scholarly journals Current Account Balances, Financial Development and Institutions: Assaying the World "Savings Glut"

2005 ◽  
Author(s):  
Menzie Chinn ◽  
Hiro Ito
Keyword(s):  
Financial Development ◽  
Current Account ◽  
The World ◽  
Current Account Balances

scholarly journals Global Imbalances: The Role of Institutions, Financial Development and FDI in the Context of Financial Crises

2021 ◽  
Vol 13 (1) ◽  
pp. 356
Author(s):  
Carlos A. Silva ◽  
Xavier Ordeñana ◽  
Paul Vera-Gilces ◽  
Alfredo Jiménez
Keyword(s):  
Financial Crisis ◽  
Financial Development ◽  
Current Account ◽  
Global Financial Crisis ◽  
Quality Of Institutions ◽  
Current Account Imbalances ◽  
The Global Financial Crisis ◽  
Current Account Balances

This paper examines the role of the quality of institutions, financial development and FDI on current account imbalances, which narrowed during the Global Financial Crisis. In doing so, we utilize (i) a sample of 49 advanced and emerging economies during 1984–2014; (ii) a novel three-clustered indices of institutional quality and (iii) two measures of financial development, the share of FDI and a measure of financial crisis in addition to standard determinants of the current account. We find that the better the quality of institutions and the greater the financial development, the larger are current account deficits; meanwhile, FDI contributes to boost current account balances. Moreover, financial crisis episodes tend to improve current account balances, particularly for countries that are highly open to trade and to receive FDI, as in the case of advanced economies and East Asian countries.

Are export earnings from India’s bilateral intra-industry trade with the US and China robust enough?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sagnik Bagchi ◽  
Surajit Bhattacharyya
Keyword(s):  
Current Account ◽  
Manufacturing Industry ◽  
Current Account Deficit ◽  
Export Price ◽  
World Market ◽  
Export Share ◽  
Content Type ◽  
Persistent Problem ◽  
Industry Trade ◽  
The World

Purpose This paper aims to explore whether India’s export basket in the bilateral intra-industry trade (IIT) with two of its top trading partners characterize robust export earnings or not. This is pertinent for two reasons. First, India has a persistent problem of current account deficit for over decades now. Second, whether India’s export diversification strategy by participating in global value chains to improve export share in the world market led to the problem of the fallacy of composition. Design/methodology/approach This study considers bilateral trade data between India-USA and India-China at the HS-6 digit level over the period 1990–2018. The magnitude of total IIT is computed using the Grubel and Lloyd (1971) index. This paper then uses the unit value dispersion criterion to disentangle the magnitude of total IIT into horizontal and vertical IIT. Through a stepwise econometric exercise, this paper explores the attributes of exported goods in the IIT basket in terms of the directions of ToT, export share and export-price elasticity. Findings Across the two country pairs, the major contributors to the upsurge in IIT are five manufacturing industry groups of chemical, plastics and rubber, textiles, base metals and machinery and mechanical appliances. Across the industry groups, the dominant form of IIT has been low vertical IIT. Most of the industry groups do not characterize robust export earnings as the commodity groups have an elastic demand and an increasing trend of Terms of Trade (ToT). The exceptions are the industry groups of chemicals and textiles in India-China and India-USA, respectively. Research limitations/implications The concern of slim export earnings in most industry groups offers scepticism in maintaining the sustainability of the current account. The problem of the fallacy of composition also cannot be ruled out given the dominance of low vertical IIT. This study argues that these industry groups need to engage in labour market reforms and require access to easy credit to achieve competitiveness in the world market. Originality/value The analysis performed in this paper attempts to integrate the Prebisch-Singer hypothesis in the context of IIT. Empirical evidence to such an issue is not profound.

Budget Deficits and Current Account Balances

2013 ◽  
Author(s):  
Ahmad Zubaidi Baharumshah ◽  
Siew-Voon Soon ◽  
Hamizun Ismail
Keyword(s):  
Current Account ◽  
Budget Deficits ◽  
Current Account Balances
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