CHAPTER 5. International Trade, Balance of Payments, and Exchange Rate Policies: 1900 –1940

Puzzled by the demeaning level of poverty most African countries continue to grapple with despite their extensive participation in international trade, the study attempts to examine the encumbrances that tend to impede African countries from optimally reaping the developmental gains inherent in partaking in international trade, which seems to also worsen the economic misery the inhabitants endlessly contend with. The System Generalized Method of Moments (System-GMM) estimation technique was used in the study which involves 17 African countries and spans from 1995 - 2018. While misery index is used to measure economic misery, the impact of international trade on economic misery is captured by means of its effect via economic misery, economic growth rate, balance of payment, total export, manufacture export and exchange rate. The results of the study reveal that balance of payments, total export, manufacture export, per capita GDP growth rate, exchange rate and lagged form of economic misery all have positive effect on economic misery. While the effects of total export, manufacture export, per capita GDP growth rate, and exchange rate on economic misery are significant, those of balance of payments and lagged form of economic misery are insignificant. While the study recommends that international trade be engaged strategically such that it results in favourable balance of payments, it also encourages the discarding of obsolete trade policies such as outright bans on importation of certain commodities. Bilateral trade agreements are recommended over multilateral trade agreements, since they are more mutually beneficial and binding on the parties involved

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International trade.

An introduction to economics: concepts for students of agriculture and the rural sector ◽

10.1079/9781800620063.0009 ◽

2021 ◽

pp. 174-193

Author(s):

Berkeley Hill

Keyword(s):

International Trade ◽

Exchange Rates ◽

Comparative Advantage ◽

Trade Balance ◽

Balance Of Payments ◽

Trade Restrictions

Abstract This chapter discusses the theory of comparative advantage, specialization, and trade in surpluses. A two-country and two-commodity model of the gains from specialization and trade is presented, which is then extended to include many countries and many commodities. Also discussed are: transactions involving currencies; arguments put in support of trade restrictions; balance of payments; monetary matters; and government manipulation of the trade balance and exchange rates.

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Asymmetric effect of exchange rate volatility on trade balance in Nigeria

National Accounting Review ◽

10.3934/nar.2021018 ◽

2021 ◽

Vol 3 (3) ◽

pp. 342-359

Author(s):

Nuraddeen Umar Sambo ◽

◽

Ibrahim Sambo Farouq ◽

Mukhtar Tijjani Isma'il ◽

◽

...

Keyword(s):

International Trade ◽

Exchange Rate ◽

Real Exchange Rate ◽

Financial Development ◽

Trade Balance ◽

Exchange Rate Volatility ◽

The Real ◽

Non Linear ◽

The Relationship ◽

Real Exchange Rate Volatility

<abstract> <p>The relationship between real exchange rate volatility and the trade balance has been a contentious issue since the fall of Bretton woods agreement of 1973, owing to the lack of unanimity on the effect. This article provides empirical evidence of the link between the real exchange rate volatility and the trade balance in the light of financial development, confirming the assertion that the effect is significantly dependent on the country's level of financial development. Due to Nigeria's relatively undeveloped financial system, its exchange rate dampens the country's exports. Rather than studying the relationship in isolation, we examine the moderating role of financial development on the link between export and the real exchange rate volatility in this paper. The empirical estimation is based on the Nigeria's data set spanning the years 1980–2019, and it employs threshold autoregressive non-linear co-integration and non-linear ARDL estimation techniques. According to the findings, financial development magnifies the beneficial benefits of the real exchange rate on Nigeria's foreign trade. It also states that the uncertainty in foreign capital flows has a negative impact on Nigeria's international trade. The findings have broad policy implications, implying that in order to diversify and improve the economy's future growth and associated international trade, Nigeria's policymakers should promote adequate financial sector development, as financial shocks are amplified by poorly implemented credit markets.</p> </abstract>

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Exchange rate impacts on international trade

Economic Annals-ХХI ◽

10.21003/ea.v190-02 ◽

2021 ◽

Vol 190 (5-6(2)) ◽

pp. 12-22

Author(s):

Jalil Mehtiyev ◽

◽

Robert Magda ◽

László Vasa ◽

◽

...

Keyword(s):

International Trade ◽

Exchange Rate ◽

World Bank ◽

Trade Balance ◽

Exchange Rate Volatility ◽

Regression Analyses ◽

Policy Changes ◽

Long Run

As international trade activities are increased, there are more regulative practices which might be barriers to trade. One of such hindrances is exchange rate volatility that affects trade activities both directly and indirectly. Exchange rate volatility of currencies can affect the trade engagements and as well as the trade balance of a country. One of the implications of the study is that the impacts of monetary policy changes on trade activities can be noticed significantly in the long-term. While impacts on export levels are usually immediate, import levels are changed in long-run. The research analyzes the correlation between inflation and devaluation and clearly states their impacts on trade balance. The case study about devaluation of the currency of Azerbaijan elaborates the impacts of currency volatility on exports which is illustrated and analyzed in this research. Moreover, inflation and devaluation correlations and their impacts on import level of a country are studied through correlation and multiple regression analyses based on the data exported from OECD and World Bank. The results conclude that exchange rate volatility significantly impacts the trade balance in terms of imports and exports. Given the results, exchange rate is a non-trade barrier and affects foreign trade.

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Foreign trade competitiveness of the Balkan countries under the conditions of globalization

Medjunarodni problemi ◽

10.2298/medjp1201067b ◽

2012 ◽

Vol 64 (1) ◽

pp. 67-81 ◽

Cited By ~ 1

Author(s):

Ivana Bozic-Miljkovic

Keyword(s):

International Trade ◽

Foreign Trade ◽

Economic History ◽

Trade Balance ◽

The State ◽

Balance Of Payments ◽

The World ◽

Balkan Countries ◽

Trade Competitiveness ◽

Economic Nature

The development of international trade on the world scale under the conditions of globalization, more than ever in the economic history has given prominence to the issues of given countries? competitiveness and foreign trade companies. Competitiveness in foreign trade is a complex category affected by the factors of both economic and non-economic nature. With the increase of the degree of liberalization of foreign trade globally, competitiveness represents a very important factor that the results in this particular trade depend on and, consequently, realization of the developmental and stabilization objectives in the progress of trade. The Balkan countries are making efforts, through diverse forms of regional economic networking and economic cooperation, to define their competitiveness in foreign trade in such a way so as to ensure its higher level. The actions of this kind should change their relatively unfavorable position in international trade and improve the state in their foreign trade balance as well as balance of payments. In doing this, they encounter numerous problems of economic and non-economic nature, namely those that still condition their low competitiveness in foreign trade.

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Assessment of competitiveness in Ukraine and its regions measured by indicators of international trade (based on the methodology of IMD, Lausanne)

Herald of Ternopil National Economic University ◽

10.35774/visnyk2017.01.089 ◽

2017 ◽

pp. 89-99

Author(s):

Serhii Zakharchenko

Keyword(s):

International Trade ◽

Trade Balance ◽

Balance Of Payments ◽

International Institute ◽

Technical Standards ◽

Association Agreement ◽

Export Ratio ◽

Its Regions ◽

Key Indicators ◽

Original Approach

The research paper reveals the importance of maintaining the international trade at the appropriate level in order to ensure high competitiveness of countries and regions. On the basis of the methods developed by experts of the International Institute for Management Development (IMD in Lausanne, Switzerland), the author has presented an original approach to assessment of the international trade as a factor of competitiveness of countries and their regions. The competitiveness of Ukraine and its regions is assessed through key indicators of the international trade (balance of payments, exports and imports of goods / services, national currency rate, etc.). The article offers strategies for enhancing the competitiveness of Ukraine and its regions by improving the international trade, particularly by maintaining a positive trade balance, increasing the import-export ratio, harmonizing national technical standards to international ones, developing international tourism, benefiting from accession to the WTO and Ukraine-EU Association Agreement.

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Can Devaluation Cause Perverse Effects if the Macroeconomy is Stable?

The Pakistan Development Review ◽

10.30541/v33i4iipp.1033-1042 ◽

1994 ◽

Vol 33 (4II) ◽

pp. 1033-1042

Author(s):

Syed Zahid Ali ◽

W. M. Scartil

Keyword(s):

Exchange Rate ◽

Trade Balance ◽

Foreign Exchange Market ◽

Correspondence Principle ◽

Aggregate Demand ◽

Balance Of Payments ◽

Exchange Market ◽

Economic Stability ◽

Contractionary Devaluation ◽

Necessary And Sufficient

The theoretical literature on devaluation has involved an appeal to the Correspondence Principle for many years. In the early work, it was noted that a devaluation would improye the trade balance only if the Marshall-Lerner condition held, and this restriction was also necessary and sufficient for stability in the foreign exchange market. Thus, the presumption of economic stability precluded the perverse outcome. More recently, analysts have viewed this early work as limited in that it considered only the aggregate demand effects of the exchange rate, and it did not consider more general specifications of dynamics. The more recent work for example, Buffie (1986) and Lizondo and Montiel (1989) involves intermediate imports and a fully specified aggregate supply sector, and this work recognises that there are at least two kinds of perverse results that can follow from devaluation: the balance of payments can worsen, and the level of employment can fall. (This latter outcome is the so-called contractionary devaluation possibility.)

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Estimation Of The Marshall-Lerner Condition For Namibia

International Business & Economics Research Journal (IBER) ◽

10.19030/iber.v12i5.7826 ◽

2013 ◽

Vol 12 (5) ◽

pp. 511 ◽

Cited By ~ 2

Author(s):

Joel Hinaunye Eita

Keyword(s):

Exchange Rate ◽

Real Exchange Rate ◽

Trade Balance ◽

Vector Autoregression ◽

Balance Of Payments ◽

Trade Elasticities ◽

World Income ◽

The Exchange Rate ◽

The Impact ◽

Positive Effect

According to the Marshall-Lerner condition, the sum of trade elasticities should be greater than one for a change in exchange rate to have an impact on the countrys balance of payments. This paper applies cointegrated vector autoregression to empirically estimate the Marshall-Lerner condition in Namibia. The main purpose is to test the impact of change in exchange rate on the trade balance. The paper investigates if trade elasticities are high enough in order to justify a change in exchange rate as an appropriate policy to improve the trade balance of the balance payments. The results indicate that world income has a positive effect on exports, while real exchange rate appreciation discourages exports. Imports respond positively to both domestic income and real exchange rate appreciation. The results indicate that imports and exports respond significantly to a change in the exchange rate and suggest that Marshall-Lerner condition holds for Namibia.

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International trade: Research of the reasons for the fall

Voprosy Ekonomiki ◽

10.32609/0042-8736-2019-1-79-91 ◽

2019 ◽

pp. 79-91 ◽

Cited By ~ 2

Author(s):

V. S. Nazarov ◽

S. S. Lazaryan ◽

I. V. Nikonov ◽

A. I. Votinov

Keyword(s):

Growth Rate ◽

International Trade ◽

Exchange Rate ◽

Global Economy ◽

Structural Changes ◽

Global Value Chains ◽

Value Chains ◽

Negative Contribution ◽

Basic Commodity ◽

The Impact

The article assesses the impact of various factors on the growth rate of international trade. Many experts interpreted the cross-border flows of goods decline against the backdrop of a growing global economy as an alarming sign that indicates a slowdown in the processes of globalization. To determine the reasons for the dynamics of international trade, the decompositions of its growth rate were carried out and allowed to single out the effect of the dollar exchange rate, the commodities prices and global value chains on the change in the volume of trade. As a result, it was discovered that the most part of the dynamics of international trade is due to fluctuations in the exchange rate of the dollar and prices for basic commodity groups. The negative contribution of trade within global value chains in 2014 was also revealed. During the investigated period (2000—2014), such a picture was observed only in the crisis periods, which may indicate the beginning of structural changes in the world trade.

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