Assessing Participation and Position of Vietnam in Global Value Chains

Vietnam’s policy of openness to trade and investment has made it integrated very quickly with the global production networks, also known as global value chains, which has brought many visible fortunes to it in terms of socio-economic achievements. To have a deeper insight into the prospects and constraints of its integration into global value chains, and also to assess its degree of integration, this paper has employed Koopman et al. (2010) approach to measure the participation index, and position index. The analysis shows that the participation of Vietnam in global value chains has increased significantly in the last two decades based on strengthening FDI-led exports of Vietnam. It also shows that most of the exporting industries are located in the middle-stream in the value curve and are net buyers of intermediate products for exports, which infers the presence of predominant I2E practices in Vietnam. The paper also identifies and assesses the risk I2E practices are prone to. Scenario analysis suggests that Vietnam shall focus on upskilling of its labour force and developing indigenous industrial base. In the meantime, domestic firms shall be encouraged to collaborate with foreign firms and densify into global value chains.

The International Role of the U.S. Dollar

For most of the last century, the preeminent role of the U.S. dollar in the global economy has been supported by the size and strength of the U.S. economy, its stability and openness to trade and capital flows, and strong property rights and the rule of law. As a result, the depth and liquidity of U.S. financial markets is unmatched, and there is a large supply of extremely safe dollar-denominated assets.

Input Quality Upgrading from Tariff Reduction and Firm Productivity: Evidence from Ethiopian Manufacturing

Using a panel of firms from Ethiopian manufacturing census covering the period 2000–2016, this paper investigates how openness to trade help firms' input quality upgrading which further contribute to productivity gains. We estimate the quality of imported inputs at the firm level, and firm-level productivity using the Levinsohn and Petrin method. Then we estimate the effect of input tariff cut on input quality and further measure how input quality through input tariff reduction affect firms' productivity at different stages of regression. Our results suggest that input tariff reduction is associated with firms’ input quality upgrading and further with improvement in firms’ productivity.The effect of tariff cut is more pronounced for input-importing firms, and our result implies that the effect of input tariff cut motivates firms to participate in foreign input markets and helps upgrading input quality, thus contributing to firm productivity. Hence, further input trade liberalization measures should be designed to help key strategic manufacturing sectors. Besides, strategies have to be put in place to integrate the manufacturing sector into the global supply chain to reap more productivity gains. JEL codes: D22 D24 F13 H32 L15 L23

Openness and COVID-19 induced xenophobia: The roles of trade and migration in sustainable development

Along with the plight of the COVID-19 outbreak in 2020 come the xenophobic behaviors and hate crimes against people with Asian descent around the globe. The threat of a public health emergency catalyzed underlying xenophobic sentiments, manifesting them into racial discrimination of various degrees. With most discriminatory acts reported in liberal societies, this article investigates whether an economy more open to trade and migration can be more susceptible to xenophobia. Using our first-hand survey data of 1767 Chinese respondents residing overseas from 65 different countries during February of 2020, we adopt an instrumental variable strategy to identify the causal effect of openness to trade and migration of their residence country on the likelihood of them receiving discriminatory behaviors during the early stage of the COVID-19 outbreak. Our results show that greater openness to trade increases the likelihood of reported xenophobic behaviors, while openness to migration decreases it. On the other hand, stronger trade or immigration relationships with China are associated with less reported discrimination. And these effects primarily influence discriminatory behavior in interpersonal spaces, rather than through media outlets. Our findings highlight nuances of the effect of trade relations on the culture of a society.

The Impact of Trade Openness and Foreign Direct Investment on Economic Welfare in sub-Saharan Africa

The sub-Saharan African region is characterized by a high relative degree of openness to trade. The region is also identified with increased inflows of foreign investments with no significant welfare improvement. Economic development emphasizes that the lack of domestic investment in the developing economies could be boosted by trade openness and inflow of Foreign Direct Investment (FDI) for impactful enhancement of capital formation. In this article, the impact of trade openness and foreign capital inflow on economic welfare was examined on a sub-regional analysis for sub-Saharan Africa. The study also appraised the effect of openness to trade and FDI inflow on the region's economic welfare. The data for 30 countries from 2000 to 2018 were collected and analyzed, with the Generalized Least Square (GLS) technique to fit the model developed. The study showed that openness to trade has a significant impact on economic welfare for all sub-Saharan Africa regions, while FDI is only significant for the Western sub-region. Hence, the study recommends that the government of the countries in the sub-Saharan Africa region should boost trade openness to enhance efficiency in productivity, and improve industrial development.

Determinant of export diversification

The main objective of this work is to identify the explanatory factors determining the diversification of exports in SADC countries during the period 1990-2018. We regress the indicator of export diversification, measured successively by the Herfindahl-Hirschman index on a set of explanatory variables. Using a next-generation panel data approach is applied, such as panel unit root, panel cointegration, fully modified OLS (FMOLS), and Dynamic Ordinary Least Squares (DOLS). The result of unit root tests for all these variables are stationary at their first difference and integrated of order one. Our results show that there is a long-term relationship between export diversification and GDP, openness to trade, accumulation of human and physical capital, foreign direct investment. All of its variables are the main explanatory factors for the diversification of exports in SADC countries.

WAGE INEQUALITY, UNEMPLOYMENT, AND EXPORT-ORIENTED POLICY

This paper presents a simple model to address why openness to trade increases the dispersion in wages, unemployment, and capital intensity. However, the dispersion is stronger for developing countries. We argue that the export-oriented policy that most developing countries have widely adopted in recent decades, amplifies the dispersion in these countries. This paper also helps explain the conflicting evidence between two groups of developing countries: East Asian and Latin American. In comparison to the latter, the former has a track record since the 1960s of a miraculous performance in narrowing wage inequality and unemployment by practicing export-oriented policies.

On Intergenerational Commitment, Weak Sustainability, and Safety

This article examines sustainability from a policy perspective rooted in environmental economics and environmental ethics. Endorsing the Brundtland Commission stance that each generation should have undiminished opportunity to meet its own needs, I emphasize the foundational status of the intergenerational commitment. The standard concepts of weak and strong sustainability, WS and SS, are sketched and critiqued simply and intuitively, along with the more recent concept of WS-plus. A recently proposed model of a society dependent on a renewable but vulnerable resource (Barfuss et al. 2018) is introduced as an expositional tool, as its authors intended, and used as a platform for thought experiments exploring the role of risk management tools in reducing the need for safety. Key conclusions include: (i) Safety, in this case, the elimination of risk in uncertain production systems, comes at an opportunity cost that is often non-trivial. (ii) Welfare shocks can be cushioned by savings and diversification, which are enhanced by scale. Scale increases with geographic area, diversity of production, organizational complexity, and openness to trade and human migration. (iii) Increasing scale enables enhancement of sustainable welfare via local and regional specialization, and the need for safety and its attendant opportunity costs is reduced. (iv) When generational welfare is stochastic, the intergenerational commitment should not be abandoned but may need to be adapted to uncertainty, e.g., by expecting less from hard-luck generations and correspondingly more from more fortunate ones. (v) Intergenerational commitments must be resolved in the context of intragenerational obligations to each other in the here and now, and compensation of those asked to make sacrifices for sustainability has both ethical and pragmatic virtue. (vi) Finally, the normative domains of sustainability and safety can be distinguished—sustainability always, but safety only when facing daunting threats.