Export promotion agencies revisited

The number of national export promotion agencies has tripled over the past two decades. Although more countries made them part of their export strategy, studies criticized their efficacy in developing countries. The agencies were retooled, partly in response to these critiques. This paper studies the impact of today's export promotion agencies and their strategies, based on new survey data covering 103 developing and developed countries. The results suggest that on average they have a statistically significant effect on exports. The identification strategies highlight the importance of EPA services for overcoming foreign trade barriers and solving asymmetric information problems associated with exports of heterogeneous goods. There are also strong diminishing returns, suggesting that as far as export promotion agencies are concerned, small is beautiful.Economic Theory&Research,Debt Markets,Trade Policy,Free Trade,Emerging Markets

Foreign direct investment in Latin America during the emergence of China and India : stylized facts

In spite of the growing concerns about foreign direct investment being diverted from Latin America to China and India, the best available data show that Latin America has performed relatively well since 1997. Foreign capital stocks from OECD countries and the United States in particular in China and India are still far from those in the largest Latin American economies. The evidence shows that foreign capital stocks in China increased more than in Latin America during 1990-1997, but not as much since 1997. In fact, Latin America has actually performed better than China since 1997 given its lack of relative growth. The growth of foreign capital stocks in India was more stable than in China. Nonetheless, after controlling for shocks emanating from the source countries and bilateral distance between source and host countries, this paper finds a significant change in foreign capital stocks relative to China between 1990 and 1997, but no change relative to India.Debt Markets,Transport and Trade Logistics,Common Carriers Industry,,Corporate Law

Specialization and adjustment during the growth of China and India : the Latin American experience

This paper examines the extent to which the growth of China and India in world markets is affecting the patterns of trade specialization in Latin American economies. The authors construct Vollrath's measure of revealed comparative advantage by 3-digit ISIC sector, country, and year. This measure accounts for both imports and exports. The empirical analyses explore the correlation between the revealed comparative advantage of Latin America and the two Asian economies. Econometric estimates suggest that the specialization pattern of Latin A-with the exception of Mexico-has been moving in opposite direction of the trade specialization pattern of China and India. Labor-intensive sectors (both unskilled and skilled) probably have been negatively affected by the growing presence of China and India in world markets, while natural resource and scientific knowledge intensive sectors have probably benefited from China and India's growth since 1990.Free Trade,Economic Theory&Research,Trade Policy,Water and Industry,Agricultural Knowledge&Information Systems

Export promotion agencies : what works and what doesn't

The number of national export promotion agencies (EPAs) has tripled over the past two decades. While more countries have made them part of their national export strategy, studies have criticized their efficiency in developing countries (Hogan, Keesing, and Singer 1991). Partly in reaction to these critiques, EPAs have been retooled (see International Trade Centre, ITC, 1998 or 2000, for example). This paper studies the impact of existing EPAs and their strategies based on a new data set covering 104 industrial and developing countries. Results suggest that on average they have a strong and statistically significant impact on exports. For each $1 of export promotion, the paper estimates a$40 increase in exports for the median EPA. However, there is heterogeneity across regions, levels of development, and types of instruments. Furthermore, there are strong diminishing returns, suggesting that as far as EPAs are concerned, small is beautiful.Economic Theory&Research,Country Strategy&Performance,Trade Policy,Tax Law,Free Trade

Substitution between foreign capital in China, India, the Rest of the world, and Latin America : much ado about nothing ?

This paper explores the impact of the emergence of China and India on foreign capital stocks in other economies. Using bilateral data from 1990-2003 and drawing from the knowledge-capital model of the multinational enterprises to control for fundamental determinants of foreign capital stocks across countries, the evidence suggests that the impact of foreign capital in China and India on other countries'foreign capital stocks has been positive. This finding is robust to the use of ordinary least squares, Poisson, and negative binomial estimators; to the inclusion of time and country-pair fixed effects; to the inclusion of natural-resource endowments; and to the use of the sum of foreign capital stocks in Hong Kong (China) and mainland China instead of using only the latter's foreign capital stocks. There is surprisingly weak evidence of substitution in manufacturing foreign capital stocks away from Central America and Mexico in favor of China, and from the Southern Cone countries to India, but these findings are not robust to the use of alternative estimation techniques.E-Business,Foreign Direct Investment,Economic Theory&Research,Debt Markets,Currencies and Exchange Rates

Latin America’s Response to China and India: Overview of Research Findings and Policy Implications

The economic success of China and India is looked upon with admiration but also concern about the effects that the growth of these Asian economies may have on the Latin American and Caribbean (LAC) region’s manufacturing and services sectors. The evidence summarized here indicates that certain manufacturing and service industries in some countries, particularly in Mexico and to a lesser extent in Central America and the Caribbean, have been negatively affected by Chinese and Indian competition in third markets. Also, LAC imports from China and India have been associated with modest unemployment and adjustment costs in manufacturing industries. Nevertheless, there is substantial evidence of positive aggregate effects for LAC economies associated with China and India’s greater presence in world exports, financial flows, and innovation. Even though there is significant heterogeneity of such effects across LAC sub-regions, China and India’s growth is creating new production possibilities for LAC economies, in particular for sectors that rely on natural resources and scientific knowledge, which not only benefit from the growing internal markets of the two Asian economies and their effect on commodity prices, but also from complementarities in third markets through production networks, cheaper inputs and capital, and innovation spillovers. In sum, China and India’s growth has not been a zero-sum game for LAC, but the potential benefits are not being fully realized. It is crucial that LAC countries take full advantage of the growing presence of China and India in world markets by adopting offensive strategies that facilitate both the participation of LAC firms in global production networks and their commercial presence in the two Asian economies’ markets. Governments should avoid protectionist temptations and should focus on facilitating the adjustment in affected sectors, as well as the emerging structural shift towards more natural-resource and scientific-knowledgeintensive sectors by adopting adequate education, innovation (both patentable and non patentable), natural resource management, and rural development policies

Substitution between foreign capital in China, India, the rest of the world and Latin America: much ado about nothing?

This paper explores the impact of the emergence of China and India on Foreign Capital Stocks (FCS) in other economies. Using bilateral FCS data from 1990-2003 and drawing from the Knowledge-Capital Model of multinational enterprises to control for fundamental determinants of FCS across countries, the evidence suggests that the impact of foreign capital in China and India on other countries' FCS has been positive. This finding is robust across different specifications and estimation techniques. There is surprisingly weak evidence of substitution in manufacturing FCS away from Central America/Mexico in favor of China, and from Southern Cone countries to India, but these findings are not robust to the use of alternative estimation techniques. In sum, fears of a global competition for FDI seem misplaced, and policymakers concerned about attracting foreign investors should focus their efforts on the fundamentals determinants of FDI.• JEL Classification: F21, F22, O57</jats:p