Journal of International Commerce, Economics and Policy

This paper builds an index to measure the depth of accession commitments and estimate the impact of World Trade Organization (WTO) accession. We find that WTO accession has a positive and significant influence on an economy’s trade and investment. The impact of WTO accession on the ratio of trade to gross domestic product is significantly higher than in previous studies on developing countries. Trade in services also tends to increase after accession. Moreover, greater openness does not negatively affect the trade balance of Article XII members. The results on investment, be it domestic or foreign, are also encouraging, but are not fully conclusive.

Is Japan’s aging and, more recently, declining population hampering its growth and reflation efforts? Exploiting the demographic and economic variation in the prefectural data between 1990 and 2007, we find that aging of the working age population has had a significant negative impact on the total factor productivity (TFP). Moreover, prefectures that aged at a faster pace experienced lower overall inflation, while prefectures with higher population growth experienced higher inflation. The results give strong support to the notion that demographic headwinds can have a non-trivial impact on the TFP and deflationary pressures.

The paper studies the determinants of various instruments of capital flows, using 34 emerging markets and developing economies over 2009Q3–2015Q4. The regressions are extended to focus on quarters with flows that are one standard deviation above/below mean. Overall, the capital flow slowdown in recent years is due to lower growth prospects of recipient countries and worsening global risk sentiment. However, there are considerable differences across instruments. The sensitivity of some flows, towards push/pull factors, increases during periods of extreme capital flows. The gap between the US long- and short-term maturity bond yields — insignificant during normal times — is important during high capital flow episodes.

This paper examines empirically whether Aid for Trade (AfT) programs and Foreign Direct Investment (FDI) inflows affect export upgrading and, if so, whether their effects are complementary or substitutable. The empirical analysis suggests that AfT and FDI do affect export upgrading, namely export diversification and export quality improvement. Moreover, there is a significant interplay between these two financial flows in affecting export upgrading in recipient countries. The importance of this interplay should be taken into account by policymakers of recipient countries when they are devising both export development strategies and policies/institutions that affect FDI inflows into their countries.

We analyze prospects for the Chinese renminbi to become a major international currency, along with the US dollar, in a multiple reserve currency world. Analytical models on switching costs in networks and on currency choice under direct and indirect transaction costs are used to derive variables for empirical analysis. While network size and financial market depth (lower transaction costs) favor incumbents, changes in trade-related bargaining power and in currency volatility could favor newcomers. The models also point to political determinants affecting currency choice. We develop indices to quantify some of these. When the bargaining power index is used in estimation, it shows capital account openness and currency stability have to complement a rise in trade share for an aspiring reserve currency.

India’s organized manufacturing sector experienced a 11% fall in its carbon di oxide (CO₂) emissions intensity during 2009–2012, while a majority of the manufacturing plants achieved over a 30% fall during the corresponding period. How did such a reduction in CO₂ emissions intensity affect the export competitiveness of Indian manufacturing firms? Using firm-level data for 2009–2013, this paper attempts to empirically answer that question. It is found that large firms and capital intensive firms have achieved a relatively faster decline in CO₂ emissions intensity and that containment of CO₂ emissions in manufacturing firms did not cause any major loss in their export competitiveness. Rather, it is found to be positively associated with increases in exports.