Journal of Chinese Economic and Foreign Trade Studies

Publisher:
Emerald Group Publishing Limited
Publication date:
2021-02-01
ISBN:
1754-4408

Latest documents

  • Estimation of Armington elasticities for trade-policy analysis

    Purpose: The purpose of this paper is to compare the Armington elasticities for world average values and country-specific values and obtain evidence for whether the world average elasticities and the “rule of two”, which have been applied in many papers, are accurate for cereals in trade policy studies related to an individual country. Design/methodology/approach: The authors use panel data with a nested model to estimate and compare Armington elasticities based on world average values and country-specific values from 10 countries and regions. Findings: The results suggest that cereals’ elasticities vary between world average values and country-specific values, and the “rule of two” is not strictly applicable. In fact, the “less than two” concept fits well in many cases. Originality/value: This study sheds light on the effects of country heterogeneity on the elasticities and the accuracy of using world average elasticities in a trade policy study for an individual country. In addition, this paper offers estimated values of country-specific elasticities for 10 countries and regions.

  • Causes of U.S.-China trade imbalances: a review

    Purpose: It is a common view to Trump administration and public that devaluation of Chinese currency is the origin of the US trade deficit. However, the previous literature does not support this common view. To better understand the causes of the US trade imbalances with China, this study aims to review the previous literature focusing on the causes of bilateral trade imbalances between the USA and China. Design/methodology/approach: Review previous literature according to the different reasons that each paper studies. Findings: Based on the previous literature, the Chinese exchange rate is not the main reason for the US trade imbalances. The official US trade figures overestimate the amount of deficit. The actual causes for the US trade deficit with China perhaps should be the relocation of production to China, low saving in the USA and high saving in China, and the US dollar as the international currency and reserve. Originality/value: By reviewing previous literature, the authors could better understand the puzzle of the US trade deficit with China.

  • Terms of trade and economic growth in developing country. Evidence from bilateral and commodity level analysis

    Purpose: The purpose of this study is to investigate the first time ever the effects of overall terms of trade, bilateral terms of trade and main commodity groups’ terms of trade on economic growth. Design/methodology/approach: Augmented Dickey Duller and Philips Perron unit root tests and Johensan cointegration test have been applied by using annual time series data from 1974 to 2017. Dynamic ordinary least square and fully modified ordinary least square have also been used to perform sensitivity analysis. Findings: The cointegration test confirm the positive long-run relationship between overall terms of trade (ToT) and economic growth. Country-wise results show that ToT with Australia, Bangladesh, Canada, Hong Kong, Japan, Kuwait, Malaysia, Singapore, Sri Lanka, UK and the USA have significant positive effect on economic growth. Conversely, ToT with China and UAE has significant negative effect on economic growth. In contrast, ToT with India, Norway, Saudi Arabia and Switzerland has insignificant effect on the economic growth of Pakistan. Product-wise results indicate that the product group namely, Chemical, Crude Material inedible except fuels, Manufactured and Minerals fuels and Lubricant found to be a significant positive effect on economic growth. However, Beverages and Tobacco, and Machinery and Transport product groups found to be significant negative impact on economic, while Food and Live animals found to be insignificant. Practical implications: In general, it is suggested that the beneficial terms of trade are favorable for economic growth. The study suggested export promotion policy for which relationship between ToT and economic growth found positive and import substitution policy is suggested the products found a negative relationship between the said variables. Originality/value: This paper is a pioneer attempt to investigate the effect of overall ToT, bilateral terms of trade and the main commodity group’s ToT on economic growth in Pakistan.

  • Institutional quality and its impact on the facilitation of foreign direct investment. Empirical evidence from the Belt and Road countries

    Purpose: Improvements in the facilitation of foreign direct investment (FDI) through institutional quality play a significant role in the establishment of an open economy. However, the impact of institutional quality on the facilitation of FDI along the Belt and Road countries is not well explored. This study aims to empirically investigate the influence of institutional quality on the degree of FDI facilitation and explore the impact mechanism using national-level panel data from countries along the Belt and Road. Design/methodology/approach: For the data set, all variables have been normalized, and principal component analysis has been used. For the empirical models, robust standard errors and dynamic GMM method have been used to alleviate heteroscedasticity and endogeneity. Findings: The empirical results indicate that institutional quality has a significantly positive effect on the degree of FDI facilitation. Furthermore, the impact mechanism involves the mediating mechanism. In other words, the effect of institutional quality that promotes FDI facilitation is influenced by factors such as laws and regulations. In addition, the implementation of the Belt and Road Initiative (BRI) has significantly enhanced the promotional effect of institutional quality on the facilitation of FDI. Practical implications: Policymakers should focus on improving the institutional quality and the influence of mediating mechanisms, such as policies and regulations, in the institutional environment. Originality/value: This study contributes to extant literature on the impact of institutional quality on FDI facilitation of significance to China, the BRI countries, and other countries to facilitate openness in international investment. This study also contributes to the extant literature on the influence of the BRI on the development of BRI countries. This will inform policy makers, investment institutions and enterprises about the development of effective policies to aid the development of BRI countries and improve the efficiency and the returns on FDI.

  • Impact of ethnicity and self-employment on initial financing and business performance in entrepreneurship in China

    Purpose: The purpose of the current study is to analyze the influence that is caused by ethnicity and volunteer self-employment in entrepreneurship on the initial financing and business performance of Chinese enterprises. The increasing trend of entrepreneurship has raised certain ethnic challenges in entrepreneurship owing to globalization and now there are several minority groups that are running their households in China. So, the current study aims to assess whether the minority-operated and majority-operated firms have different access to initial financing and different business performance. Design/methodology/approach: The data are collected from 25 Chinese enterprises about the current variables, and the relationships are tested. This study has used the ordinary least of square (OLS) regression model to examine the findings. Findings: The purposive sampling is used in the current study because the purpose of the present research is to understand and study the role of ethnicity and self-employment in initial financing and business performance of Chinese enterprises and so the data was collected from related enterprises. This study has used the ordinary least of square (OLS) regression model to examine the findings. Originality/value: The current findings have significant implications in theory and practice. This study will be a great addition to the literature because the self-employment has never been examined before in such models to assess the role of forceful or volunteer self-employment in entrepreneurship, and so, it will open new doors of research for future researchers.

  • Development prioritization through analytical hierarchy process (AHP) - decision making for port selection on the one belt one road

    Purpose: This paper aims to attempt to investigate if the now-existing upstream Sost Dry Port in Gilgit-Baltistan and the prospective midstream Havelian Dry Port in Khyber Pakhtunkhwa, both part of One Belt One Road (OBOR), are expected to compete against or complement each other in terms of port efficiency and location, and which of the two ports should first be developed in the wake of uninterrupted logistics flow of cargo on the Economic Corridor. Design/methodology/approach: Analytic hierarchy process (AHP) has been used for multi-criteria decision making by the stakeholders. Five main criteria for transhipment port selection, ranging from port location, port efficiency, intermodal connectivity, port costs and cargo volume were used with three sub-criteria each. Findings: This study demonstrates the results that favour physical infrastructural development initiatives prioritized for the Sost Dry Port in view of its strategic location as the upstream supply chain node on the Economic Corridor, imparting efficiency to the logistics flow. Practical implications: Results of this study may assist policymakers in achieving goals like enhancing trade facilitation, reducing congestion and increasing cargo security on OBOR. Originality/value: To the best of the authors’ knowledge, this is the first study of its kind that analyzes priority for immediate development intervention for either Sost or Havelian Dry Port, both located on CPEC – OBOR supply chain.

  • Trade openness and sectoral growth in developing countries: some new insights

    Purpose: The trade–growth nexus has been researched during the past few decades. However, the impact of trade openness on different sectors of the economy is not well explored. The purpose of the current study is to focus on developing countries to examine the impact of trade openness on three main sectors: industrial, service and agricultural. Design/methodology/approach: The study applied econometric techniques that control unobserved heterogeneity and endogeneity to obtain robust and reliable results. Findings: The results revealed that trade openness impacts different sectors differently. Trade openness positively impacts agriculture and industrial sectors, whereas it negatively affects the service sector. A similar trend is observed with regard to employment as it affects service sector negatively and creates a positive impact on other sectors, namely, agriculture and industrial sectors. Furthermore, it was found that human capital has a negative effect on all sectors, whereas financial development has positive effects on service and industrial sectors and negative effect on agriculture sector. The results are robust because of the method of estimation and the addition of some relevant variables. Practical implications: The policymakers should focus on trade in agricultural and industrial sectors and should discourage trade in the service sector. Originality/value: This study has examined the impact of trade openness on sectoral growth by focusing on the developing world, which is an under-researched area in the literature.

  • Macroeconomic fundamentals and exchange rates in South Asian economies. Evidence from pooled and panel estimations

    Purpose: This study aims to examine the impact of macroeconomic fundamentals on exchange rates of selected South Asian economies during 1981-2013. Design/methodology/approach: The authors have used two econometric approaches to the data. For the pooled sample, estimated generalized least square (EGLS) and the two-stage least square method are applied. For the panel data, the authors have used the panel generalized method of moments and ordinary least squares (OLS) methods. Findings: The results suggest that macroeconomic factors have a significant impact on exchange rates. The robust findings highlight that improvements in domestic economic and political systems are crucial for a successful exchange rate policy. Originality/value: The existing literature on exchange rate fundamentals have either focused on exchange rates and international trade or investigated the relationship for the developed economies. Covering a period of more than three decades, and using both pooled and panel estimations, our study is unique in terms of its focus on the South Asian economies.

  • The effect of capital structure on profitability and stock returns. Empirical analysis of firms listed in Kompas 100

    Purpose: The purpose of this study is to examine the factors that influence capital structure, profitability and stock returns and the relationship between capital structure, profitability and stock returns. The endogenous variables in this study are capital structure, profitability and stock returns, whereas the exogenous variables are firm size, growth opportunity, tangibility, liquidity, volatility and uniqueness. Design/methodology/approach: The population used is a company that is listed on the compass index 100 period of August 2016. A total of 64 companies are sampled in this study. The unit of analysis is 448 data. The data analysis technique used is path analysis with the help of AMOS. Findings: The results obtained show only profitability variables that affect stock returns. Variable capital structure, firm size, growth opportunity, tangibility and liquidity have no significant effect. Variables that influence capital structure are only influenced by growth opportunity, whereas other variables are not significant and variables that affect profitability are firm size, growth opportunity, uniqueness and volatility. Originality/value: Path analysis is a model similar to the multiple regression analysis, factor analysis, canonical correlation analysis, discriminant analysis and more general multivariate analysis groups. This research discusses that capital structure is useful for increasing the value of the company in the sense that the more debt that is used, a tax deduction will be obtained because of interest costs. So that the company’s profits will increase and eventually will increase the value of the company. This opinion remains a controversy among financial experts. Until now, there is no agreement that can explain the capital structure in all conditions of the company. There are two important theories concerning capital structure, trade-off theory and pecking order theory.

  • China’s impact on pass-through to US import prices

    Purpose: This paper aims to analyze the marked decline in exchange rate pass-through to US import prices in the early 2000s focusing on the increased role of China as a trade partner. In particular, the research focuses on the impact of an exporter with a fixed exchange rate having large market shares of a particular importing country. Design/methodology/approach: The study uses highly disaggregated US import data and rolling regressions to calculate quarterly pass-through estimates for specific goods from every exporter. This leads to a total of over 1.7 million pass-through coefficients. The second stage compares these pass-through coefficients with China’s share of US import market for that particular good and time. Findings: The paper shows that as China’s market share for specific goods grows, pass-through rates of imports from other countries falls. Pass-through rates remain relatively stable for goods that China does not export to the USA or goods for which China’s share of US imports stays constant. This relationship is stronger when the dollar decreases in value, further suggesting that pressure from China forces competitors to maintain stable prices. Originality/value: This paper is unique in its use of highly disaggregated data on US imports. While many analyses of exchange rate pass-through focus on overall levels or general goods, this work uses import data at the 10-digit HTS code level. Therefore, the findings are more detailed in showing how China’s increased presence in the US market influences prices of imports from other countries.

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