Global Economy Journal

The hypothesis of learning-by-exporting hinges largely based on the argument that the exporters are exposed to knowledge and technology to foreign markets and they learn and become more productive and innovative. However, firms from developing countries not only export to industrialized economies but also to less developed countries. The natural questions arises that what if a firm from developing countries directs its exports to a country at a similar or lower level of technological developed. Would there still be productivity gains to be made? We attempt to test the effects of destination of exports on firms’ productivity and innovation for a sample of the Indian manufacturing firms. Our findings indicate that a positive learning effect is flowing from developed countries to productivity and innovation of the Indian firms. However, in the case of exporting to developing countries including China, we find weak or negative effects. Furthermore, our results also suggest that in-house R&D and foreign technology enhances the absorption capacity of firms, which in turn help firms in learning and gaining through exporting to technologically advanced countries.

This paper analyses the impact of education networks on the FDI from the United States and United Kingdom to 167 countries during 1999–2011. Proxies of networks are international students in the United States and United Kingdom and American and British alumni associations abroad. Results show that international students boost British FDI, while their influence on American FDI is weaker and restricted to non-OECD economies. International alumni associations strongly attract both American and British FDI to the alumni home countries. The different impact of education networks on American and British FDI is partly related to the two countries’ use of soft and hard power. The pro-FDI effects of student ties are disrupted by the use of hard power.

The creation of the EMU in 1999 gave its original eleven members additional advantages for intra-EMU trade, relative to other members of the EU and the rest of the world. Other things being equal, this should have resulted in greater export affinity within the Euro Zone. This paper constructs export affinity indices for the intra-regional exports of the EMU, for its exports to the then other members of the EU, and to the countries that joined the EU during this period, for 1997, a full year before the Euro, and for 2007. These are used to see whether the net effect on export affinity are as expected, or whether other forces affecting the growth and direction of world exports led to different results. It was found that though there was clear export affinity within the EMU in both years examined, and, of course, tremendous growth in total exports to all regions, export affinity fell rather than rose between the two years. As far as special affinity is concerned, other factors affecting the development of world exports cancelled the advantages both of EMU membership and of new membership in the EU. Similar net results were found for bi-lateral export affinity indices of the original EMU members.

This paper analyses the role of Free Trade Agreements in determining export and import efficiency levels in India using stochastic frontier version of gravity model. We estimate the impact of selected FTAs of India (its bilateral FTAs, FTA with ASEAN and South Asian FTA) and regulatory quality on the efficiency of exports and imports over the period of 2000–2014. The results indicate that India’s bilateral FTAs and its FTA with the ASEAN group help in improving the export and import efficiency respectively. However, the South Asian Free Trade Agreement is statistically insignificant for India’s export and import efficiency. The results also highlight importance of trading partners’ regulatory quality for enhancing the India’s trade efficiency and note that the impacts of regulatory quality are non-monotonic.

Using a comprehensive database with 51 emerging countries studied over a 13 year period, we find that devaluation increases the PE investment. More years of annual devaluation have a higher impact in promoting PE investment. Conclusions are confirmed for total and high technology PE investments, but not for early stage PE investments. Devaluation does not benefit PE investment in firms in the early stages of development. Devaluation itself is not sufficient to encourage the appetite of investors; however, some country-level competitiveness variables are indispensable for making a country more fertile for PE investment when a devaluation occurs – the high relevance of competiveness increasing in the long term.

The article seeks to clarify the relationship between financial development and the marginal variation in the proportion of exporting firms (extensive margin) and the volume exported by each economic sector (intensive margin). We develop a theoretical model with two countries facing different levels of financial restrictions and input costs, several sectors differentiated by their dependence on external finance and heterogeneous firms producing with a combination of inputs. The model shows that financially developed countries experience a commercial advantage in financially dependent sectors and countries with more competitive cost structures experience an advantage and specialize in low financially dependent sectors. This relationship is true even within the manufacturing sectors. The model also indicates that financial development only affects trade in financially constrained sectors.

In this study, we attempt to provide underlying theoretical and empirical explanations for exchange rate appreciation due to foreign capital influx and aggregate demand conditions in the BRICS economies. The empirical analysis is based on a panel dataset of BRICS countries over the time period 1992–2013 to substantiate our theoretical findings. For panel co-integration, Pedroni and Johansen-Fisher panel co-integration tests are conducted to compare co-integration among panel countries. We also analyze the results from Dumitrescu-Hurlin panel causality test among variables and use Granger Causality to test for the causal patterns in each of the individual countries. Our findings showed that the exchange rate volatility is directly affected by the flows of FDI, GDP per capita, Capital formulation and House hold consumption. The results have profound implications in terms of exchange rate stability in the BRICS countries and associated risks.

We investigate the relationship between remittances, financial deepening and the growth of the Lebanese economy using quarterly data from 1993 to 2011. Our results provide strong support for the theoretical contention that remittances and financial development share a robust long-run relationship with growth in Lebanon. However, the results indicate that short-run effects on growth volatility are statistically insignificant from financial development but strongly significant from remittances. These results extend recent findings on the financial development, remittances and growth nexus and imply that benefits expected from remittances for addressing growth volatility in Lebanon materialize more than those associated with financial development.