Journal of Chinese Economic and Foreign Trade Studies

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

ISBN:: 1754-4408

Issue Number

Latest documents

Trade war, media tone and market reaction asymmetry
Purpose: This study investigates the impacts of Chinese media reporting strategy (media tone) on the market performance of US-trade-intensive firms vs non-US-trade-intensive firms and the effect of media tone on the occurrence of good and bad news. Design/methodology/approach: News texts were retrieved from nine major financial/economic media outlets. Lexical analysis and event study have been adopted to examine the impact of different types of news during the US–China trade frictions on Chinese firms. Findings: The results show that US-trade-intensive firms vs non-US-trade-intensive firms exhibited different reactions to media coverage. US-trade-intensive firms care more about the governmental attitudes toward the trade war and potential policy supports implied in the official media reports than non-US-trade-intensive firms do. The return-chasing behavior hypothesis is supported by US-trade-intensive investors, and this effect is further enhanced when multiple releases occur on the same day. A higher media tone combined with intensified media releases significantly increases the volatilities of both US-trade-intensive and non-US-trade-intensive firms. Practical implications: Information provided by this study helps the regulatory authorities to formulate measures to enhance investor confidence and better optimize resource allocation. Originality/value: This study investigates the asymmetric effect of media tone on US-trade-intensive firms vs non-US-trade-intensive firms, which has not been examined, to the best of the authors’ knowledge, in the existing literature.
Guest editorial: FDI divestment inflows and outflows in developing economies
Impact of US-China trade war on Asian economies: neural network multilayer perceptron approach
Purpose: This study aims to find the impact of the trade war between the USA and China on Asian economies. Apart from macroeconomic variables associated with trade, this study explicitly creates a trade war scenario and trade war participant dummies. Using the neural network multilayer perceptron, this study checks for the causal linkages between the predictors and target output for the panel of Asian economies and the USA. Design/methodology/approach: A conceptual model of the after effects of trade war in a quadrant is developed. Variables related to trade and tariffs are included in the study for a panel of 19 Asian economies. The feedforward structure of neural network analysis is used to identify strong and weak predictors of trade war. Findings: The hidden layers of the multilayer perceptron reveal the inconsistency in linkages for the predictors’ services exports, tariff measures, anti-dumping measures, trade war scenario dummy with gross domestic product. The findings suggest that to curtail the impact of the trade war on Asian economies, predictors with neural evidence must be paid due weightage in policy determination and trade agreements. Originality/value: The study applies a novel and little explored AI/ML technique of Neural Network analysis with training of 70% observations. The paper will provide opportunity for other researchers to explore techniques of AI/ML in trade studies.
FDI, disinvestment and growth: an appraisal of Bhutanese economy
Purpose: The purpose of this paper is to appraise the influence and challenges of direct disinvestment or through foreign direct investment (FDI) in the Kingdom of Bhutan, particularly to identify the inflow of disinterment post pandemic and how it can be improved. Design/methodology/approach: The authors investigated the influence of FDI on Bhutan’s economy by analyzing secondary published data by Asian Development Bank and government agencies of Bhutan. To find out the role FDI has played in the growth of the Bhutanese Economy. Findings: The FDI is not playing a major role in the nation’s economy so far. However, its potential cannot be ignored as there is a need for foreign currency and expertise in the country. Furthermore, government policies are directly influencing the inflow of foreign exchange that affects the Bhutan’s economy. FDI has not increased considerably because of self-imposed restrictions blocking government policies. Research limitations/implications: This research is based on the data collected from secondary sources, which could be considered as the main limitation of this study. The Himalayan kingdom is not much open to the outside world in terms of the publication and availability of the data. Researchers put their best effort in retrieving secondary data from authentic sources. Practical implications: This research has direct implications from an institutional perspective on the government policies and procedures. This study throws light on the elements that might help in improving Bhutan’s economy, employment and productivity for an overall development of economy. Social implications: Bhutan and similar countries need to understand the pros and cons of having FDIs. This study might help the government and the civil society to understand the trends FDI has triggered in the nation over last 30 years, and will help them to make appropriate policies and regulations dealing with foreign investments. Originality/value: This paper underwrites the influence of disinvestment on Bhutan’s economy, which can revolutionize business, entrepreneurship and institutions. This research was conducted by analyzing secondary data released by authorized agencies, which indicated the lower inflow of foreign exchange and how to improve further.
Foreign divestment, economic growth and development in South Africa: an empirical analysis
Purpose: The purpose of this study is to investigate the effect of foreign direct divestments (FDD) on economic growth and development in South Africa for the period 1991–2019. Design/methodology/approach: The non-linear autoregressive distributed lag technique is used for the empirical analysis. Two regression models are specified, one for economic growth and the other for development which is proxied by poverty. Findings: The empirical results suggest that foreign divestments are detrimental to both economic growth and development. Furthermore, the results suggest that the negative effects of foreign divestments outweigh the positive effects of FDI inflows. Practical implications: South African policymakers should thus use policies that promote the retention of FDI inflows together with those that attract inflows. Furthermore, policies that promote economic freedom such as transparency and reduction in the time frame for granting government permits for business operations are also of paramount importance. Originality/value: Most of the available literature on FDD focuses on the firm perspective. Available studies on the effect of FDD on economic growth do not investigate the effect of divestment on economic development. Economic growth is a necessary but not a sufficient condition for the achievement of socioeconomic development.
Food security and political instability-foreign divestment analysis
Purpose: Prior studies have found evidence for the role of political instability on foreign divestment (FD) where a high level of instability encourages FD decisions. Therefore, this paper aims to examine how the food security level explains the linkage between political instability and FD. Design/methodology/approach: The current study adopts the system generalised method of moment (GMM) to achieve accurate and reliable empirical evidence for 60 developing countries in the period 2011 to 2020. Findings: The results demonstrated a negative and significant relationship between political instability and FD on food security. This suggests that political instability’s impact on divestment tends to be lower in countries with better levels of food security. Other controlled variables, such as economic growth, human capital and trade openness, also have a negative effect on FD, discouraging FD. Practical implications: As a result, policymakers could take steps to ensure that food security levels reach acceptable levels, as food security has been linked to a country’s political stability. Originality/value: To the authors limited knowledge, no studies have looked at the relationship between political instability and food security in determining a country’s FD. Our study aims to analyse this issue because the current global crisis, which is being caused by high food prices, will push millions of more people into severe poverty and exacerbate hunger and malnutrition
An appraisal of India’s comparative advantage in information technology exports
Purpose: The purpose of this study is to estimate revealed comparative advantage and normalized revealed comparative advantage (NRCA) indices of India’s computer and information services (CIS) export competitiveness with regard to information technology (IT) competing developing nations, such as China, Philippines, Malaysia and Brazil. Design/methodology/approach: Using annual data of total exports for CIS, transportation (TNS), travel (TVL) and insurance (INS) services under service categories of the balance of payment, the present study estimates the pattern of comparative advantage (CA) in India’s CIS exports with respect to IT competing developing nations such as China, Philippines, Malaysia and Brazil from 2000 to 2018. The choice of the study period is determined by the availability of consistent data on IT service exports of these nations. The study also estimates the export position of CIS export in comparison to India’s traditionally strong commercial services export of TNS, TVL and INS during the study period. Findings: Both the indices showed that India had a strong CA in CIS compared to the selected nations, indicating India’s relative export performance to be stronger than that of China, Malaysia, Philippines and Brazil. The cross-service index showed that India’s relative specialization level in CIS with respect to the world’s average specialization level was stronger than its relative specialization level in TNS, TVL and INS services. Furthermore, The NRCA cross-nation index showed that India’s NRCA index score has been declining since 2010 with respect to these nations, which implied a decline in the competitiveness of CIS. On the other hand, NRCA has increased in the case of Philippines, Malaysia and Brazil for most of the period post-2010. Research limitations/implications: IT is a dynamic area of economic activity, and when the pace of change is so rapid, the relevance of individual factors can change over time. The study period is also limited to the available data. Practical implications: The paper has implications for attaining sustainability in IT export growth. It is suggested that policies are directed at enhancing the overall performance of IT sector. Originality/value: The novelty of the present study lies in the estimation of India’s competitiveness in IT exports in relation to the group of reference countries. With its policy recommendations, this research is helping to shape the sustainability of the IT sector.
Impact of the divestment of Spanish FDI on economic growth of Morocco: an econometric analysis of 13 country-of-origin
Purpose: This study aims to identify the impact of foreign direct investment (FDI) on economic growth in Morocco depending on each origin country, including Spain. This study uses a linear model to measure the marginal impact of FDI on the growth of Morocco. This marginal effect allows to compare the different effects of FDI among countries of origin. Also, the marginal effect helps to measure the rate of substitution between FDI in an easier way than the other specifications of the model. The second step determines the substitute for Spain in case he decides to divest its FDI from Morocco to maintain the economic growth. Design/methodology/approach: Using data of FDI from 13 countries of origin from 1995 to 2020 and two estimation methods (Dynamic Ordinary Least Squares and Autoregressive model), this study aims to measure the marginal impact of the divestment of FDI from Spain on growth. Then this study estimates how much Morocco should attract FDI from other countries when Spain divests. This study uses the differential calculus, assuming a perfect substitution between FDI from different countries. This calculus implies an indifference curve between FDI from Spain and FDI from another country where we deduct the substitution rates between FDI. Findings: The results indicate that the FDI from Spain and France are the only ones to impact positively Moroccan economic growth. The FDI coming from Germany, Holland, China and Turkey have a negative impact, whereas those from the USA, Italy, UK, Switzerland and Gulf countries: Saudi Arabia, Kuwait and UAE have an insignificant effect. Second, using the differential calculus, the result indicates that when Spain divests 1m dirhams of its investments from Morocco, France would have to increase its own by 0.1509m dirhams so that Morocco could maintain its economic growth. Research limitations/implications: The research focuses only on economic growth, neglecting the impact on other aggregates, such as total factor productivity, technology transfer and employment. Also, this research marginalized the sectorial analysis of FDI by the source to better understand the divergent effects. Originality/value: This paper fills a research gap when analyzing the effect of FDI on the host economy depending on country-of-origin. In addition, it contributes to the body of literature by constructing the rate of substitution between the different sources of FDI to adapt to divestment policy.
The determinants of foreign divestment in South Korea
Purpose: This paper aims to enhance empirical research on foreign divestment and international relocation by multinational firms are still limited and understudied, although these issues have been a frequent phenomenon and carry important economic implications. Design/methodology/approach: The paper investigates the trends of foreign divestment in South Korea and examines firm- and host country-level determinants in total, manufacture and service sectors from 2010 to 2019. Findings: Using probit model analysis, the main findings are first, among the firm-level factors, sales revenue and parent firm dummy are shown as negative and significant determinants of foreign divestment especially in manufacturing sector. Second, among the country-level factors, gross domestic product growth rate and regulatory quality that measures perceptions of sound policies that promote private sector development are shown negative and significant determinants of foreign divestment. On the other hand, relationship between the environmental policy stringency and foreign divestment is shown positive and significant. Originality/value: The results suggest that these nonfirm-specific characteristics are also important factors in firm decision to divest from the host country.
Guest editorial: Women and the environment