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Using the overall FDI inflows for 89 countries during the period from 1985 to 2007, we empirically investigate the effects on inward FDI of various components of political and financial risk. We examine the effects of not only the level of these risks but also their changes over time. One of the major findings is that among the political and financial risks, only the political risk is adversely associated with FDI inflows. Specifically, not only the initially low level of political risk, but also a decrease in the level of political risk helps to bring a greater amount of FDI inflows. On the other hand, lower financial risk does not attract FDI inflows, especially to developing countries. Among the various components of political risk, in the sample of developing countries only, it is found that internal conflict, corruption, military in politics, and bureaucracy quality are inversely related to inward FDI flows.

JEL classification: F10 F31 N75 Keywords:Exchange rate volatility Trade East Asia a b s t r a c t Hayakawa, Kazunobu, and Kimura, Fukunari-The effect of exchange rate volatility on international trade in East AsiaIn this paper, we empirically investigate the relationship between exchange rate volatility and international trade, focusing on East Asia. Our findings are summarized as follows: first, intra-East Asian trade is discouraged by exchange rate volatility more seriously than trade in other regions. Second, one important source of the discouragement is that intermediate goods trade in international production networks, which is quite sensitive to exchange rate volatility compared with other types of trade, occupies a significant fraction of East Asian trade. Third, the negative effect of the volatility is greater than that of tariffs and smaller than that of distancerelated costs in East Asia. J. Japanese Int. Economies xxx (xx) (2009) xxx-xxx. Inter-disciplinary Studies Center, Institute of Developing Economies,

We investigate the impacts of COVID‐19 on global value chains by examining bilateral trade in finished machinery products from January to June in both 2019 and 2020. We use the numbers of COVID‐19 cases and deaths as measures of the impact of the pandemic. Specifically, we investigate how these impacts affect value chains in three scenarios—countries that import finished machinery products, countries that export finished machinery products, and countries that export machinery parts to countries exporting finished machinery products—to assess the impacts on demand, output, and supply chain, respectively. In our analysis, the largest negative impacts were from supply chain effects, followed by output effects. In contrast, we did not find significant impacts from demand effects. We also found that output effects are not so strong in intra‐Asian trade compared with trade in other regions.

Recent empirical studies which utilize plant-or establishment-level data to examine globalization's impact on productivity have discovered many causal mechanisms involved in globalization's impact on firms' productivity. Because these pathways have been broad, there have been few attempts to summarize the several and detailed mechanisms of self-selection and learning at the same time. This paper examines seven pathways so that the clear-cut consequences of the broad picture of globalization become visible. This strategy is useful for detecting missing links within and across the existing studies as well as for finding possible synergy effects among different mechanisms. Insightful policy implications may be derived from the comprehensive comparisons between the seven different pathways of globalization.

In this paper, we examine the role of export promotion agencies (EPAs) in promoting exports from Japan and Korea. Looking at two home countries enables us to tackle endogeneity issues by controlling for both country-pair time-invariant characteristics and importing-country time-varying characteristics. Our empirical results indicate that EPA has a positive and significant effect on exports even when we control for endogeneity. However, the size of the effect becomes substantially smaller, implying the importance of addressing endogeneity in accurately measuring the impact of EPA on exports. In addition, we find that EPA's (marginal) effects are larger in exporting to low-income trade partners than in exporting to high-income trade partners.

In this paper we empirically examine the determinants on utilization of the Korea–ASEAN Free Trade Agreement (KAFTA) by employing a database provided by the Korea Customs and Trade Development Institute. We find that, although three effects, namely preferential margin (margin effect), rules of origin restrictiveness (ROO effect), and average export volume (scale effect), contribute to determining the utilization of the FTA, the scale effect has the greatest impact. Our results suggest that, since firms with relatively small volumes of trade are usually small and medium-size enterprises (SMEs), policy assistance for reducing administrative costs should be geared toward SMEs. Our results further indicate that policymakers should also try to negotiate more extensive tariff reductions on products not only where MFN rates are high but also where shipments are large.