Depreciation and Trade Deficits in India: Problems of Foreign Exchange and Domestic Industrialisation Base

2019 ◽  
Vol 67 (3-4) ◽  
pp. 258-278
Author(s):  
Satya Prasad Padhi
Keyword(s):  
Present Article ◽  
Foreign Exchange ◽  
Financial Stability ◽  
Aggregate Demand ◽  
Division Of Labour ◽  
Market Mechanism ◽  
Balance Of Payments ◽  
Domestic Production ◽  
Trade Imbalances ◽  
Financial Balance

The present article develops an argument in which depreciating Indian rupee is basically due to underdeveloped status of domestic production base that is reflected in continuing trade deficits. It argues that price theoretic policies not only manage trade imbalances but also completely neglect the revival of domestic production base that can induce a tendency towards exports-led correction of the trade imbalances, that is, it neglects the importance of exports to make a transition towards strong production base, manageable trade balances and strong foreign exchange status; if so, the continuing Indian deprecation negates international financial stability status. The present article provides an alternative policy focus that is on finance-led initiations of broader Youngian–Kaldorian division of labour that favourably shapes demand-based market mechanism (and growth of aggregate demand) and results in sophistication in industrial differentiation, that is, increased specialisations in intermediate goods production. It is argued that such transition confers a developed status with respect to the (BBoP basic Balance of Payments i.e., trade and foreign direct investment [FDI] inflow prospects), which in turn is crucial to achieve financial balance of payments (BoP) stability. All in all, the price theory is inapplicable when trade is based on absolute cost disadvantages and Keynesian policies provide the solutions.

On the Concept of the Foreign Exchange Multiplier

1975 ◽  
Vol 14 (2) ◽  
pp. 233-237
Author(s):  
J. Diamond
Keyword(s):  
Foreign Exchange ◽  
Realistic Model ◽  
Domestic Production ◽  
Supply Elasticity ◽  
Aggregate Supply ◽  
Multiplier Effect ◽  
Special Case

Although in recent years there has been increasing recognition of the import¬ance of intermediary imports, the conventional Keynesian treatment of aggregate " supply has-generally been adopted. By assuming supply elasticity and conditions of over-production, such imports are treated as a leakage and-therefore deflationary. This paper investigates another special case which may be a more realistic model for many industrialising economies like Pakistan. Namely, J,y assuming supply bottlenecks and the technical dependence of domestic production on imported inputs, an increase in imports may be inflationary and have an import or foreign exchange multiplier effect.

Foreign Direct Investment

2017 ◽  
Author(s):  
Yilmaz Akyüz
Keyword(s):  
Foreign Direct Investment ◽  
Mergers And Acquisitions ◽  
Financial Markets ◽  
Foreign Exchange ◽  
Direct Investment ◽  
Balance Of Payments ◽  
Productive Capacity ◽  
Cross Border ◽  
Direct Contribution ◽  
High Profit

Recent years have also seen increased openness of EDEs to foreign direct investment (FDI) in search for faster growth and greater stability. However, FDI is one of the most ambiguous and least understood concepts in international economics. Common debate is confounded by several myths regarding its nature and impact. It is often portrayed as a stable, cross-border flow of capital that adds to productive capacity and meets foreign exchange shortfalls. However, the reality is far more complex. FDI does not always involve inflows of financial or real capital. Greenfield investment, unlike mergers and acquisitions, makes a direct contribution to productive capacity, but can crowd out domestic investors. FDI can induce significant instability in currency and financial markets. Its immediate contribution to balance-of-payments may be positive, but its longer-term impact is often negative because of high-profit remittances and import contents.

Monetary and Exchange Rate Policies for International Financial Stability: A Proposal

1988 ◽  
Vol 2 (1) ◽  
pp. 83-103 ◽  
Author(s):  
Ronald I McKinnon
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Foreign Exchange ◽  
Purchasing Power Parity ◽  
Financial Stability ◽  
Foreign Exchange Market ◽  
The United States ◽  
Power Parity ◽  
Monetary Reform ◽  
Exchange Rate Fluctuations

What keeps the three major industrial blocs -- Western Europe, North America, and industrialized Asia -- from developing a common monetary standard to prevent exchange-rate fluctuations? One important reason is the differing theoretical perspectives of economic advisers. The first issue is whether or not a floating foreign exchange market -- where governments do not systematically target exchange rates -- is “efficient.” Many economists believe that exchange risk can be effectively hedged in forward markets so international monetary reform is unnecessary. Second, after a decade and a half of unremitting turbulence in the foreign exchange markets, economists cannot agree on “equilibrium” or desirable official targets for exchange rates if they were to be stabilized. The contending principles of purchasing power parity and of balanced trade yield very different estimates for the “correct” yen/dollar and mark/dollar exchange rates. Third, if the three major blocs can agree to fix nominal exchange rates within narrow bands, by what working rule should the new monetary standard be anchored to prevent worldwide inflation or deflation? After considering the magnitude of exchange-rate fluctuations since floating began in the early 1970s, I analyze these conceptual issues in the course of demonstrating how the central banks of Japan, the United States, and Germany (representing the continental European bloc) can establish fixed exchange rates and international monetary stability.

MÜASİR ŞƏRAİTDƏ AZƏRBAYCANIN VALYUTA SİYASƏTİNİN TƏKMİLLƏŞDİRİLMƏSİ VƏZİFƏLƏRİ VƏ İSTİQAMƏTLƏRİ

2020 ◽  
Vol 54 (05) ◽  
pp. 122-125
Author(s):  
Kamil Sayavush Demirli ◽  
Keyword(s):  
Monetary Policy ◽  
Key Words ◽  
Foreign Exchange ◽  
Oil And Gas ◽  
Balance Of Payments ◽  
International Capital ◽  
Foreign Exchange Reserves ◽  
Commodity Trade ◽  
Transit Service ◽  
Gas Balance

Key words: monetary policy, commodity trade foreign exchange reserves, balance of payments, oil and gas, balance, transportation, transit service, international, capital, perspective

scholarly journals Beholding Tanjung Pesona Coastal-ecotourism in Bangka Islands, Indonesia

2017 ◽  
Vol 7 (2) ◽  
pp. 102 ◽  
Author(s):  
Hengky S. H.
Keyword(s):  
Local Government ◽  
Foreign Exchange ◽  
Financial Stability ◽  
Business Models ◽  
Community Education ◽  
Environment Protection ◽  
Carbon Footprints ◽  
Local Business ◽  
Tourism Sector ◽  
Business Market

Tourism sector becomes the largest foreign exchange contributor in 2020, and Indonesia has a number of tremendous natural and cultural potential to become a national tourism development asset. Even this potential could be a reckoned contributor to GDP, Foreign Exchange, and Employment. This study aims to respond Deputy of Business Market Segment and Government of Ministry of Tourism, and to behold Tanjung-Pesona coastal ecotourism. However, this fieldwork results show that the existing performance is in critical condition based on coastal-ecotourism. There are three main issues that should be addressed immediately. Firstly, enhancing community education on handling fragile ecosystems. Secondly, local government got to improve the performance of coastal carrying capacity, as well as sustaining local business model. Thirdly, they get to increase an incentive for supporting coastal environment protection program that would reduce carbon footprints and made it based on collective action. It would maintain the levels of financial stability too. The final solution of the local government to make the zoning of tourism, mining. In addition, there is the potential for regional culinary-ecotourism and fishing-ecotourism that can make a vibrant coastal-ecotourism in the islands. Besides, there are many traditional culinary options that can contribute economic to local people as sustainable local-business models. It’s a unique food. 

Guidance Note for Surveillance Under Article IV Consultations

Policy Papers ◽  
2015 ◽  
Vol 09 ◽  
Author(s):  
Keyword(s):  
Financial Stability ◽  
Balance Of Payments ◽  
Policy Options ◽  
Executive Board ◽  
Financial Policies ◽  
The Public ◽  
Guidance Note ◽  
Formal Requirements ◽  
Policy Adjustments ◽  
Operational Guidance

This note provides country teams with guidance on bilateral and multilateral surveillance in the context of Article IV consultations. It covers the following issues: Focus on stability. Stability is the organizing principle of surveillance. Article IV consultations should focus on the conduct of economic and financial policies pursued by members to promote present and prospective domestic and balance of payments stability, as well as global economic and financial stability. For the latter, Article IV consultations should discuss spillovers from members’ economic and financial policies that may significantly affect global stability, including alternative policy options that would minimize their adverse impact. Operational guidance. The note provides detailed guidance, suggestions and references in areas covered in surveillance including risks and spillovers, fiscal policy, macrofinancial and monetary policy, BOP stability, structural policies and data issues. Communication and Engagement. Effective two-way communication is key to surveillance, including with the authorities (to help staff’s advice get traction), the Executive Board (to support effective peer review), and the public and other stakeholders (to gain support for necessary policy adjustments). Surveillance messages need to be clear, concise, and focused. The Fund needs to be evenhanded, in line with the principle of uniformity of treatment, for surveillance to command the confidence of the membership. Process and formal requirements. A number of procedures, rules, and requirements are summarized in this note.

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