The Comparative Analysis of the Industrial Policy Impact on Export Performance in the Military and Democratic Regime of Pakistan

Since independence, the economy has always suffered from the power struggle between democracy and autocracy, which significantly damaged the economy and gave birth to different economic issues, the export sector being one of the top most affected. Once titled among Asian Tigers, the country’s export overseas yields even to Bangladesh. The current study attempts to analyse the impact of industrial policy on export performance under democracy and autocracy. Many authors and past studies have argued that Pakistan lacks the long-term farsighted industrial policy. The paper considers the industrial policy instruments, import tariff, export subsidy, export rebate, R&D expenditures, industrial expenditures and export processing zone, while export sophistication, export diversification and export competitiveness are used as indicators of export performance from 1980 till 2018. The result of the study indicates that the democracy type of a regime promotes industrialization with expanding export base and competitiveness, while the autocratic type of a regime is helpful in producing sophisticated goods. The analysis is focused on the descriptive basis by comparing the changes and growth in democracy and autocracy, while the Error Correction Model has been applied to see the adjustment of shocks and structural changes. Export sophistication and export diversification show a significant convergent effect, while export competitiveness demonstrates a divergent relation with our independent variables. The findings suggest that it is of sheer necessary to have a long-term farsighted industrial policy under conditions of stability to attract more and more investment in the economy to sophisticate, diversify and promote competitiveness.

Dampak Penghapusan Subsidi Ekspor Produk Pertanian Terhadap Harga dan Perdagangan Produk Pangan Indonesia

Abstrak Salah satu komitmen terpenting hasil pertemuan Konferensi Tingkat Menteri World Trade Organisation (WTO) di Nairobi tahun 2015 adalah diberlakukannya penghapusan subsidi ekspor produk pertanian negara anggota WTO, baik oleh negara maju (pada 2015) maupun negara berkembang (pada 2018). Studi ini bertujuan untuk melihat dampak penghapusan subsidi ekspor produk pertanian oleh negara asal terhadap harga dan perdagangan produk pangan Indonesia. Dengan menggunakan model Global Trade Analysis Project (GTAP) disimpulkan bahwa penghapusan subsidi ekspor produk pertanian akan mengakibatkan kenaikan harga beberapa produk pangan impor Indonesia terutama susu. Selain itu, penghapusan subsidi ekspor juga akan berdampak pada menurunnya impor Indonesia untuk produk hortikultura, susu, dan makanan olahan sedangkan ekspor Indonesia untuk daging sapi, gula, susu dan makanan olahan akan naik. Hal ini menunjukkan bahwa Indonesia berpotensi untuk swasembada produk pangan sehingga dapat mengurangi ketergantungan terhadap impor. Dengan demikian komitmen penghapusan subsidi ekspor oleh negara mitra dagang akan berdampak positif bagi Indonesia jika didukung dengan peningkatan produktivitas produk pangan. Kata Kunci: Subsidi Ekspor, Produk Pertanian, Produk Pangan, GTAP, WTO Abstract One of the most important commitments of the meeting of the World Trade Organization (WTO) Ministerial Conference in Nairobi 2015 is the abolition of export subsidies for agricultural products of WTO member countries, both developed countries (in 2015) and developing countries (in 2018). This study aims to examine the impact of the elimination of export subsidy on agricultural products by trading partners toward the price and trade pattern of Indonesian food products. Using the Global Trade Analysis Project (GTAP) model, the analysis shows that the elimination of export subsidies for agricultural products would lead to higher prices of Indonesian imported food products particularly for milk products. In addition, the abolition of export subsidy would reduce Indonesian imports of horticultural commodities, milk, and processed food while exports of beef, sugar, milk and processed foods would rise. This shows that Indonesia has the potential for self-sufficiency in some food products, thereby reducing dependence on imports, therefore the abolition of export subsidy will given a more positive impact on Indonesia if supported by increasing productivity of food products. Keywords: Export Subsidy, Agricultural Products, Food Products, GTAP, WTO JEL Classification: D58, F13, Q17, Q18

Identifying opportunities for value chain development in the Kenyan coffee sector

By developing a model that describes the Kenyan coffee value chain, this study evaluates opportunities emanating from four scenarios representing productivity gains in the various value chain stages of the coffee sector and additional three scenarios reflecting shifts in market situations. Results show that productivity-enhancing policies have stronger effects on coffee output and export performance if they target the milling stage of the value chain. Export subsidy and favourable external marketing conditions also have stronger effects, distributed comparably across the various value chain stages. We, however, found that these gains in the coffee sector come at the expense of other cash crops such as cotton, tea, sugar and tobacco. The approach followed in this study is relevant as this trade-off between coffee and the other cash crop sectors may not be visibly shown using standard value chain approaches.

Cournot-Bertrand competition: a revisit of strategic trade policy in the third-market model

Purpose – The purpose of this paper is to discuss the optimal policy settings of the home government for any combination of strategic variables adopted by home and foreign firms under Brander and Spencer’s third-market model framework. Design/methodology/approach – This paper follows all the assumptions of Brander and Spencer with only two modifications: firms produce differentiated products, and firms choose different strategic variables. A two-stage game is set and the subgame-perfect Nash equilibrium is deduced following backward induction. Findings – The authors arrive at a general, simple rule to determine the optimal policy of the home government for any combination of strategic variables: regardless of the strategic variable of the domestic firm, the optimal policy of the home country is an export subsidy (tax) as long as the foreign firm’s strategic variable is output (price). The optimal subsidy or tax of the home country is shown to move the equilibrium to the Stackelberg equilibrium where the domestic firm behaves as the leader while the foreign firm behaves as a follower under free trade. With appropriate interpretations and a suitable caveat, the above results still hold in the case with multiple foreign firms which may choose different strategic variables. Originality/value – This paper fills the gap in the literature, and provides some more general results not easily detected in the original model of Brander and Spencer or Eaton and Grossman.