Real Effective Exchange Rate and Regional Economic Growth in China: Evidence from Provincial Data

Guo, Yan; Lin, Yaqi; Li, Jie

doi:10.1111/cwe.12180

Cited by 8 publications

(5 citation statements)

References 32 publications

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“…Hence, it measures the competitiveness of a currency. The exchange rate is expected to be negatively correlated with economic growth as suggested by the literature (Yan, Lin & Li 2016).…”

Section: Model Specificationmentioning

confidence: 91%

Trade openness and economic growth: Evidence from the Economic Community of Western African States region

Guei

Roux

2019

Journal of Economic and Financial Sciences

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It is well known that developing countries have enormous constraints in what they can bring to global trade and investment. Economic Community of Western African States (ECOWAS) countries export primary commodities that make them vulnerable to external shocks. Inadequate infrastructure and the small size of their domestic markets often limit their access to foreign markets (Clark, Dollar & Micco 2004;Gulati et al. 2007). Rising trade costs and limited access to technology and intermediate inputs for firms in developing countries constitute a barrier to entry into world markets, as well as participation in global value chains (Arvis et al. 2013). Orientation:The establishment of the African Continental Free Trade Area has raised a new question regarding the link between gross domestic product (GDP) per capita and trade openness among economists and policymakers. Research purpose:The purpose of this research is to provide an understanding of the potential free trade agreement between Economic Community of Western African States (ECOWAS) countries.Motivation for the study: Trade liberalisation is seen as an avenue for African countries to achieve social and economic advancement. Therefore, establishing the contribution of trade to economic growth is of paramount importance to society, especially for developing economies.Research approach, design and method: This study used two econometric tools -the autoregressive distributed lag (ARDL) bound testing approach and the pool mean group (PMG) model -to assess the link between trade openness and GDP per capita in ECOWAS. The data set covers the 15 ECOWAS member countries over the period 1990-2016. Main findings:The study indicates the existence of a long-run relationship between the variables at 1% in all countries except for Ghana, Guinea-Bissau, Mali, Senegal and Togo. This implies that the variables are cointegrated; hence, the PMG can be used. The estimation reveals that trade openness has a negative impact on GDP per capita in the long run. The findings have important implications for policymakers in the ECOWAS region and other developing countries.Practical/managerial implications: The paper invites policymakers in the region to carefully consider the outcome of the agreement in each member country and adjust accordingly with tariff barriers. Contribution/value-add: Even though trade liberalisation can be beneficial, the lifting of trade barriers in all sectors among ECOWAS members will not contribute to growth. ECOWAS countries must decide the sectors they want to liberalise and also add value to their production of goods and services in order to fight poverty and boost income.

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“…Hence, it measures the competitiveness of a currency. The exchange rate is expected to be negatively correlated with economic growth as suggested by the literature (Yan, Lin & Li 2016).…”

Section: Model Specificationmentioning

confidence: 91%

Trade openness and economic growth: Evidence from the Economic Community of Western African States region

Guei

Roux

2019

Journal of Economic and Financial Sciences

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“…Some scholars consider that exchange rate appreciation diverts producers to look for cheap local inputs and thus change the pattern of international trade. Exchange rate appreciation can affect trade and growth in developing countries and therefore a proper use of exchange rate is a way to enhance growth and trade (Yan, Sheng, Yaqi, & Jie, 2016).…”

Section: Real Effective Exchange Rate (Exch)mentioning

confidence: 99%

Did China‐Pakistan free trade agreement promote trade and development in Pakistan?

Shah

Kamal

2020

Int. J Fin Econ

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China‐Pakistan Free Trade Agreement (CPFTA) increased trade between China and Pakistan, however, it also swelled Pakistan trade deficit with China. The empirical findings of this paper suggest that CPFTA positively contribute to Pakistan exports to China and her imports from China but the increase in Pakistan imports was far greater than Pakistan exports after CPFTA. Resultantly, Pakistan's trade deficit with China increased and Pakistan's growth hampered. Constant market share analysis suggests that a better understanding of the Chinese market, efficient utilization of tariff lines and focus on products of the comparative edge are important for Pakistan to benefit from CPFTA. Otherwise, CPFTA is counterproductive for Pakistan.

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“…However, building a sub-national level REER series is beyond the scope of our study. Yan et al (2016) have constructed provincial-level REER indices to study the effect of REER on regional economic growth in China. It would be interesting to construct a similar state-level index for India for our future research on the impact of REER on FDI inflows to India.…”

Section: Figure 5 Reer Seriesmentioning

confidence: 99%

Real Effective Exchange Rates and Foreign Direct Investment Inflows: Empirical Evidence from India’s Sub-National Economies

Giap¹,

Gopalan²,

Luthra³

2020

JEPF

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This paper investigates the impact of real effective exchange rates (REER), both in terms of levels and volatility, on foreign direct investment (FDI) inflows for a panel of 35 Indian sub-national economies over the period 2000-2013. In light of the asymmetric distribution of FDI inflows within India, we focus on examining the nexus between FDI inflows at the sub-national level and India’s competitiveness captured by REER. Our empirical analysis reveals that movements in REER have a significant and negative impact on FDI inflows, while REER volatility is found to be inducing FDI. Our results are suggestive that FDI inflows into India are largely domestic market oriented in nature. Purpose: In light of the asymmetric distribution of FDI inflows within India, we focus on examining the nexus between foreign direct investment (FDI) inflows at the sub-national level and India’s competitiveness captured by real effective exchange rates (REER). This paper investigates the impact of REER, both in terms of levels and volatility, on FDI inflows to 35 Indian sub-national economies over the period 2000-2013. Research Methodology: To examine the impact of REER on FDI inflows, we compile a panel dataset for 35 sub-national economies covering the time period 2000 to 2013. We employ panel fixed effects models to explore our relationship of interest between REER and FDI, controlling for other characteristics specific to a sub-national economy.Findings: Our empirical analysis reveals that movements in REER have a significant and negative impact on FDI inflows, while REER volatility is found to be inducing FDI. Our results are suggestive that FDI inflows into India are largely domestic market-oriented in nature. Originality/Value: Considering that India’s FDI inflows exhibit significant concentration patterns among selected regions, we exploit this heterogeneity at the sub-national level to empirically understand the determinants of FDI, with a particular focus on cost competitiveness as captured by REER. The extant literature has not explicitly focused on testing the impact of REER both in terms of its levels and volatility on FDI inflows to India at the sub-national level, especially not at the sub-national level. While admittedly the exchange rate varies only at the national level, the value-addition comes from understanding its interaction with state-varying macroeconomic indicators.

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Real Effective Exchange Rate and Regional Economic Growth in China: Evidence from Provincial Data

Cited by 8 publications

References 32 publications

Trade openness and economic growth: Evidence from the Economic Community of Western African States region

Trade openness and economic growth: Evidence from the Economic Community of Western African States region

Did China‐Pakistan free trade agreement promote trade and development in Pakistan?

Real Effective Exchange Rates and Foreign Direct Investment Inflows: Empirical Evidence from India’s Sub-National Economies

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