Essays on trade and export development

Abstract

The dynamics between industrial development and export activities have been the interest of research for the past two decades, especially those related to services activities and global value chain activities. This thesis contributes to the literature by examining the relationships between industrial upgrading, the similarity of countries’ exports, and the economic development of countries. The thesis also explores the factors that promote export upgrading and policy barriers in services trade across different economies. The thesis is organized as follows. Chapter 1 provides the motivation for the thesis. Chapter 2 highlights the literature on export activities (export similarity index and export quality index) foreign direct investment (FDI), and services activities in global economic development. Chapter 3 investigates the links between export similarity and bilateral FDI of Japan and host countries, exploring in particular how multinational activities (FDI) could increase the export activities of domestic countries. The empirical analysis is conducted using a panel data of 70 countries based on SITC (Standard International Trade Classification) 4- and 5-digit products. The results suggest that: (1) outward FDI from Japan increases export similarity between host and source countries, however, inward FDI to Japan shows no evidence of promoting similarity; (2) bilateral FDI positively promotes similarity in the manufactured exports, but to a lesser extent in primary sector exports; and (3) geographic distances and differences in per capita income have significant negative effects on export similarity. In Chapter 4, the empirical framework is developed to study the impact of policy restrictions on services trade across countries. Recent studies highlight that services are essential for manufacturing productivity improvement and economic development. This chapter examines the relationship between policy restrictions (measured by the services trade restrictiveness index (STRI)) and services trade across countries using data from UN Comtrade. A log-linear gravity model is developed to explain variations in bilateral services-trade volumes. The main results show that: (1) a 1% percent increase in the overall STRI leads to a 0.3% decrease in bilateral services trade and around 0.04% decrease in services export; and (2) both goods-trade networks and merchandise exports similarity have statistically significant and positive influences on services trade. In Chapter 5, the determinants of variations in export quality across countries are investigated. The study empirically examines the dynamic pattern of export upgrading and its main influencers based on a panel framework. The results imply that service imports, FDI inflows and the level of per capita income have positive effects on export quality growth. The last chapter, Chapter 6, provides the policy discussion and conclusion of the thesis, as well as discussing how the study could be extended as part of further research in this area.