Effect of multilateral trade liberalization on foreign direct investment outflows amid structural economic vulnerability in developing countries

PurposeThe purpose of this study is to examine empirically whether the impact of multilateral trade liberalization on export performance and export performance convergence in developing countries depends on the amount of Aid for Trade (AfT) flows that accrue to these countries. Export performance is measured by export of goods and services to gross domestic product ratio, whereas export performance convergence refers to the process whereby a developing country’s export performance catches up with the world’s average export performance.Design/methodology/approachThe analysis has used an unbalanced panel data set covering a sample of 97 developing countries, over the period 2002 to 2015. The two-step system generalized methods of moments has been used to address the question empirically.FindingsEmpirical results show that multilateral trade liberalization generates higher export performance and convergence in export performance in developing countries only when it is accompanied by higher AfT flows to developing countries, with a view of helping these countries enhance their trade capacity and reap the opportunities offered by multilateral trade liberalization in the international trade market.Research limitations/implicationsThese findings indicate that greater access to the international trade market is not sufficient to promote developing countries’ export performance and convergence in export performance. Such a promotion could materialize if multilateral trade liberalization is accompanied by higher AfT flows (to enhance these countries’ capacity to trade). The findings therefore indicate that the current context of escalation of trade tensions would likely result in lower degree of multilateral trade liberalization, and eventually lower AfT flows to recipient-countries, and ultimately hamper developing countries’ export performance and convergence in export performance.Practical implicationsThe findings therefore indicate that the current context of escalation of trade tensions would likely result in lower degree of multilateral trade liberalization, and eventually lower AfT flows to recipient-countries, and ultimately hamper developing countries’ export performance and convergence in export performance. An avenue for future research could be to perform the same analysis when data would be available over a longer time period. Future studies on the matter could also investigate whether the findings obtained apply to components of export performance, including for example manufactured exports and non-manufactured exports.Originality/valueMany papers related to the AfT effectiveness have looked at the effect of AfT inflows on recipient-countries’ export performance. However, little attention has been paid to the effect of multilateral trade liberalization on developing countries’ export performance and export performance convergence and particularly to whether this effect would depend on the amounts of AfT that would accrue to developing countries to help them develop their trade capacity. To the best of our knowledge, no previous paper has addressed this issue.

Download Full-text

Patterns of Representation in WTO Committee Chairs, 1995–2012

World Trade Review ◽

10.1017/s1474745614000305 ◽

2014 ◽

Vol 14 (3) ◽

pp. 419-450

Author(s):

KENT JONES ◽

YUNWEI GAI

Keyword(s):

Developing Countries ◽

Trade Liberalization ◽

Leadership Capacity ◽

Economic Interests ◽

Committee Chair ◽

Development Status ◽

Multilateral Trade ◽

Multilateral Trade Liberalization ◽

Selection Of

AbstractThis paper sets out to examine the pattern of WTO committee chair appointments by nationality since the WTO's founding in 1995. Chairs of the General Council (GC), subsidiary and negotiating committees play important roles in the outcome of trade negotiations and in administrative and implementation issues in Geneva. The GC selects most committee chairs, and must consider the balance of member representation and the quality of the candidates in its choices. Regression results indicate that the selection of a chair by nationality generally reflects the country's mission size in Geneva, the country's years of experience as a WTO member, and its economic interests in trade. The experience of individuals and continuity in committee leadership also appear to play important roles. Among developing countries, emerging markets (EMs) tend to have the largest proportional representation. The GC thus appears to follow a human capital model of chair selection, geographical constraints and especially development status balance considerations. Continued investments among all WTO members, but especially EM and other developing countries, in WTO representation and leadership capacity will be required in order to promote multilateral trade liberalization in the future.

Download Full-text

Do Governance, Foreign Direct Investment and Human Capital Matter to Bolster Trade Liberalization? Fresh Insight from Developing Countries

Review of Economics and Development Studies ◽

10.47067/reads.v7i3.369 ◽

2021 ◽

Vol 7 (3) ◽

pp. 325-341

Author(s):

Muhammad Umar ◽

Imran Sharif Chaudhry ◽

Muhammad Faheem ◽

Fatima Farooq

Keyword(s):

Developing Countries ◽

Human Capital ◽

Foreign Direct Investment ◽

Trade Liberalization ◽

Direct Investment ◽

Foreign Direct Investments ◽

Lower Income ◽

Middle Income ◽

Middle Income Countries ◽

The Impact

This study aims to explore the impact of governance, foreign direct investment and human capital on trade liberalization in developing countries (lower income, middle income and upper middle income). The study employed fixed effect for the period of 2000 to 2019. Results show governance, foreign direct investment and human capital are highly significant with trade liberalization in the case of lower-income countries. In the case of middle-income countries, empirical findings demonstrate governance and foreign direct investment are highly significant with a negative sign, while human capital has positive on trade liberalization. In the case of upper-middle-income countries, results show human capital and foreign direct investment affect positively, while governance has a negative effect on trade liberalization. On the behalf of results it is suggested that in the countries where human capital is high, most of the inflows of foreign direct investment happen. It means that the government can develop human resources to attract more foreign direct investments. The governments of developing countries should also concentrate on education, including training facilities and other quality educational facilities for human skill development.

Download Full-text

Multilateral trade liberalization and developing countries’ economic exposure to shocks

Journal of Economic Studies ◽

10.1108/jes-05-2017-0141 ◽

2019 ◽

Vol 46 (2) ◽

pp. 496-515 ◽

Cited By ~ 2

Author(s):

Sena Kimm Gnangnon

Keyword(s):

Developing Countries ◽

Trade Liberalization ◽

Fixed Effects ◽

Developed Countries ◽

Least Developed Countries ◽

Data Set ◽

Content Type ◽

Multilateral Trade ◽

Multilateral Trade Liberalization ◽

The Impact

Purpose The purpose of this paper is to examine the impact of multilateral trade policy (MTP) liberalization on developing countries’ economic exposure to shocks. Design/methodology/approach The analysis is conducted on a panel data set comprising 120 countries over the period 1996–2013 and uses the within fixed effects estimator. Findings The empirical results suggest that over the entire sample as well as sub-samples of least developed countries (LDCs) and non-LDCs, multilateral trade liberalization have a negative and significant impact on economic exposure to shocks. Interestingly, LDCs appear to experience the highest magnitude of the reducing impact of multilateral trade liberalization on countries’ economic exposure to shocks. Research limitations/implications These findings suggest that a greater cooperation among countries in the world, including among WTO members to further liberalize trade would surely contribute to reducing developing countries’ economic exposure to shocks. Practical implications The current study shows that the current backlash against trade and the consequent strong appeal for domestic trade protectionist measures would likely to undermine the likelihood of further multilateral trade liberalization. One implication of this could be a rise in countries’ economic exposure to shocks. Originality/value To the best of the author’s knowledge, this is first the study on this matter.

Download Full-text

Does the WTO Accession Stimulate Inward FDI in Developing Countries? Accentuate on TRIMS, TRIPS or Trade Liberalization

International Journal of Accounting and Financial Reporting ◽

10.5296/ijafr.v8i1.12825 ◽

2018 ◽

Vol 8 (1) ◽

pp. 277

Author(s):

Md. Shakib Hossain

Keyword(s):

Developing Countries ◽

Human Capital ◽

Foreign Direct Investment ◽

Trade Liberalization ◽

Financial Development ◽

Direct Investment ◽

Research Work ◽

Market Size ◽

Wto Accession ◽

Macroeconomic Stability

The propensity of WTO always ensure to strengthening and consolidating the integration approach with country to country. Manifold accession like TRIMS, TRIPS and trade liberalization agenda facilitate to enlarge the attractiveness of foreign direct investment in many more developing countries. This study is concentrates on judgment of the WTO accession like liberalization, TRIMS and TRIPS stimulate the flow of FDI in developing countries and also to observe that the other relevant important variables such as macroeconomic stability, infrastructure, human capital, geographic location, financial development, agglomeration, market size has helped the incessant inflow of FDI for developing country. Some research penetratingly interpreted that TRIMS, TRIPS and trade liberalization accession are controversial subject matter for the developing countries. For accomplishing the research work the paper has used panel data of 58 different developing countries over the years 1990-2014. Through that work the paper has explore that because of the adopting liberalization polices, relinquishing market distortions with the connection of TRIMS and harmonization of IPR standards throughout TRIPS escalate the foreign direct investment in the developing countries, it means that there is a significant relationship of FDI along with TRIPS, TRIMs and trade openness. Other pertinent factors like market size, macroeconomic stability, agglomeration and engagement of WTO membership have also significant impact on FDI inflows. Others common factors like infrastructure, human capital, financial development, geographical location also make significant impact on facilitating foreign direct investment. Developing countries always requires strengthening their superiority and protecting rights and ensuring negotiation process and encouraging market liberalization process for accomplishing economic competitiveness.

Download Full-text