability, lack of export diversification, devaluation of domestic currency, lack of resources, etc. are the major causes of the trade deficit in Nepal. Nepal, being not self-reliant on factors of production, consumer goods and capital goods, needs to import goods from abroad. On another hand, Nepal’s exports are heavily concentrated; both in terms of product and destination. Nepal’s major trading partners are India, China, U.A.E, etc. During the year 2019/20, Nepal exports goods worth RS. 97.71 Billion And import goods worth RS. 1196.80 billion Leading to a trade deficit of Rs.1099.09 Billion. Trade deficit is acting as negative catalyst in the economic growth and GDP of a country. Increased deficit has caused suppressed inflation. Import to export ratio is continuously increasing as demand is increasing and these demands could not be met by the domestic producers. During the year 2019/20, the contribution of trade on GDP of Nepal is 40.65%. No doubt, trade is an engine of economic growth. So, after analyzing barriers in the foreign trade, some of the steps to be taken are recommended which includes the development of competitive ability and enhancement of Human Resources, commodity and market diversification, formulation of strong legal framework and trade policy, incentives for the promotion of export and priority in the agricultural and hydropower sectors.

Modeling the volatility of exchange rate and international trade in Ghana: empirical evidence from GARCH and EGARCH

PurposeThe volatility of exchange rate has generally been sighted as a primary cause for various shocks and instability in international trade of Ghana as witnessed over the years and most especially in recent times. Hence, owing to the increasing trade levels between Ghana and Ghana's global trading partners, the study aims to investigate if the trade–exchange rate volatility nexus in Ghana supports the positive, negative or ambiguous hypotheses?Design/methodology/approachThe study investigates the effects of Ghana's exchange rate volatility on international trade by designing import and export equations to estimate both short- and long-run specifications of the effect and employing the multivariate generalized autoregressive conditional heteroskedasticity (GARCH) with Baba, Engle, Kraft and Kroner (BEKK) specification developed by Engle and Kroner (1995) as a further check for the robustness of the findings. Monthly data between 1993 and 2017 on the real effective exchange rates of Ghana's trade with 143 trading partners were taken as the series for modeling the volatility using GARCH andexponential generalized autoregressive conditional heteroskedastic (EGARCH) models.FindingsThe empirical results show that the volatility of exchange rate negatively impact export performances in the Ghanian economy. On the other hand, there was no sufficient evidence to support the observed positive effect of exchange rate volatility on imports, as the effects were only significant at 10% level in the long run. Thus, it is concluded that the finding cannot confirm a relationship between volatility and import. Thus, the results present differences in the direction of the effect of exchange rate volatility on imports and exports in the context of the Ghanaian economy.Research limitations/implicationsConsidering the fragility of the Ghanaian economy and Ghana's macro-economic indicators, the study points at the crucial need for more integration of well-informed trade policies within the country's macro-economic policy framework to contain the impacts of exchange rate volatility on trade performances.Practical implicationsThe study contributes to literature by scope and method. More specifically, empirical studies have failed or provided little evidence uniquely on the Ghanaian economy's reaction to exchange rate volatility on the country's imports and exports. Additionally, most of the existing empirical studies measure exchange rate volatility using the standard deviation of the moving averages of the logarithmic transformation of exchange rates. This method is criticized because the method is unsuccessful in capturing the effects of potential booms and bursts of the exchange rate. The authors' study circumvents for these highlighted pitfalls.Social implicationsThe study contributes to literature by scope and method. More specifically, empirical studies have failed or provided little evidence uniquely on the Ghanaian economy's reaction to exchange rate volatility on the country's imports and exports. Thus, the study chat a course for socio-economic dynamic of Ghanaian economy.Originality/valueThe study contributes to literature by its scope and method, as extant empirical studies have provided little evidence specifically on the Ghanaian economy's reaction to exchange rate volatility. Additionally, most of the existing empirical studies measure exchange rate volatility using the standard deviation of the moving averages of the logarithmic transformation of exchange rates. This method is criticized because of the method's inadequacies in capturing the effects of potential booms and bursts of the exchange rate. The study thereby essentially circumvents for these highlighted pitfalls.

Design of Portfolio using Multivariate Analysis

Stock markets are considered a barometer of the respective country’s economy around the world. Modern portfolio theory advocates diversification for risk management, which helps maintain returns as long as indices around the world are not perfectly correlated. The relationship exists across markets; as a result, co-movement has drawn the attention of individual investors and portfolio managers for the construction of their portfolios to maximize returns for a given level of risk. The study of co-movements provides inputs for portfolio construction and facilitates the identification of markets where indices may move in the same direction or the opposite direction and the country’s stock markets that are not correlated. A review of the literature revealed that statistical tools like Correlation, Factor analysis, and Granger causality test, etc., are some of the tools that can be used to understand co-movements of markets. Alan harper et al. (2012) study used principle component analysis and inferred that Indian stock returns are aligned with its trading partners and concluded that maximizing the investors’ returns by reducing the risk. Tak Kee Hui concluded that factor analysis provides inputs for selecting foreign markets for risk diversification. This study examines the potential for diversification using 22 world stock market indices using multivariate analysis.

Determinants of Bilateral Trade Flows Between Vietnam and Trading Partner Countries – Gravity Model Approach

This study uses the gravity model to investigate the bilateral trade flows between Vietnam and 52 countries from 2001 through 2011. The data are collected from International Trade Centre (ITC), International Monetary Fund (IMF), and the World Bank (WB). The results show that economic size, geographical distance, economic distance, technological innovation, trade openness, free trade agreement, population, exchange rate, and common border affect the bilateral trade flows between Vietnam and these 52 countries. More importantly, this study uses the speed-of-convergence method to find new potential trading partners for Vietnam, such as those in Africa and Southwest Asia.

Development of the agro-industrial complex in Kazakhstan

The article is devoted to the analysis of foreign trade in agricultural products of the Republic of Kazakhstan. The analysis of indicators of export of agricultural products of the country. In the process of studying the foreign trade turnover of agricultural products of Kazakhstan, identified the main trading partners or importers of agricultural products of the Republic. The analysis of changes in the structure of exports of agricultural products of the Republic to the countries of the Commonwealth of Independent States and the rest of the world. The main agricultural products occupying significant shares in the structure of export of the Republic are determined. For the analysis, a statistical review of the dynamics of foreign trade in agricultural products over the last five years is presented. The analysis of indicators of production of agricultural products, as well as the share of manufactured products for export (Simić, Stankov, 2020). The study confirmed that the share of agricultural exports in the overall structure of the country's exports is insignificant. A significant part of the exported agricultural products are directed to the CIS countries and neighboring countries. A significant part of the export of agricultural products falls on cereals. The share of this category of goods in the total income from exports of food and agricultural raw materials is 90 percent. Thus, exports and foreign trade in agricultural products in General are a source of growth of the agricultural economy for the country, the external factor is important to take into account when building forecasts of economic growth and modeling the economic policy of the country in the field of agriculture.

External and Internal Shocks and the Movement of Palm Oil Price: SVAR Evidence from Malaysia

Movements in palm oil price give important signals to various stakeholders of the palm oil industry in Malaysia. Thus, understanding external and internal factors that may affect the palm oil price is vital to the industry players for sustainability of their activities. This study investigates relative importance of external and internal shocks on the movement of palm oil price in Malaysia. Employing a structural vector autoregressive (SVAR) model on quarterly data from 1990 to 2019, the findings reveal that external shocks are more dominant in affecting the palm oil price. Shocks to the crude oil price, the prices of substitution goods (soybeans oil, rapeseed oil, and sunflower oil), the world palm oil price, and foreign income significantly affect the palm oil price in the short and medium run. The results also indicate that a shock to soybean oil price has a more profound effect on the palm oil price than a shock to rapeseed oil or sunflower oil prices, respectively. Likewise, shocks to incomes from India as well as from Netherlands create greater impacts on the palm oil price than a shock to income from the other trading partners, respectively. The study has shown the importance of external factors in affecting the palm oil industry.