Impact of trade and investment on income surge in Bangladesh: Evidence from trade liberalization regime

Trade and investment are crucial drivers of economic growth. Successful execution of trade and investment policy can elevate a developing country to a sustained growth path and make it self-reliant. Bangladesh implemented a trade liberalization policy in the 1980s, deviating much from its conservative trade policy. This article assesses the impacts of trade, investment in physical as well as human capital, and a few trade policy variables on income surge for the liberalized regime. The econometric analysis finds that export, import, and domestic investment stimulate income. The impact of foreign investment is not conducive. Public spending on education also contributes to the income surge. Among the policy variables, trade openness and currency depreciation produce a beneficial impact. Population growth retards economic growth. The baseline results hold in the estimations involving several specifications of variables and testified as robust. The article views that a comprehensive approach to trade and investment policy would ensure the comparative advantage of trade and the well-being of Bangladesh.     

Does free trade really reduce growth? Further testing using the economic freedom index

While studies of the relationship between economic freedom and economic growth have shown it to be positive, significant and robust, it has rightly been argued that different areas of economic freedom may have quite different effects on growth. Along that line, Carlsson and Lundström (2002) present the surprising result that “International exchange: Freedom to trade with foreigners” is detrimental for growth. We find that “Taxes on international trade” seems to drive this result. However, using newer data and a more extensive sensitivity analysis, we find that it is not robust. Least Trimmed Squares-based estimation in fact renders the coefficient positive.     

The effect of trade openness on economic growth: Some empirical evidence from emerging market economies

This study investigates the impact of trade openness on economic growth in a panel of five emerging market economies, covering the data period from 1993 to 2016. Based on the panel estimation methods, the empirical results confirm the long‐run relationship among trade openness, economic growth, financial development, inflation, labour force, and technology, whereas the findings of long‐run elasticities show that trade openness has a positive considerable impact on economic growth. Furthermore, the heterogeneous panel non‐causality tests indicate the presence of a bidirectional causality between economic growth and inflation and a unidirectional causality that runs from economic growth to trade openness and economic growth to financial development in the short run. Finally, the findings suggested that trade openness plays a substantial role in promoting economic growth while also promoting economic development in these five emerging market economies.     

Explanations of protectionism in international trade votes

In this study, we analyze the voting records of U.S. senators on three recent international trade bills. Our objective is to assess the importance of ideology and constituent interest as forces that influence protectionist vs. free trade voting behavior. The methodology uses discriminant analysis supplemented with expert judgement. The first conclusion is that ideology is the more important force in generic protectionism issues, and local constituent interests are more important for commodity-specific issues. Second, we find that protectionism is especially associated with liberal ideology, high import impact, and low export dependence. Although the discriminant analysis outperforms expert judgement in classifying protectionist vs. free trade votes in two of the three bills studied, the best explanation is obtained by using both methods together.We are indebted to Dennis Quinn, Tom Brewer, Michael Czinkota, Karen Gaertner, Annette Shelby, and Melanie Hayes. Errors remain our responsibility.     

Mandatory corporate social responsibility and provision of trade credit: Evidence from India

The relationship between corporate social responsibility and trade credit is investigated in this study via the trust (direct) and cash holding (indirect) channels. We discovered that corporate social responsibility and trade credit are strongly correlated, lending support to the trust channel. We also find evidence for the indirect route; particularly, enterprises with high CSR have high cash holdings, which are associated with less trade credit.     

Inequity Aversion and the International Distribution of Trade Protection

One important puzzle in international political economy is why lower‐earning and less‐skilled intensive industries tend to receive relatively high levels of trade protection. This pattern of protection holds across countries with vastly different economic and political characteristics and is not well accounted for in existing political economy models. We propose and model one possible explanation: that individual inequity aversion leads to systematic differences in support for trade protection across industries. We conduct original survey experiments in China and the United States and provide strong evidence that individual policy opinions about sector‐specific trade protection depend on the earnings of workers in the sector. We also present structural estimates that advantageous and disadvantageous inequality influence support for trade protection in the two countries.     

Foreign direct investment,information and communication technology,trade, and economic growth in the South Asian Association for Regional Cooperation countries: An empirical insight

Information and communication technology (ICT) is one of the key sectors promoting economic growth in the present modern era of globalization. It promotes technological advances in global communications as well as production techniques and contributes to economic growth and development. Most of the economic activities, including international trade and foreign direct investment (FDI), are largely dependent on various modern sources of ICT. The objective of this study is to examine the dynamic relationship between FDI, ICT, trade, and per capita gross domestic product growth across the South Asian Association for Regional Cooperation (SAARC) developing nations from 2000 to 2017. We have used different panel estimates such as fully modified ordinary least squares, dynamic ordinary least squares, Fisher–Johansen cointegration test, panel autoregressive distributed lag, and Dumitrescu–Hurlin causality. We found existence of unidirectional causality from FDI to ICT and bidirectional causal relationship between trade and ICT. The outcome of our study suggests policy recommendations for improving the standards of ICT, specifically focusing on economic growth, trade openness, and facilitation of foreign investment in the SAARC countries.     

What explains attitudes across US trade policies?

Examining the demographic, economic and political variables that are associated with attitudes toward various trade policies can provide some insight into the public perceptions of globalization, and the political response to those perceptions. Using detailed data from the Program on International Policy Attitudes survey “Americans on Globalization, Trade, and Farm Subsidies,” I assess a number of potential determinants of trade policy attitudes. Education is associated with pro-trade attitudes, and Democrats are pro-trade on particular, politically salient trade issues. In addition, there is substantial variation in the determinants of trade policy attitudes across policies.     

Using state-level simulations in a political economy model of US trade policy

Most analyses of US congressional votes on trade policy identify political and economic factors, and general economic conditions as significant factors. In this paper we examine whether simulated state-level impacts of trade policy changes obtained from an applied general equilibrium model explain recent US Senate votes on trade bills. We find that simulated gross state product effects are good predictors of recent trade-policy votes. Our model-based measures of trade sensitivity perform slightly better in statistical terms than the more traditional economic measures. For the Senate as a whole, import considerations have a larger impact on senate voting than export considerations.     

‘Cleaning up’ while cleaning up? Pollution abatement,interest groups and contingent trade policies

This paper analyzes the political economy of environmental-policy formation in a trading economy with established rules for administered protection. We argue that the social costs associated with the adoption of an inefficient environmental regime are likely to be compounded by induced restrictions on trade when the effected industries are import competing. The preferences of interest groups for alternative environmental regimes tend to be linked to the legal-institutional setting in which trade policy is conducted. Under existing rules and practices in the area of administered protection, there is reason to believe that interest group preferences for an inefficient approach to pollution control will be strengthened because the adoption of such a regime is more likely to lead to a concomitant increase in trade barriers.     

Learning,political regimes and the liberalisation of trade

In this article, the probability of opening to trade is related to a country's propensity to learn from other countries in its region. It is argued that countries have different motivations to learn, depending upon the responsiveness and accountability of their political regimes. Whereas democracies cannot afford to be dogmatic, authoritarian regimes are less motivated to learn from the experience of others, even if they embrace policies that fail. Using data on trade liberalisation for 57 developing countries in the period 1970–1999, it is found that democracies confronting economic crises are more likely to liberalise trade as a result of learning; among democracies, presidential systems seem to learn more, whereas personalist dictatorial regimes are the most resistant to learning from the experience of others.     

The dynamics of federalism,subnational markets and trade policy-making in Canada and the US

Preferential trade agreements are now the dominant trend in the international trading regime. Unlike earlier ‘first generation’ agreements, the new agreements became more comprehensive in their coverage, impinging on areas that are subject to subnational jurisdiction of federal systems. Given constitutionally-prescribed competences allocated to subnational governments, the diversity of interests and sensitivities of subnational entities bring deeply entrenched regulatory practices under scrutiny. Few studies have focused on whether the combination of economic liberalization and political fragmentation will push federal and sub-federal entities to address domestic market fragmentation. We examine whether international market liberalization fosters domestic regulatory and structural reforms to cross-border barriers to trade in Canada and the United States. We show that while the political incentives and functional pressures generated by free trade agreements have fostered attempts at addressing internal market restrictions in Canada, the US has not followed the same path due to weaker mechanisms of intergovernmental coordination.     

Industries, Occupations, and Trade Policy Preferences

The nature of one’s work, not just who one works for, is central to political and economic life. Yet models of trade policy preferences mostly ignore occupation, focusing exclusively on industries (perhaps because industries are the usual organizing dimension of economic policymaking). This article proposes new measures of how much risk trade imposes on different workers based on how diversified their occupation is across industries, thus considering both industry and occupation. Having a job specific to any sector appears to encourage protectionism, regardless of that sector’s comparative advantage, supporting the idea that public opinion may treat trade policy as insurance.     

Cooperative lobbying and endogenous trade policy

This paper considers trade policies in a small open economy in which two influential interest groups lobby the government. Since competitive lobbying leads to excessive rent-seeking expenditures, the lobbies have an incentive to cooperate. The outcome of cooperative lobbying is characterized in terms of lobbying and bargaining power of the two groups. Two important results are derived. First, if the power of competing interest groups is balanced, then cooperation leads to free trade. Second, if it is unbalanced, cooperation may, on the contrary, increase protection.     

Fair trade: global problems and individual responsibilities

The topic of global trade has become central to debates on global justice and on duties to the global poor, two important concerns of contemporary political theory. However, the leading approaches fail to directly address the participants in trade and provide them with normative guidance for making choices in non-ideal circumstances. This paper contributes an account of individuals’ responsibilities for global problems in general, an account of individuals’ responsibilities as market actors, and an explanation of how these responsibilities coexist. The argument is developed through an extended case study of a consumer’s choice between conventional and fair trade coffee. My argument is that the coffee consumer’s choice requires consideration of two distinct responsibilities. First, she has responsibilities to help meet foreigners’ claims for assistance. Second, she has moral responsibilities to ensure that trades, such as between herself and a coffee farmer, are fair rather than exploitative.     

Political polarization, congressional redistricting, and trade liberalization

During the last 50 years, political polarization in the US House of Representatives has intensified. One explanation for this trend emphasizes the importance of congressional redistricting. This paper analyzes the relationship between political polarization and redistricting in the context of two trade liberalization bills. The results of the paper indicate that redistricting has not contributed significantly to party polarization over trade policy although it has produced a partisan shift in favor of trade liberalization. Redistricting does not appear to impact political polarization largely because district-level characteristics currently are dominated by broader, national factors such as party affiliation. The results of the paper clearly demonstrate this point by showing that changes in party affiliation have a much greater impact on voting behavior than changes in district characteristics. The paper also finds, however, that institutional control of the redistricting process at the state level has influenced political polarization with respect to trade policy.     

Australian opinion on international trade and the security link with the United States

In recent years, the Australian government has shifted the focus of its foreign economic and trade policies away from traditional practices and partners and onto Asia while simultaneously maintaining close diplomatic and defence ties with Washington. Using the results of the 1993 Australian Election Study survey, this note examines the place of public opinion in this continuing exercise. We find that although there is public support for increased trade with Asia, strong protectionist and pro‐alliance sentiments remain strong within the populace at large. These prevailing sentiments and their, albeit at this stage limited, interconnections could serve to complicate any push towards greater trade ties with its Asian neighbours.     

The issue of instability in a simple policy game between the central bank and a representative union

In the recent economic literature the independence of the central bank is often considered to be one of the most effective guarantees to achieve price stability. A strong theoretical basis for this proposition is that the monetary policy delegation given to an independent central bank is an optimal instrument to avoid the time inconsistency problem of monetary policy. This paper investigates the stability properties of this solution in a simple game in which the private sector (i.e. the trade unions) and the public sector (i.e. the central bank) simultaneously interact. A representative monopoly union is considered, and – in line with the recent economic debate – two types of unions are investigated: (i) the standard micro-founded trade union; (ii) the inflation-averse trade union. In both cases, we find that the requirement for the Nash equilibrium to be stable imposes a limit to the conservativeness of the central bank. Instability of the Nash equilibrium reveals a strategic co-ordination failure between the public and the private sector.     

When trade liberalization turns into regulatory reform: The impact on business–government relations in international trade politics

Business–government relations on trade issues are generally characterized as protectionist lobbying or – less often – lobbying for the liberalization of markets. However, with the evolution of the trading system, negotiations today concern not just market opening, but also the regulatory frameworks that structure international trade. This transformation has important consequences for the ways in which private interests can contribute to trade negotiations. Instead of simply trying to exert pressure, businesses and other private actors now form working relationships with governments based on expertise, learning, and information exchange. This article illustrates these new forms of public–private interactions with examples from the USA, the European Union, and Brazil.     

Overcoming the deadlock in world trade

The WTO's Ninth Ministerial Conference is a serious opportunity to break a five-year deadlock in the Doha Round of trade negotiations. Failure to do so could reinforce a growing tendency among major trading powers to focus on regional and inter-regional trade agreements beyond the WTO.