Tariffs and economic development: Some theoretical issues 1

There is evidence to suggest that in Brazil import substituting industrialization has brought an increased dependence on the foreign sector. Further growth is highly dependent upon the ability to increase exports, and economic policy exercises an important function in such export expansion. In an attempt to analyse the behaviour of manufactured exports, a regression model, complemented with in‐depth interviews with individual firms, is posited and tested with Brazilian data. In analysing policy variables and other determining factors in terms of their effects on manufactured export performance, it is found that exchange rate policy, tax incentives, LAFTA, and a recession‐boom effect have all played important roles in shaping Brazilian industrial export growth.     

Effective exchange rates for exports in Pakistan

Effective exchange rates for exports in Pakistan can be calculated which take into account the major export incentive measures in operation and their divergent treatment of specific exports. This quantification of export policies into an overall measure of the implicit (effective) foreign exchange rate structure permits an evaluation of the impact of export promotion measures on foreign exchange earning capacity. The major export incentive schemes were found to provide the highes’ subsidies to those exports with the highest total import components and the lowest relative earnings of net foreign exchange. Thus de velopment policy in some cases failed adequately to encourage these producers with relatively higher levels of domestic value‐added to export their products.     

MNE Affiliation,Firm Size and Exports Revisited: A Study of Information Technology Firms in India

In this study we argue that the export performance of affiliates of multinational enterprises (MNEs) in developing countries is determined differently from that of licensees of foreign firms or of domestic firms. Our empirical results for the information technology sector in India show that exports of MNE affiliates are greater when they have larger foreign equity stakes that bring more tacit knowledge transfer and complementary FDI advantages and when they import more explicit technology from the purchase of licences. Standard export determinants such as firm size and capital intensity do not matter for MNE affiliates, but they do for licensees and domestic firms.     

Foreign ownership and export performance in the large corporate sector of India

This paper examines the impact of foreign ownership on export performance by the largest corporate firms in India, to analyse whether the ‘monopolistic advantages’ of multinationals survive in its highly restrictive and regulated environment. After controlling for industrial characteristics and export incentives, foreign ownership has a positive impact on export performance. The statistical significance of the result is not very strong, but the finding counters earlier works based on simple comparisons of exports at the firm level. The analysis also sheds light on other influences of policy significance on export performance.     

Commodity composition of trade in manufactures and south‐south trade potential

Using two different measures, the degree of correspondence between a country's export vector of manufactures and a trade partner's import vector is determined. These export‐import similarity measures are shown to contribute to an explanation of bilateral trade intensity. They are then used in computing an index of export potential in manufactures for 34 developing countries, and an index showing the potential to replace LDC imports presently originating from developed countries. Given the existing LDC commodity composition, the possibility of substituting imports of DC manufactures by LDC supplies ‐ for example, through preferential inter‐LDC trading ‐is found to be limited only.     

An interpretation of argentine economic growth since 1930∗Part I

This study uses pairing of Mexican‐owned manufacturing firms and firms with direct United States investment, to examine the effects of ownership structure on firms’ performance and sources of technology. Results suggest that in terms of profitability, growth and export performance the Mexican firms were competing successfully during the period 1966–73. Furthermore, the basis for this strong posture by the Mexican manufacturers was not due to a heavy reliance on foreign technology imported through formal channels, but rather is linked with internal innovative activity and the use of domestic consultants.     

Employment effects of output and technological progress in Malaysian manufacturing

A major factor contributing to the growth in industrial employment in Malaysia was the implementation of the export‐oriented industrialisation strategy. With the withdrawal of GSP privileges to the USA, the inevitable loss of comparative advantage in labour cost and the emergence of trading blocs, it is feared that the growth of the export‐oriented sectors in manufacturing will be impeded, causing a serious unemployment problem. This fear is compounded by the increasing shift to technology‐intensive methods of production which displace labour. This article shows that domestic demand and export expansion exert positive and almost equal influence on industrial employment. Any negative impact on employment due to a shortfall in exports could be neutralised if an appropriate choice of import‐substituting and export expansion policies is adopted. Displacement of labour due to the substitution effect of using technology‐ and capital‐intensive production is largely compensated for by the increase in labour utilisation due to the output effect of increased production for both the domestic and foreign markets.     

Economic Fluctuations and Growth in Sub-Saharan Africa: The Importance of Import Instability

The traditional thesis that export instability (XI) is deleterious to economic growth in developing economies has received mixed empirical results. For African countries, recent research suggests that the effect of XI is weak, but that capital (investment) instability (KI) adversely influences economic growth. The current study argues that in many of these nations, imports are likely to be critical to the growth process, while exports represent only one of the various sources of investment resources. Hence, import instability (MI) may pose a more serious problem than XI in hindering economic growth. Employing 1968-1986 World Bank data for 33 sub-Saharan African countries, XI, KI and MI variables are calculated for each country as the standard errors around the respective 'best-fitted' trends over the sample period. These instability measures and additional World Bank data are then used to estimate an augmented production function that controls for the effects of labour, capital, and exports. The study finds that although KI is still a relevant argument of the production function, MI appears to be even more important, while XI is extraneous.     

Who Benefits from Aid for Trade? Comparing the Effects on Recipient versus Donor Exports

Abstract

Recent studies offer an ambiguous picture on the effectiveness of foreign aid in strengthening the export capacity of recipient countries. Moreover, the literature on aid for trade (AfT) has often neglected the fact that exporters in the donor countries may be among the main beneficiaries. We simultaneously estimate and compare the effects of AfT on trade in both directions. We find that AfT increases recipient exports to donors as well as recipient imports from donors. The first effect tends to dominate the latter, which contradicts the sceptical view that donors grant AfT primarily to promote their own export interests.     

Foreign capital inflows and output growth rate: A reformulation

A strategy of export promotion has evolved into the new conventional wisdom. The alleged superiority of this strategy draws on an extensive list of empirical studies, an important strand of which consists of tests in cross‐country format that use bivariate correlations and/or production function‐type regressions to demonstrate a strong positive relationship between exports and GDP growth. By showing that these same tests support the ‘promotion’ of all major components of GDP, this note argues that these tests have no bearing at all on the export‐promotion/import‐substitution controversy.     

Developing countries' terms of trade in manufactures, 1967–87: A note

Terms of trade, relating only to manufactured exports and imports, are calculated for a sample of 37 industrialised and developing countries over the 1967 to 1987 period. It is found that the terms of trade movements were significantly more favourable for higher‐income countries. This result highlights the importance of export diversification as part of a development strategy.     

Accumulating Technology and Location Spillovers Among Firms in Taiwan's Electronics Industry

Using firm-level panel data from the Taiwanese Census of Manufactures for 1986 and 1991 in the context of a modified selection model, we focus on three activities that contribute to the productivity growth of firms in the electronics industry: research and development, direct foreign investment and exports. In particular we address the issue of whether, in addition to the direct benefits of these activities, there are spillovers to other firms within the same four-digit industry or within the same geographical county. Our empirical results indicate that while the survival and direct productivity growth effects of R&D, exports and DFI are positive and statistically significant, intra-industry and geographical spillover effects are consistently present only for the export activity. That is, a firm's expected future TFP is positively and significantly affected by being located in a county and industry with more export activity. In addition, there is some evidence that the indirect effects generated by DFI firms, in the form of location spillover benefits to other firms, are also positive and significant. Finally, the empirical results indicate that the above direct and indirect benefits of the technological activities under study accrue principally to Taiwan's small and medium enterprises, rather than its large firms.     

Trade Liberalisation,the Peso,and Mexico's Commodity Trade Flows with the United States

We assess the effects of real peso devaluations, as well as the effects of GATT and NAFTA, on Mexico's in-payments and out-payments with the United States for 102 industries. We find that relatively few trade flows are sensitive to changes in the real exchange rate, probably due to production-sharing and intra-industry trade, but devaluations affect Mexican imports more than exports. Trade liberalisation has had a larger impact, particularly on imports of intermediate goods and exports of certain manufactures. Many affected export industries are ones that have previously been shown to have economies of scale.     

Exports and growth: Additional evidence

In a recent article in this journal [Sheehey, 1990], evidence was presented that the results of a substantial number of studies on exports and growth are biased by a built‐in correlation between exports and GDP. In this note, drawing on the parallel literature on government and growth, the analysis is carried further by investigating for 1960–81 how strong a relationship between exports and growth emerges when alternate export variables not subject to this bias are introduced.     

Productivity performance and priorities for the reform of China's state‐owned enterprises

This study reports on the results of a survey of 300 state‐owned, collective and foreign‐funded industrial enterprises conducted in three of China's coastal provinces; Guangdong, Fujian and Shanghai‐shi in 1993.’ Its major focus and policy relevance is to identify which of China's recent enterprise, market and ownership reforms have been most effective in improving the productivity performance of China's state owned enterprises. The study concludes that productivity growth (measured by total factor productivity) has been significantly higher for non‐state‐owned than for state‐owned enterprises and for firms located in the special economic zones of Shenzhen and Xiamen and the open city of Guangzhou than for firms in the more centrally planned Shanghai. Export‐orientated enterprises also had higher total factor productivity growth than non‐export‐orientated ones. At a lower level of significance, enterprises that controlled their own decision‐making produced a lower proportion of output for the plan, procured a higher proportion of their investment finance from loans (rather than budgetary allocations) and achieved higher total factor productivity growth. Finally, labour‐intensive industries in general had higher total factor productivity growth than did capital‐intensive ones. A number of policy conclusions may be drawn from these results.     

Poverty and Morality: Religious and Secular Perspectives

This article analyses the pattern of technology imports and its influences on China's indigenous technology. Indigenous technology consists of two dimensions: technology generation measured by R&;D and spending on technical upgrading; and application measured by output value of heavy industry and its export value respectively. The analysis reveals increased reliance on foreign loans to finance technology imports, diversified sources of supply, and strong emphasis on the purchase of disembodied technology after the late 1970s. Based on time series data from 1960 to 1991, statistical evidence indicates that imported technology has significantly enhanced China's technological build‐up. Imported technology is positively correlated with both dimensions.     

Policy and Non-Policy Barriers to Trade and Implicit Taxation of Exports in Uganda

Uganda has made significant progress in reducing policy-induced anti-export bias in its trade policy in the 1990s. Taxes on exports have been abolished, and import protection has been reduced considerably. Such trade barriers are only a component of thee transaction costs associated with trade. Poor infrastructure, notably by increasing transport costs, and institutional inefficiencies can significantly increase trade costs. The effective protection of imports, and implicit tax on exports, due to transport costs is calculated and compared to effective protection due to trade policy barriers for Uganda. The results reveal that transport costs are often very high, in many cases representing a greater cost (tax) to exporters than trade policy.     

How Responsive are Chinese Exports to Exchange Rate Changes? Evidence from Firm-level Data

This article examines the impact of exchange rate changes on Chinese firms’ decisions on export market entry and export share. Using a large dataset for Chinese firms in 2000–2006, we find that changes in exchange rate levels play a significant role on both export extensive and intensive margins of Chinese firms. Compared to studies using macro data, our firm-level analysis allows us to control for firm and industry heterogeneity. Firm size and location matter. We do not find a difference between foreign and domestic firms in responding to exchange rate changes. Industry heterogeneity is also found to be important.     

Technology Trade

This study addresses the question of why some countries import more research and development-intensive goods than others. Using a panel data set of 80 countries for the period 1970–1995, results indicate that domestic investment, foreign direct investment and the quality of intellectual property rights systems positively affect technology imports. However, the higher the percentage of the workforce with primary studies, the lower technology imports are. Moreover, intellectual property rights tend to reinforce the positive role played by foreign direct investments in importing technology while the ability of imitation reduces the effect of intellectual property rights.     

The growth of Indian nitrogen fertilizer manufacture: Some lessons for industrial planning

Large‐scale manufacture of nitrogen fertilizers in India originated during the Second World War as a result of the interruption of the import of rice from Burma. The growth of production has been at the prodigious rate of 22 per cent per annum in the 17‐year period 1949/50–1965/6. Demand has never acted as a constraint; this suggests that agro‐industry can play an important part in an industrializing strategy for development. In spite of this success two negative features have characterized the economic history of fertilizer production: gestation lags and under‐utilized capacity. Had the establishments worked at design capacity and had the average gestation lag not exceeded three years, less than 60 per cent of the 2.1 million tons of nutrient imported into India during these 17 years would have been required. This highlights the need to include in planning models of output expansion both of these variables, getstation lag and low capacity utilization. Some of their causes have been exogenous to the industry. But a number are internal and recurrent. Unjustified technical risks, plant dis‐integration, faulty process selection and inadequate project appraisal in investment decision‐making. Attempts to reduce the balance of payments deficit have had a negative feedback on the foreign exchange flow by reducing the industry's average annual output. Such negative effects should be included in formulating import control, import substitution and export promotion policies. Finally the ubiquity of excess capacity and the invariance of labour force size with the degree of capacity utilization in this sector is shown to lead to large over‐estimates of the future required‐labour force when certain forecasting techniques are used, even in the absence of trends to increasing labour productivity.