Effect of Aid for Trade on Financial Development: Exploring the Channel of Manufactured Exports

2021 ◽  
Author(s):  
SENA KIMM GNANGNON
Keyword(s):  
Financial Development ◽  
Scale Up ◽  
Productive Capacity ◽  
Positive Effects ◽  
Generalized Methods Of Moments ◽  
Aid For Trade ◽  
Manufactured Exports ◽  
Methods Of Moments ◽  
Export Product

Abstract Many studies have considered the macroeconomic effects of Aid for Trade (AfT) flows, that is, the part of official development assistance allocated for the development of the trade sector. The present paper aims to expand this literature by investigating the effect AfT flows on financial development notably through channel of manufactured exports. The analysis has covered a set of 120 countries over the period 2002–2017, and relied primarily on the two-step system Generalized Methods of Moments (GMM). Results show that total AfT flows, notably its components AfT for economic infrastructure and AfT for productive capacity promote financial development, and the magnitude of these positive effects rises as countries' share of manufactured exports increases. Additionally, total AfT flows influence positively financial development in countries that diversify their export product basket towards manufactured exports. These findings highlight the key role of AfT flows in promoting financial development in recipient-countries, and therefore call on donor-countries to scale up AfT flows in favour of developing countries, given the importance of financial development for economic development.

scholarly journals Effect of Aid for Trade Policy and Regulations on Tariff Policy Volatility: Does Institutional and Governance Quality Matter?

Economies ◽  
2019 ◽  
Vol 7 (1) ◽  
pp. 6 ◽  
Author(s):  
Sena Kimm Gnangnon
Keyword(s):  
Trade Policy ◽  
Scale Up ◽  
Trade Policies ◽  
Domestic Institutions ◽  
Tariff Policy ◽  
Empirical Results ◽  
Generalized Methods Of Moments ◽  
Aid For Trade ◽  
Governance Quality ◽  
Methods Of Moments

This article investigates empirically the effect of aid for trade policies and regulations on the volatility of tariffs in the recipient countries. The analysis has used an unbalanced panel dataset of 107 countries over the period from 2002 to 2015. The empirical results, based on the two-step system Generalized Methods of Moments (GMM) approach, show that aid for trade policies and regulations influences negatively and significantly tariff policy volatility in recipient countries. Additionally, the findings indicate that the better the institutional and governance quality in recipient countries, the higher is the reducing effect of aid for trade policies and regulations on tariff policy volatility. These results, therefore, suggest that a scale up of aid for trade policies and regulations to, inter alia, build the capacity of policymakers in recipient countries to contribute to reducing tariffs volatility in these countries, which would, in turn, likely benefit donor countries. Furthermore, improving domestic institutions and governance in recipient countries would further enhance the reducing impact of this aid on tariff volatility, which, once again, benefits both the recipient countries and donor countries.

scholarly journals Effect of Poverty on Financial Development in Developing Countries

2020 ◽  
Author(s):  
Sena Kimm Gnangnon
Keyword(s):  
Developing Countries ◽  
Financial Development ◽  
Poverty Reduction ◽  
Trade Openness ◽  
Product Concentration ◽  
Education Levels ◽  
Generalized Methods Of Moments ◽  
Reduction Effect ◽  
Methods Of Moments ◽  
Export Product

Numerous studies in the literature have investigated the effect of financial development on poverty, and tend to report a poverty reduction effect of financial development. The present paper considers the issue in the other way around, by examining the effect of poverty on financial development. In particular, it has investigated the financial development effect of poverty that passes through three main channels, including the education level, the level of trade openness, and the degree of export product concentration. The analysis is carried out using a sample of 97 developing countries over the period 1980-2017, and the two-step Generalized Methods of Moments (GMM). Results have shown that poverty genuinely affects financial development through these three channels. Specially, lower poverty rates induce greater financial development in countries that experience higher education levels. Similarly, a rise in poverty rates in the context of restrictive trade policies (that eventually result in lower levels of trade openness) undermines the development of the financial sector. Finally, higher poverty levels adversely affect financial development in countries that experience an increase in the level of export product concentration.

scholarly journals Effect of Productive Capacities on Economic Complexity: Do Aid for Trade flows Matter?

2021 ◽  
Author(s):  
Sèna Kimm GNANGNON
Keyword(s):  
Scale Up ◽  
Developed Countries ◽  
Least Developed Countries ◽  
Economic Complexity ◽  
Generalized Methods Of Moments ◽  
Aid For Trade ◽  
Low Levels ◽  
Methods Of Moments ◽  
First Time ◽  
Positive Effect

Abstract The COVID-19 health pandemic has exposed the strong vulnerabilities of countries, including developing ones to shocks, and underlined the need for exploring ways to strengthen countries' resilience to future shocks. The current paper uses the dataset made recently available by the United Nations Conference on Trade and Development (UNCTAD) to examine (for the first time) the effect of productive capacities on economic complexity. The analysis further investigates whether Aid for Trade (AfT) flows matter for the influence of productive capacities on economic complexity in recipient-countries. The analysis uses a sample of 126 countries (including both developed and developing countries) over the period 2002-2018, and adopts the two-step system Generalized Methods of Moments (GMM) approach. Results have shown that productive capacities exert a positive effect on economic complexity over the full sample. However, the magnitude of this positive effect varies across different sub-samples, with Least developed countries (LDCs) enjoying the lowest magnitude of this positive effect. Furthermore, total AfT flows are positively associated with economic complexity, with LDCs enjoying a higher positive effect than other countries. Interestingly, total AfT flows exert a higher positive effect on economic complexity in countries that experience low levels of overall productive capacities. The latter finding highlights the need for donor-countries to scale-up AfT flows in favour of countries (such as LDCs) that are characterized by low levels of productive capacities. Finally, the empirical outcomes indicate that productive capacities enhance economic complexity in countries that receive higher amounts of total NonAfT flows.

The nexus of economic growth, priority sector lending and non-performing assets: case of Indian banking sector

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dolly Gaur ◽  
Dipti Ranjan Mohapatra
Keyword(s):  
Economic Growth ◽  
Banking Sector ◽  
Dynamic Panel ◽  
Content Type ◽  
Generalized Methods Of Moments ◽  
Major Increase ◽  
Dynamic Panel Regression ◽  
Methods Of Moments ◽  
The Impact

PurposeIn recent years, the Indian banking sector is facing a major cause of concern in the form of Nonperforming Assets (NPA), and the priority sector lending (PSL) is generally recognized as the major factor contributing to it. Thus, the present study has been carried out with the objective of examining the relationship between priority sector lending and GDP growth. Thereafter, the role of PSL and certain other bank-specific, industry-specific and macroeconomic variables in determining NPA has been studied.Design/methodology/approachTaking a sample of 45 scheduled commercial banks, the study has been carried out for 14 years (2004–2018). Granger causality between PSL and GDP has been examined by applying the Dumitrescu-Hurlin test. For the purpose of investigating the impact of PSL and other determinants on NPA, both static and dynamic panel regression have been performed. Under the dynamic panel, system generalized methods of moments (S-GMM) approach has been followed.FindingsThe findings show that there exists a positive correlation and bidirectional causal relationship between PSL and GDP, which implies that PSL brings additional growth for the whole economy. In addition to it, PSL is found to be insignificant for the NPA ratio, and thus, it can be inferred that credit extended to government-specified sectors does not bring any major increase in the bad loan portfolio of banks.Practical implicationsThe policymakers and bank management can take a cue from the findings of this study to decrease the exposure to loan nonrepayment issue. The priority sectors are in need of formal credit for their growth, and since the rising population of the country can find employment in these sectors, banks should meet their credit needs while securing their position with regard to the NPA problem.Originality/valueThe issue of NPA determinants, and in particular, the contribution of priority sector lending in it has not been much explored for Indian banking sector. Also, the present study adds to the literature by using the causality approach for examining the importance of directed credit schemes for economic growth.

Aid for Trade, Export Product Diversification and Foreign Direct Investment

2020 ◽  
Author(s):  
Sèna Kimm GNANGNON
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Product Diversification ◽  
Product Concentration ◽  
Fdi Inflows ◽  
Aid For Trade ◽  
High Level ◽  
Positive Effect ◽  
Export Product

Abstract The few existing studies on the relationship between Aid for Trade (AfT) flows and Foreign Direct Investment (FDI) inflows tend to report a positive effect of total AfT flows, in particular of Aid flows for building economic infrastructure, on FDI inflows. The present article aims to complement these works by investigating whether the effect of AfT flows on inward FDI stock depends on recipient-countries' level of export product concentration. The empirical analysis has shown that AfT flows exert a strong positive effect on inward FDI stock in countries that experience a high level of export product concentration. These findings are relevant for developing countries in light of the concentration of their export products on primary commodities, and given the strong role of FDI flows for employment generation, economic growth and development in these countries.

scholarly journals Role of Structural Change in Economic Growth: An Empirical Evidence from a Panel of Asian Countries

2020 ◽  
Vol 4 (2) ◽  
pp. 345-360
Author(s):  
Umar Riaz ◽  
Babar Hussain ◽  
Arshad Ali Bhatti
Keyword(s):  
Economic Growth ◽  
Structural Change ◽  
Aggregate Productivity ◽  
Asian Countries ◽  
High Productivity ◽  
Generalized Methods Of Moments ◽  
Alternative Measures ◽  
Change Promotion ◽  
Methods Of Moments

Economic growth, although being a major quest of all the economies, is not an automatic phenomenon. Among its determinants, structural change in the form of reallocation of labour from low to high productivity sectors is of crucial importance. In view of the remarkable growth performance and unprecedented structural change of Asia in the last couple of decades, this paper empirically investigated the case of 20 selected Asian countries. By employing the data spanning from 1991 to 2018, the study shows three main results. First, by employing Shift Share Analysis framework, it reaffirms the findings of previous literature that structural change contributes to the aggregate productivity growth. Second, by utilizing Generalized Methods of Moments technique, the results find it to be an important booster of growth. Third, the results are reliable and consistent with alternative measures of structural change like Norm of Absolute Values and Modified Lilien Index. Taken together, these findings suggest that the governments in Asia (other regions like Africa and Latin America may alike) must chalk out policies for structural change promotion.

scholarly journals Effect of Export Product Quality on Export Product Diversification at the Extensive Margins

2021 ◽  
Vol 1 (1) ◽  
Author(s):  
Sèna GNANGNON
Keyword(s):  
Product Quality ◽  
Product Diversification ◽  
Policy Implications ◽  
Linear Effect ◽  
Generalized Methods Of Moments ◽  
Conclusion Section ◽  
Methods Of Moments ◽  
Export Product ◽  
Export Product Diversification

This paper explores the effect of improvement in export product quality on export product diversification at the extensive margins. The analysis relies on a sample of 135 countries (both developed and developing countries) over the period 1970-2014. It uses the two-step system Generalized Methods of Moments (GMM) estimator to perform the empirical exercise. Results show the existence of a non-linear effect of export product quality on export product diversification at the extensive margins: improvement of export product quality in countries with low levels of export product quality leads to greater export product diversification at the extensive margins. However, countries with a high quality of export products experience greater export product concentration at the extensive margins. The SE findings have policy implications discussed in the conclusion section of the paper.

scholarly journals Export Product Diversification, Poverty and Tax Revenue in Developing Countries

2020 ◽  
Author(s):  
Sena Kimm Gnangnon
Keyword(s):  
Developing Countries ◽  
Product Diversification ◽  
Tax Revenue ◽  
Product Concentration ◽  
Full Sample ◽  
Generalized Methods Of Moments ◽  
Methods Of Moments ◽  
The Empirical Analysis ◽  
Export Product ◽  
Export Product Diversification

The current paper has examined the effect of both export product diversification and poverty on non-resource tax revenue in developing countries. The analysis has used an unbalanced panel dataset of 111 countries over the period 1980-2014. Based on the Blundell and Bond two-step system Generalized Methods of Moments technique, the empirical analysis has shown interesting findings. Export product concentration and poverty influence negatively non-resource tax revenue over the full sample, but this effect varies across countries in the sample. Furthermore, the effect of export product diversification on non-resource tax revenue performance depends on the level of poverty. It appears that export product diversification influences positively non-resource tax revenue performance in countries that experience lower poverty rates. From a policy perspective, these findings show that policies in favour of diversifying export product baskets and reducing poverty would contribute to enhancing non-resource tax revenue performance in developing countries.

scholarly journals Do Donors Provide Higher AfT Flows to Recipient-Countries that Diversify Export Products or Is It the Other Way Around?

2020 ◽  
Author(s):  
Sena Kimm Gnangnon
Keyword(s):  
Developed Countries ◽  
The Other ◽  
Least Developed Countries ◽  
Product Concentration ◽  
Aid For Trade ◽  
Manufactured Exports ◽  
Export Product

This article has explored whether Aid for Trade (AfT) flows that accrue to recipient-countries depend on the latter's level of export product concentration. The analysis covers a sample of 133 countries over the period 2002-2017. The findings indicate that least developed countries (LDCs) receive higher AfT flows when they experience a rise in the level of export product concentration, while NonLDCs enjoy higher AfT flows when they diversify export products. Interestingly, higher amounts of AfT accrue to countries that diversify their export product basket towards manufacturing products, although different result patterns appear for the components of manufactured exports.

Do Donors provide higher Aid for Trade flows to Recipient-Countries that Diversify Export Products or Is It the Other Way Around?

2021 ◽  
pp. 097674792110366
Author(s):  
Sèna Kimm Gnangnon
Keyword(s):  
Developed Countries ◽  
Trade Flows ◽  
The Other ◽  
Least Developed Countries ◽  
Product Concentration ◽  
Aid For Trade ◽  
Manufactured Exports ◽  
Export Product

This article has explored whether Aid for Trade (AfT) flows that accrue to recipient-countries depend on the latter’s level of export product concentration. The analysis covers a sample of 132 countries over the period 2002–2017. The findings indicate that least developed countries (LDCs) receive higher AfT flows when they experience a rise in the level of export product concentration, while NonLDCs enjoy higher AfT flows when they diversify export products. Interestingly, higher amounts of AfT accrue to countries that diversify their export product basket towards manufacturing products, although different result patterns appear for the components of manufactured exports. JEL: F35; F14; O14

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