The role of intermediate inputs in a multisectoral balance-of-payments-constrained growth model: the case of Mexico

Araújo, Ricardo Azevedo; Paiva, Matheus Silva de; Santos, Julio Fernando Costa

doi:10.1186/s40008-019-0153-3

Cited by 8 publications

(4 citation statements)

References 27 publications

(55 reference statements)

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“…First, the focus of Mexico's export sector shifted from primary products to technology-intensive goods. From 1962 to 2015, primary products fell from 37.5 percent to 5.5 percent of total exports, whereas technology-intensive products increased from 2 percent to 65 percent (Araujo et al 2016). Second, having been nationalized after the 1982 financial crisis, the Mexican 2.…”

Section: Economic Crises and The Dollar As A Store Of Valuementioning

confidence: 99%

“…In the case of Mexico, given that the export sector uses a significant level of imported intermediate goods, much of the recent literature evaluating BoP-constrained growth has utilized a multi-sector analysis; however, the results have been inconsistent (see, for example, Gouvêa and Lima 2010;Ibarra and Blecker 2014;Araujo et al 2016). Blecker and Ibarra (2014) suggest that the dramatic structural changes in the Mexican economy over the past 40-50 years provides an explanation for the inconsistent results.…”

Section: Foreign Currency As a Necessary Bank Reservementioning

confidence: 99%

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The process of endogenous liquidity in developing economies: the case of Mexico*

Polanco

Schmidt

2019

Review of Keynesian Economics

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The Post-Keynesian theory of endogenous money is typically used to explain the operations in advanced economies like the US. While the core ideas are relevant for all market economies, developing economies have additional features which complicate the process. These may include: the local currency is not accepted as a means of payment for international transactions, so the banking system (including the central bank) requires foreign currency reserves (balance-of-payments constraint); hard currency reserves are needed to provide ‘credibility’ for circulation of domestic currency; stock and bond markets are not well developed, so other financial instruments are necessary to complete the finance-funding process; and institutional differences regarding monetary control. We use the case of Mexico to show how these features of developing economies can complicate the endogenous-money process. For Mexico the process is constrained by the use of the US dollar as both a store of value and a reserve for the banking system. As a consequence, the interest rate is determined by the demand for the alternative sources of liquidity creation, and therefore a credit-financed expansion will necessitate an increase in the interest rate which can lead to a recession or other crisis scenarios.

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Section: Economic Crises and The Dollar As A Store Of Valuementioning

confidence: 99%

Section: Foreign Currency As a Necessary Bank Reservementioning

confidence: 99%

The process of endogenous liquidity in developing economies: the case of Mexico*

Polanco

Schmidt

2019

Review of Keynesian Economics

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“…This phenomenon shows the dependence of the Indonesian industry on raw materials originating from abroad (Thirafi, 2020). In addition, the manufacturing sector also has a role in the import chain, especially for export-oriented products (Araujo, de Paiva & Santos, 2019). When the Covid-19 strike, nonoil and gas goods fell, other effects on the manufacturing sector, such as industrial processing, were also felt.…”

Section: Literature Reviewmentioning

confidence: 99%

Behind Trade Balance Surplus in Kalimantan Barat Amidst Covid-19 Pandemic

Fatmawati

2021

JEBIK

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This study aims to determine general exports/imports structure, find the commodities and their salient characteristics, and measure changes in primary commodities price during the pandemic in Kalimantan Barat. The data used is Kalimantan Barat's export and import from Statistics Indonesia over January 2019 - June 2021 through descriptive analysis method and Fisher Index unit value. The results explain that three primary export commodities are bauxite, palm oil, and rubber. Bauxite and natural rubber were shocked by the pandemic, but palm oil can still hold. The government encourages downstream activities for bauxite and palm oil to produce value-added products, while rubber pays more attention to upstream quality. The contribution of exports is relatively significant to affect economic growth with the downstream process performed by the government; tremendous added value can be seen in palm oil commodities. Imports are beneficial because they add intermediate materials to support industrial processes. The recommendation is that local governments continue intensive monitoring and evaluation of smelter construction even during the Covid-19 pandemic, concentrate on the grade of palm oil downstream for its sustainability, and improve rubber trading system and capacity building for rubber extension officers to provide adequate guidance to rubber farmers.JEL : F10, F19, F40. Keywords: trade balance, export, fisher index, downstream, descriptive statistics, covid-19. ABSTRAKPenelitian ini bertujuan untuk mengetahui gambaran umum struktur ekspor/impor; mengetahui komoditas utama dan karakteristik yang menonjol; serta mengukur perubahan harga komoditas utama selama pandemi di Kalimantan Barat. Data yang digunakan adalah data ekspor dan impor Kalimantan Barat yang dikumpulkan oleh Badan Pusat Statistik selama periode Januari 2019 - Juli 2021 dengan analisis deskriptif dan Indeks Fisher. Hasil penelitian menjelaskan bahwa neraca perdagangan masih didominasi oleh aktivitas ekspor. Tiga komoditas ekspor utama adalah bauksit, minyak sawit dan karet. Pemerintah mendorong kegiatan hilirisasi pada komoditas bauksit dan kelapa sawit untuk menghasilkan produk bernilai tambah, sementara komoditas karet justru lebih memperhatikan kualitas hulu. Kontribusi ekspor sangat mempengaruhi pertumbuhan ekonomi dengan proses hilirisasi yang dilakukan oleh pemerintah, nilai tambah yang sangat besar terlihat pada komoditas minyak sawit. Aktivitas impor juga sangat menunjang perekonomian, selama impor yang dimanfaatkan adalah bahan baku penolong untuk mendukung proses industri. Oleh karena itu disarankan untuk pemerintah daerah agar tetap melakukan pengawasan dan evaluasi secara intensif berkala terhadap progres pembangunan smelter meskipun di masa pandemi Covid-19, memperhatikan kualitas produk hilir minyak sawit agar dapat terus berkelanjutan, memperbaiki tata niaga karet serta meningkatkan kualitas penyuluh karet agar tepat sasaran dalam melakukan pembinaan kepada petani karet.

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“…On the one hand, China and Switzerland have recently experienced the negative effect of excessive accumulation of foreign exchange reserves far exceeding the optimal level (Kumhof & Yan, 2016), on the other -China imports large volumes of intermediate resources that will be used in the production of final goods for export. There arises a question about how harmful can this strategy of limited growth balance of payments is (balanceof-payments-constrained growth, BPCG) (Araujo, Paiva, & Costa Santos, 2019).…”

Section: Introductionmentioning

confidence: 99%