This study investigates the impact of Technology Balance of Payments (TBP) on countries' international competitiveness. Using dynamic panel data estimations for 26 OECD countries over the period ...2000-2017, the estimations unambiguously show that a TBP surpluses significantly foster countries' international competitiveness, regardless of how this latter is measured.
We agree with Aguinis and Gabriel that, contrary to Eden and Nielsen, international business (IB) is not uniquely complex, but argue that it faces two unique challenges. First, because it deals with ...cross-country phenomena, IB data are less plentiful and reliable. Second, because IB uses many imported theories, and they tend to be influenced by the national environment of their authors, they often have, taken as is, limited applicability in many of the contexts IB studies. We illustrate our twin points by examining the secondary data used in IB to measure the economic activities of multinational enterprises outside their home country, both at the country level, using foreign direct investment (FDI) data from balance of payments statistics, and at the firm level, using firm-level databases such as Orbis. We document the serious shortcomings of FDI data and the problems encountered in using firm-level data. We then highlight some of the cultural biases inherent in Williamson’s version of transaction cost theory (TCT) but show how they can be overcome to arrive at a richer and more general theory that is applicable to a wider variety of contexts.
Purpose
The purpose of this paper is to analyse the implications of exchange rate depreciation for inflation targeting and trade balance of UK in the context of the Brexit epoch.
...Design/methodology/approach
The study employed a time-varying structural vector auto-regression (TVSVAR) model framework in which the sources of time variation were both the coefficients and variance-covariance matrix of the innovations on the data from January 1989 to September 2016.
Findings
The findings suggest that the depreciation of the Stirling has significant effects on inflation and trade balance in UK in context of Brexit epoch. It also showed that such a depreciation can be helpful in the improvement of external balance as well as steering the inflation to its statutory target. Despite, the inflation targeting, there is strong evidence of a pass-through.
Research limitations/implications
Research has profound implications in terms of the sharp depreciation of GBP associated with the Brexit outcome. The study is very topical and could be very interesting to the readership of JES as well as wider audience. The study has limitations in a context that the significance of the results and association of the under analysis entities is contingent on the future trade relationships and Channel between UK and EU. Therefore, although there is a lot of uncertainty about the future of Britain trade relationships, this study provides guidance on the importance of exchange rate channel if the similar trade arrangements prevails in the post-Brexit era.
Practical implications
The research has profound practical implications, using a TVSVAR model in which the relationship among the entities varies over time; it has shown the importance of exchange rate in terms of external balance and inflation targeting. Hence, it has appeal for the practitioners as well as academics.
Social implications
The research has great social implications. The Brexit is the biggest political and economic event of this era for UK and EU. There are big questions about the relationship between UK and EU in the post-Brexit epoch as well as questions about the future of the European integration. In this context, this study has shown that how the exchange rate could play an important role for the UK economy when its contemporary trade channels prevail. Concomitantly, it has social implications particularly for the European society.
Originality/value
The research is an original piece of work. It has contributed to the debate on the exchange rate deprecation, external balance and inflation targeting in context of the Brexit associated sharp depreciation of Stirling. It has used a framework, i.e. TVSVAR, which also have unique features in terms of testing the associations among under analysis entities against time.
RESUMO Este trabalho investiga se há de fato uma restrição imposta pelo balanço de pagamentos - via relação entre as elasticidades-renda das importações e das exportações - sobre o crescimento ...econômico dos estados brasileiros. Em outros termos, verifica-se a validade da Lei de Thirlwall para a economia dos estados brasileiros no período de 1991 a 2009. Para tanto, estima-se as referidas elasticidades por meio do estimador para painéis dinâmicos System-GMM, que contorna, além dos problemas clássicos de estimação, o viés de endogeneidade do painel dinâmico. Os resultados apontam para a validade da lei, visto que a elasticidade-renda das importações mostrou-se superior à elasticidade-renda das exportações.
ABSTRACT This paper investigates whether there is a restriction imposed by the balance of payments - through the relationship between income elasticities of imports and exports - on the economic growth of Brazilian states. In other words, it checks the validity of Thirlwall’s Law to the Brazilian states in the period from 1991 to 2009. These elasticities were estimated using the dynamic panel estimator System-GMM, which circumvents the classical endogeneity problem inherent to dynamic panels. The results point out to the validity of the law, since the income elasticity of imports was higher than the income elasticity of exports.
•We rely on a multi-sectoral balance-of-payments constrained growth model that incorporates intermediate imports.•We explicitly incorporate the effects of intermediate imports and relative prices ...into the analysis.•The outcome of the study shows that the MBPCG model correctly predicts Nigeria's growth path.•The manufactured exports is one of the main determinants of the intermediate import demand function.•Actual economic growth rates in the Post SAP era (1987–2018) are below the balance of payments constrained growth rates.
This study seeks to ascertain whether the Multi-Sectoral Balance of Payments Constrained Growth model is suitable to explain Nigeria's growth experience from 1981 to 2018. The paper explicitly incorporates the effects of intermediate imports and relative prices into the analysis. We employ the autoregressive distributed lag econometric procedure for the analysis. The outcome of the study shows that the Multi-Sectoral Balance of Payments Constrained Growth model correctly predicts Nigeria's growth path. It was found that manufactured export is one of the main determinants of the intermediate import demand function. Considerable reliance on this type of import to produce final exports could reduce the gains from trade, thus adversely affecting the GDP growth of the economy compatible with the BoP constrained growth model in the long run.
This article analyses late 1960s’ and early 1970s’ policy debate on issues concerning balance of payments in Sweden. Part of this debate was the question of fiscal austerity as a tool to achieve ...external balance, and if it could be used without risking economic and social unrest. The aim is twofold: first to empirically shine new light on modern Swedish economic policy in a historic context. Second to theoretically explore new ways of interpreting the relationship between political thinking and economic ideas. Special focus within the second aim are the consequences of political thinking on Keynesian economic ideas as a framework of economic understanding at the time. The study is qualitative in its methods and pays attention to limits within the relationship between economic policymaking and economic expertise. The article highlights conflicting perspectives on Keynesian ideas and the heterogeneity of these perspectives among economic experts. A heterogeneity of this kind is also shown to complicate the assumed close relationship between Social Democracy and Keynesianism in a historic context. In essence, the article shows that studying policy debates in close historic detail makes for new conclusions on the development of modern economic ideas and the part political thinking plays in it.
This article extends the recent revisions to the two-sector model of Latin American structuralism, following the classical tradition approach, to a small economy with an advanced stage of ...industrialisation. After considering the incorporation of a third sector, which produces capital goods and is controlled by foreign capital, the relationships between distribution and balance of payments are analysed. The extended model enables an analytical formulation of O'Donnell's 'Pendulum', by putting forward various distributive configuration alternatives on the basis of different types of alliances between the classes described therein, as well as by identifying the limitations faced by each coalition.
In this paper, we evaluate the French balance-of-payments constrained growth rate and we compare it with the effective growth rate. Empirically, we show that France is experiencing, simultaneously to ...its European integration, a substantial increase in the income elasticity of demand for imports and a collapse in the growth rate of its exports. Within the balance-of-payments constrained growth approach, this twofold negative effect is a major obstacle to true economic recovery and full employment.
This paper estimates a structural model of the balance of payments, with disaggregated exports (manufactures and other) and imports (final and intermediate), and a reduced-form model of the trade ...balance for the Mexican economy. The analysis identifies structural changes in the composition of Mexico's trade and the parameters that affect it across five subperiods marked by statistical breakpoints. The results indicate that a tightening of the balance-of-payments constraint may account for the post-liberalisation slowdown in Mexico's growth only during certain subperiods and that the impact of real exchange rate changes on the trade balance has diminished, most likely as a result of the increasing integration of export industries into global supply chains. The results also suggest an asymmetry, whereby a country cannot sustain growth above the rate consistent with balance-of-payments equilibrium, as expected, but it can grow persistently below that rate when other constraints are more binding.
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