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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 …
Price Competition And The Fallacy Of Composition In Developing Country Exports Of Manufactures: Estimates Of Short-Run Growth Effects, Robert A. Blecker, Arslan Razmi
Price Competition And The Fallacy Of Composition In Developing Country Exports Of Manufactures: Estimates Of Short-Run Growth Effects, Robert A. Blecker, Arslan Razmi
Economics Department Working Paper Series
This paper studies whether intra-developing country price competition has significant effects on the short-run growth rates of developing countries that are specialized in manufactured exports. Regression estimates using the generalized method of moments (GMM) applied to annual panel data for 17 developing countries in 1983-2004 show that these countries exhibit a “fallacy of composition,” in the sense that a real depreciation relative to competing developing country exporters increases the home country’s growth rate in the short run. The results also suggest that real depreciations for these developing countries relative to the industrialized countries are contractionary.