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Full-Text Articles in Social and Behavioral Sciences
The Effects Of Export-Oriented, Fdi-Friendly Policies On The Balance Of Payments In A Developing Economy: A General Equilibrium Investigation, Arslan Razmi
Economics Department Working Paper Series
Many developing countries have adopted investor-friendly policies in recent years in order to attract export-oriented foreign direct investment (FDI). The effects of these policies on the external accounts have been largely ignored. This paper endogenizes FDI inflows in a structuralist general equilibrium framework to contribute towards filling this gap. Our economy consists of: (i) a non-tradable goods sector and (ii) an export processing zone (EPZ) that hosts transnational corporations. The analysis finds that, contrary to widely-shared perceptions, the short-run effects of FDI-friendly policies on the balance of payments may frequently be negative due to the nature of both the investments …
Balance Of Payments Constrained Growth Model: The Case Of India, Arslan Razmi
Balance Of Payments Constrained Growth Model: The Case Of India, Arslan Razmi
Economics Department Working Paper Series
This study applies the Balance of Payments Constrained Growth (BPCG) model to India, a large developing country with a relatively low trade to GDP ratio. Rather than assuming similar elasticities of substitution between goods produced in different regions, the study extends the model to relax these assumptions. Johansen’s cointegration technique is employed to estimate trade parameters. Short-run adjustments are explored within a vector error correction framework. The average growth rates predicted by various forms of the BPCG hypothesis are found to be close to the actual average growth rate over the period 1950-1999, although individual decades display substantial deviations.
Developing Country Exports Of Manufactures: Moving Up The Ladder To Escape The Fallacy Of Composition?, Arslan Razmi, Robert A. Blecker
Developing Country Exports Of Manufactures: Moving Up The Ladder To Escape The Fallacy Of Composition?, Arslan Razmi, Robert A. Blecker
Economics Department Working Paper Series
This paper tests for a ‘fallacy of composition’ by analysing the demand for exports of the 18 developing countries that are most specialised in manufactures in the markets of the 10 largest industrial countries. Estimated export equations (both time-series and panel data) suggest that most developing countries compete with other developing country exporters rather than with industrialised country producers. A smaller number of countries that export more high-technology products compete with industrialised country producers and also have higher expenditure elasticities for their exports. Thus, the fallacy of composition applies mainly to the larger group of countries exporting mostly low-technology products.