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  • Author: Philip Abbott, Finn Tarp
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Vietnam has been among the most successful East Asian economies, especially in weathering the external shocks of recent globalization crises—the 1997-98 Asian financial crisis and the 2008-09 great recession, financial crisis and collapse of global trade. Its success contradicts its characterization as an example of export-led growth and highlights the role of the state, particularly in maintaining and influencing investment. Examination of economic performance and policy responses shows rising dependence on foreign finance around each crisis, and actions by the government to counteract that dependence and bolster the domestic economy while continuing to restructure the economy toward greater emphasis on the private sector. Growth, employment and poverty alleviation have been maintained at the expense of renewed inflation, larger budget deficits, and currency depreciation. The 'stop-go' nature of present …
  • Topic: Development, Economics, Globalization, International Trade and Finance
  • Political Geography: Asia
  • Author: Jeffrey Henderson
  • Publication Date: 05-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The rise of China as an economic and political 'driver' of the global economy is likely to be one of the defining moments of world history. Its dynamism and international expansion are on the verge of creating a 'critical disruption' in the global order that has held sway for over 60 years. As such, China is beginning to reshape the world, presaging a new phase of globalization: a 'global-Asian era'. This new era is likely to be distinct from any of the earlier phases of globalization and China's global footprint, in terms of its business, economic and political actions and their geopolitical implications, is likely to be markedly different from what has gone before. This paper offers a framework by which we can begin to understand the coming global-Asian era (GAE) and some of its consequences, particularly as the latter are surfacing in the developing world. Having discussed the nature and dynamics of the GAE, the paper turns to sketch a series of vectors (trade, aid and energy security) along which the GAE is beginning to impact on developing countries. The paper argues that, at least for these vectors, the Chinese-driven GAE is providing opportunities as well as dangers for national development projects. It concludes by briefly speculating on the viability of the GAE.
  • Topic: Development, Globalization, International Political Economy, International Trade and Finance, Oil
  • Political Geography: China, Asia
  • Author: Jarko Fidrmuc, Ivana Bátorová
  • Publication Date: 01-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: We analyse the business cycles in China and in selected OECD countries between 1992 and 2006. We show that, although negative correlation dominate s for nearly all countries, we can also see large differences for various frequencies of cyclical developments. On the one hand, nearly all OE CD countries show positive correlations of the very short-run developments that may correspond to intensive supplier linkages. On the other hand, business cycle frequencies (cycles with periods between 1.5 and 8 years) are typically negative. Nevertheless, countries facing a comparably longer history of intensive trading links tend to show also slightly higher correlations of business cycles with China.
  • Topic: Economics, International Trade and Finance
  • Political Geography: China, Asia
  • Author: Yuqing Xing
  • Publication Date: 04-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper analyses China's ICT exports grow thin its two major markets Japan and the US from 1992 to 2004. It focuses on ICT products classified in SITC 75, 76 and 77. The empirical results show that Chinese exports had maintained two-digit annual growth during the period. The growth was much higher than the corresponding growth of the overall markets. By 2004, Chinese ICT exports accounted for 26 per cent of the total Japanese imports and 19 per cent of the total imports of the US in ICT products. In addition, the paper investigates whether the rapid growth of Chinese ICT exports crowded out that of other Asian countries: Indonesia, Malaysia, Philippines, Singapore, South Korea and Thailand. The empirical analysis shows that the crowding out effect differs across countries and products. The exports of Singapore and Philippines have been negatively affected by the growth of Chinese exports, but no crowding effect existed at all with Indonesia's exports.
  • Topic: International Trade and Finance, Markets
  • Political Geography: United States, Japan, China, Indonesia, Malaysia, Asia, South Korea, Philippines, Singapore, Thailand
  • Author: Yuefen Li, Bin Zhang
  • Publication Date: 04-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The segmentation of global manufacturing and services provided China and subsequently India with a golden opportunity to make full use of their absolute advantage—low cost yet educated labour—to integrate into the world economy within a comparatively shorter period of time than some earlier industrialisers. Though international trade functioned as a vent of surplus in view of the narrowness of their domestic markets at the beginning of their economic catch-up, the label of export-led model may not reflect the real picture as imports underwent dramatic increases during their respective growth periods, in particular for China. Foreign direct investment has played a pivotal role in their economic growth and has major presence in international trade and investment in leading sectors of both countries, giving rise to certain special features and weak links for their economic expansion and sustainability of fast economic growth. To maintain more broad-based, fast and balanced growth, it seems that both countries have to redress sectoral imbalances, encourage technology upgrading and cope with future changes in demographic profiles which constituted a trigger to fast economic growth at the time of their respective economic reform.
  • Topic: Development, International Trade and Finance
  • Political Geography: China, India, Asia
  • Author: Alessandra Guariglia, Amelia U. Santos-Paulino
  • Publication Date: 03-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Using a panel of 139 countries over the period 1992-2003, we analyse the links between export productivity, economic growth and financial development indicators. We then investigate whether the links observed in China, India and Brazil systematically differ from those observed in other countries in the sample. We find that both GDP per capita and investment generally exert a positive and significant effect on export productivity. Except for Brazil, financial development is not an important determinant of export productivity. Moreover, except for Brazil, export productivity plays a positive effect on growth, and so does financial development for both China and Brazil, but not for India. Finally, in both India and Brazil, FDI is negatively associated with growth.
  • Topic: International Trade and Finance
  • Political Geography: China, India, Asia, Brazil, South America
  • Author: Amelia U. Santos-Paulino
  • Publication Date: 03-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper analyses the patterns of export productivity and trade specialization profiles in the China, Brazil, India and South Africa, and in other regional groupings. In doing so, the investigation calculates a time varying export productivity measure using highly disaggregated product categories. The findings indicate that export productivity is mainly determined by real income and human capital endowments. Importantly, the study reveals significant differences in the export productivity and specialization patterns of countries with comparable per capita income levels. For instance, China's export productivity and implied export sophistication is in line with that of countries with higher per capita incomes, including some OECD industrial economies.
  • Topic: Economics, International Trade and Finance
  • Political Geography: Africa, China, India, Asia, South Africa, Brazil, South America
  • Author: John Henley, Stefan Kratzsch, Tamer Tandogan, Mithat Külür
  • Publication Date: 03-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The burgeoning literature on outward foreign direct investment from emerging markets has largely focused on analysing the motives of investors as reported by parent companies. This paper, instead, focuses on firm-level investments originating from China, India or South Africa in fifteen host countries in sub-Saharan Africa (SSA). The analysis is based on a sub-set of firms drawn from the overall sample of 1,216 foreign-owned firms participating in the UNIDO Africa Foreign Investor Survey, carried out in 2005. The sample of investments originating from China, India and South Africa is analysed in terms of firm characteristics, past and forecast performance in SSA over three years and management's perception of ongoing business conditions. Comparisons are made with foreign investors from the North. The paper concludes that while investors in SSA from the three countries are primarily using their investment to target specific markets, they are largely operating in different sub-sectors. While there appear to be specific features that firms from a given country of origin share, there are no obvious operating-level features they all share apart from market seeking.
  • Topic: International Trade and Finance
  • Political Geography: Africa, China, India, Asia, South Africa
  • Author: Rhys Jenkins
  • Publication Date: 02-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: In recent years there has been a growing literature that analyses the threat which Chinese exports pose to the exports of other developing countries. The paper provides a critique of the standard measures of export similarity which have been used to estimate the threat from China in these studies. Two alternative indices, the static and the dynamic index of competitive threat, are developed and estimated for 18 developing countries and compared with estimates for the standard measures. It is shown that the latter tend to underestimate the extent to which countries are threatened by China. They also distort both the rankings of countries according to the extent to which they face competition from China and the direction of change in the competitive threat over time.
  • Topic: International Political Economy, International Trade and Finance
  • Political Geography: China, Asia
  • Author: Shujie Yao, Zhongwei Han, Genfu Feng
  • Publication Date: 04-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Since China joined the WTO in 2001, the pressure for bank reforms has mounted as China ought to fully open up its financial market to foreign competition by 2006. Efficiency is key for domestic banks to survive in a liberalised environment, but it appears that the last hope for raising bank efficiency is through ownership reform. Whether ownership reform and foreign competition can solve China's banking problem remains to be tested. This paper aims to answer this question through using a non-parametric approach to analyse the efficiency changes of 15 large commercial banks during 1998-2005. We find that ownership reform and foreign competition have forced the Chinese commercial banks to improve performance, as their total factor productivity rose by 5.6 per cent per annum. This coincides with the recent bullish Chinese stock markets led by three listed state-owned commercial banks. Despite such encouraging results, we remain cautious about the future of the Chinese banks, as the good results may have been artificially created with massive government support and the fundamentals of the banks may be still weak.
  • Topic: Economics, International Trade and Finance
  • Political Geography: China, Asia
  • Author: Silvia Nenci
  • Publication Date: 02-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The rise of the emerging southern economies – China, India, Brazil, and South Africa (CIBS) – as both economic and political actors, is having significant and far-reaching impact on the world economy. Notwithstanding the increasing amount of study and research, there are still important knowledge-gaps with respect to a range of likely consequences of the dynamism of the Southern Economies. One of these gaps concerns the implications for the WTO-multilateral trading system. The present paper proposes a review of the southern participation in the multilateral integration process and suggests a methodology to assess the impact of CIBS' rise on the future of the WTO system. Through the analysis of the trajectories of 'impact' of the trade channel, the paper draws some suggestive remarks.
  • Topic: International Organization, International Trade and Finance
  • Political Geography: Africa, China, India, Asia, South Africa, Brazil, South America
  • Author: Guanghua Wan, Mahvash Saeed Qureshi
  • Publication Date: 02-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: By exploring the export performances and specialization patterns of China and India, we assess their trade competitiveness and complementarity vis-à-vis each other as well as with the rest of the world. Our analysis indicates that (i) India faces tough competition from China in the third markets especially in clothing, textile and leather products; (ii) there is a moderate potential for expanding trade between the two countries; (iii) China poses a challenge for the East Asian economies, the US, and most of the European countries especially in medium-technology industries; (iv) India appears to be a competitor mainly for its neighbouring South Asian countries; and (v) complementarity exists between the imports of China and India, and the exports of the US, some European states and East Asian countries, especially Japan, Korea, Malaysia, Singapore and Thailand, implying opportunities for trade expansion; and finally (vi) the export structure of China is changing with the exports of skill intensive and high-technology products increasing and those of labour-intensive products decreasing gradually. This suggests that challenges created by China in traditional labour-intensive products might reduce in the long run.
  • Topic: International Trade and Finance
  • Political Geography: United States, Japan, China, Europe, South Asia, Malaysia, India, Asia, Korea, Singapore, Thailand
  • Author: Yin Ge
  • Publication Date: 09-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: How do foreign trade and foreign direct investment affect regional inequality? Foreign trade and investment may affect internal economic geography, and the resulting industry agglomeration may contribute to regional inequality. This paper provides empirical evidence supporting this linkage. The results indicate that the increasing regional inequality in China has been accompanied by an increase in the degree of regional specialization and industry agglomeration. Foreign trade and foreign investment are closely related to industry agglomeration in China. Industries dependent on foreign trade and FDI are more likely to locate in regions with easy access to foreign markets, and exporting industries have a higher degree of agglomeration.
  • Topic: Economics, Industrial Policy, International Trade and Finance
  • Political Geography: China, Asia
  • Author: Mingming Zhou, Iftekhar Hasan
  • Publication Date: 08-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper documents the financial and institutional developments of China during the past two decades, when China was successfully transformed from a rigid centralplanning economy to a dynamic market economy following its unique path. We empirically examine the relationship between financial development and economic growth in China by employing a panel sample covering 31 Chinese provinces during the important transition period 1986-2002. Our evidence suggests that the development of financial markets, institutions, and instruments have been robustly associated with economic growth in China.
  • Topic: Development, Economics, International Trade and Finance
  • Political Geography: China, Asia
  • Author: Bassam A. Fattouh, Panicos O. Demetriades
  • Publication Date: 08-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: We provide a novel empirical analysis of the South Korean credit market that reveals large volumes of excess credit since the late 1970s, indicating that a sizeable proportion of total credit was being used to refinance unprofitable projects. Our findings are consistent with theoretical literature that suggests that soft budget constraints and overborrowing were significant factors behind the Korean financial crisis of 1997-98.
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: Asia, South Korea, Korea
  • Author: M.S. Quresh
  • Publication Date: 04-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper revisits the pollution haven hypothesis in the context of Pakistan by offering a systematic analysis of its trade and production patterns. Using bilateral trade statistics from 1975-2003, we test the hypotheses that Pakistan's net exports of pollutionintensive products have increased to the OECD countries. We also investigate if the stringency of environmental governance in the importing countries plays a role in determining Pakistan's exports of pollution-intensive products. The results reveal that there has been a change in the composition of output and exports towards pollutionintensive manufacturing that parallels the opening of the economy. Overall, the findings appear to be in favour of the pollution haven hypothesis and call for effective environmental policy response for poverty alleviation and sustainable development.
  • Topic: Development, International Trade and Finance, Poverty
  • Political Geography: Pakistan, Asia
  • Author: Tony Addison
  • Publication Date: 02-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Much has changed in international finance in the twenty years since UNU-WIDER was founded. This paper identifies five broad contours of what we might expect in the next twenty years: the flow of capital from ageing societies to the more youthful economies of the South; the growth in the financial services industry in emerging economies and the consequences for their capital flows; the current strength in emerging market debt, and whether this represents a change in fundamentals or merely the effect of low global interest rates; the impact of globalization in goods markets in lowering inflation expectations, and therefore global bond yields; and the implications of the adjustment in global imbalances between Asia (in particular China) and the United States for emerging bond markets as a whole. The paper ends by noting the paradox that today we see ever larger amounts of capital flowing across the globe in search of superior investment returns, and yet the financing needs of the poorer countries are still largely unmet.
  • Topic: Development, Economics, International Trade and Finance
  • Political Geography: United States, China, Asia
  • Author: Guanghua Wan, Yin Zhang
  • Publication Date: 08-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The Chinese economy underwent cyclical fluctuations in growth and inflation in the reform period. Contrasting views exist on the role of money in such fluctuations. This paper assesses these views employing structural VEC models based on the exchange equation. It is found that in the long run money accommodates, rather than causes, changes in output and prices. In the short run, price fluctuations are mostly attributable to shocks that have permanent effects on prices and money but not on real output. These shocks also account for a large proportion of fluctuations in money, and strongly influence the movements of output.
  • Topic: Economics, Emerging Markets, International Trade and Finance
  • Political Geography: China, Asia
  • Author: Guanghua Wan, Yin Zhang
  • Publication Date: 08-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper proposes a structural VAR model which extends the frameworks of Hoffmaister and Roldós (2001) and Prasad (1999). The model is then used to analyse the sources of China's trade balance fluctuations in the period of 1985–2000. Efforts are made to distinguish the forces which underlie the long-run trend in trade balance from those with transitory impacts. The effects of four types of shock are examined—the foreign supply shock, the domestic supply shock, the relative demand shock, and the nominal shock. Among other findings, two emerge as important. First, the movements in China's trade are largely the result of real shocks. Second, the Renminbi is undervalued, yet changes in the exchange rate bear little on the trade balance. Therefore, monetary measures would not suffice to redress China's trade 'imbalance'.
  • Topic: Economics, Emerging Markets, International Trade and Finance
  • Political Geography: China, Asia
  • Author: Ernest Aryeetey
  • Publication Date: 03-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Efforts to realize the issue of development-focused Special Drawing Rights (SDR) by the International Monetary Fund (IMF) have been on-going for many years. Recently, however, the campaign first gained a new momentum immediately after the Asian financial crises with the new liquidity problems of developing nations following the collapse of private capital markets. Currently the search for financing options towards the achievement of the Millennium Development Goals drives the interest in development-focused SDRs. Extending the uses to which SDR can be put is derived from the growing demands on the international financial system to respond to the development finance needs of poor nations. Apart from the need to provide emergency funds in times of crises and the whole area of crisis prevention, increasingly the facilitation of development in poor countries and assistance to make the best policy decisions is considered crucial.
  • Topic: Development, Economics, International Political Economy, International Trade and Finance
  • Political Geography: Asia
  • Author: John Hawkins
  • Publication Date: 04-2002
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: International bank lending is a major component of capital flows between advanced and emerging economies. However, in recent years these flows have been going the wrong way, like water flowing uphill. Even four years after the Asian crisis, there is a net flow of funds from emerging economies to banks in advanced economies. This paper looks at this phenomenon, starting by setting out the relevant data, and then looking at factors influencing these flows. These include both cyclical influences (both 'push' and 'pull') and structural changes within the banking industry. There is some evidence that international lenders are now discriminating more between the various emerging economies.
  • Topic: Economics, Emerging Markets, International Trade and Finance
  • Political Geography: Asia
  • Author: Ricardo Ffrench-Davis, Guillermo Larraín
  • Publication Date: 01-2002
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: During the Asian crisis, intermediate exchange rate regimes vanished. It has been argued that those regimes were no longer useful and only the extremes remained valid. The paper analyses three foreign exchange regimes: Argentina (pegged), Chile (band) and Mexico (float). The Argentinean currency board delivered low financial volatility while it was credible, but even then it displayed high real volatility. Mexican float performed well in periods of instability isolating the real sector. The Chilean band delivered a mixed outcome as compared to Argentina and Mexico. This is linked apparently to a loss in the band's credibility, associated to policy mismanagement and an over-appreciation in the biennium before the crisis. Optimal exchange rate regimes vary across time and the conjuncture. Exit strategies are part of the election of the optimal system, including a flexible policy package rather than a single rigid policy tool.
  • Topic: Development, International Trade and Finance
  • Political Geography: Asia, Argentina, South America, Latin America, Mexico, Chile
  • Author: Helmut Reisen
  • Publication Date: 01-2002
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The increased importance of rating agencies for emerging-market finance has brought their work to the attention of a wider group of observers - and under criticism. This paper evaluates whether the importance of ratings for developing-country finance has changed since the Asian Crisis and whether rating agencies have modified the determinants for their rating decisions. It also provides an analysis on recent suggestions by the Basel Committee on Banking Supervision, as these are very important for gauging the future role of sovereign ratings for foreign debt finance in developing countries. While the explanatory power of conventional rating determinants has declined since the Asian crisis, recent rating performance for Argentina and Turkey can still be qualified as lagging the markets, as variables of financial-sector strength and the endogenous effects of capital flows on macroeconomic variables seem to remain underemphasized in rating assessments. The market impact of sovereign ratings is predicted to decline as agencies have started to modify their country ceiling policy and as market participants try to exploit bond trading opportunities arising from the lagged nature of ratings. The paper presents theory and evidence to suggest that the Basel II Accord will destabilise private capital flows to the developing countries, if the current proposal to link regulatory bank capital to sovereign ratings is maintained: Assigning fixed minimum capital to bank assets whose risk weights are in turn determined by market-lagging cyclically determined ratings will reinforce the tendency of the capital ratio to work in a pro-cyclical way.
  • Topic: Development, Economics, International Trade and Finance
  • Political Geography: Turkey, Asia, Argentina