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Journal of Global Trade, Ethics and Law
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Cover of Journal of Global Trade, Ethics and Law, volume 1, issue 1
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Volume 1 · Issue 1 · 2023

The inaugural issue of the Journal of Global Trade, Ethics and Law.

Published
24 April 2023
Articles
9
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Table of contents

Research articles

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  1. 01

    Research Article · Pages 1–54

    Cross Countries Economic Performances - SPF Approach

    Walid Y. Alali

    The differences in technical inefficiency (inefficient allocation of production inputs) explain the diverse cross-country economic performances, using estimating a “global” stochastic production frontier (SPF) model, and (Rodrik (2000)’s taxonomy of institutions), to compare the mean level of technical inefficiency for each country per period. Our model, consider three variables’ dimensions – human capital, openness, and institutions. Institutions are more fundamental to the sources of technical inefficiency. Specifically, the rule of law has a direct impact on improving technical efficiency. Democracy and sound money, do not have a direct impact on technical efficiency. However, their interactions with human capital are statistically significant. It points out the possibility that a minimum level of human capital matters for these two aspects of institutions to have any impact on technical efficiency. Regulation, on the other hand, shows a threshold effect. That said, after reaching a threshold level of regulation, excessive regulation leads to technical inefficiency.

  2. 02

    Research Article · Pages 55–85

    Effect of Capital Ratios on Listed Banks Stock Returns: Evidence from Pakistan

    Umer Shahzad, He Xiaoyin

    The study examined the market-valued capital ratio (MLR) as an indicator to measure the riskiness of banks. After examining the cross-section relationship between market-value capital ratios and banks’ stock returns in the Pakistani banking sector from 2005 to 2018 by using Fama & French three-factor model. The study shows that banks in Pakistan with lower market capital ratios have had higher average stock returns of banks than those with higher market capital ratios, which means there is a negative relationship between market-value capital ratios (MLR) and banks’ stock returns (SR). Furthermore, the result also revealed that banks in Pakistan with high market-value capital ratios (MLR) had low future average returns than those banks with lower market-value capital ratios (MLR). The low future returns are not just because of high market-value capital ratios there is a common riskfactor related to average future returns. Evidence from the analysis of sample data shows the existence of a positive causal relationship between market-value capital ratios (MLR) and bank efficiency. Based on these results, we conclude that Pakistani banks with high marketvalue capital ratios (MLR) are associated with high bank efficiency as compared to banks with low market-value capital ratios (MLR). Additionally, the outcomes examine that the bank's size has a positive effect on the relationship between market-value capital ratios and bank stock returns and in the financial crisis there is a positive relationship between marketvalue capital ratios and bank stock returns.

  3. 03

    Research Article · Pages 86–115

    Swiss Defence Industry in the Global Arms Trade – Successes and Challenges

    Donatas Palavenis

    When we talk about the Defence Industry (DI), arms transfers, and military expenditures we mostly refer to data accumulated by the Stockholm International Peace Research Institute (SIPRI). In the SIPRI Top 20 list of largest exporters of major arms for 2019, small states hold consecutive positions: Israel takes 8th place, Switzerland is 13th, and Sweden, Norway, and Belarus place 15th, 17th, and 20th respectively. The author analyses the Swiss DI case due to several reasons; its place in SIPRI Top, its sharp rise of Swiss arms exports in the recent year, its Swiss neutrality strategy, the country’s multilingual society, and its all-government approach to the arms industry, though still contributing to the limited scholarly studies on contemporary Swiss DI. This paper aims to explore Swiss DI and its strategies, to identify the country’s defence and security policy influence towards DI, and to discuss the Swiss DI stance and future perspectives in the context of the global arms trade. At the same time, this paper also highlights Swiss DI successes and failures that could be of significant use to other small states aiming to develop or enhance their relevant DIs.

  4. 04

    Research Article · Pages 116–130

    Trade Agreement as a Model of Development: The Case of the Japan-Philippine Economic Partnership Agreement (JPEPA)

    Al Faithrich C. Navarrete, Virgilio M. Tatlonghari

    The Japan-Philippines Economic Partnership Agreement (JPEPA) includes comprehensive provisions that aims to foster economic growth. The provision on Tariff Elimination is expected to increase trade between the two countries. A modified Gravity Model was used in order to estimate the impact of Tariff Elimination to Exports of the Philippines to Japan using the weighted average of tariffs imposed by Japan to Philippine Exports. While a Two-Stage Least Squares (TSLS) was utilized to estimate its impact to Economic Development. Using quarterly data from 2001 to 2013, results shows that although the agreement is able to statistically increase exports of the Philippines to Japan, it may not be enough to induce significant Economic Growth to the Philippines.

  5. 05

    Research Article · Pages 131–145

    Trade Liberalization and Poverty in Nigeria (1981-2018): An Empirical Study

    Michael O. Ogundipe

    This study looked at the effects of trade liberation on reducing poverty in Nigeria. To investigate the data properties, a number of tests were run, including cointegration, the unit-root test, and descriptive statistics. The Auto-Regressive Distributed Lag (ARDL) method was used in this study to examine the variables' short-run and long-run effects. The outcome demonstrated that trade is statistically important in determining Nigeria's poverty rate over the long and short runs. However, a country's economic system's potential to gain from economic globalization also depended on its domestic macroeconomic policy, market structure, early economic state, institutional quality, and degree of political stability. According to the predicted outcome, trade will benefit the poor in the long run. On the basis of the study's findings, suggestions are given to promote trade and lower the rate of poverty in Nigeria. To save the domestic market, Nigeria may implement a restrictive trade liberalization strategy. In contrast, the government should encourage the import of technology to advance domestic industry and adopt a soft trade liberalization policy that is based on the elimination or reduction of barriers to international commerce in technology.

  6. 06

    Research Article · Pages 146–220

    A Framework Explaining Inflation Surprises

    Douglas H. Carr

    Four major inflation surprises mark the modern economic era: diminished response of inflation to stimulus since the 1990’s, increasing financial bubble cycles, resilience of inflation during the Great Financial Crisis, and, of course, the pandemic inflation. To explain these surprises, this paper presents a new framework for analysing inflation as driven by three major components: a Natural Rate of Inflation reflecting an economy’s dynamism, monetary inflation driven by the relative unit value of a currency as determined by monetary aggregates, and cyclical inflation governed by fiscal policy and influenced by trade balances and demand shifts. Monetary inflation becomes increasingly less responsive to stimulus (inelastic) at a geometric rate, explaining both the 1990’s decline and increased financial bubbles. Another consequence was incomes falling behind growth in money, credit, and asset prices. Natural Inflation sets a floor on the overall inflation rate, which was evident following the GFC. The inflationary effect of unprecedented U.S. pandemic deficits is most evident when viewed in conjunction with the monetary model and accounts for the timing and magnitude of the pandemic inflation. The analysis indicates significant differences in the effects of fiscal and monetary stimulus, a return to sub-2% inflation, and that central banks are neither responsible for nor able to offset the inflation surprises.

  7. 07

    Research Article · Pages 221–277

    Impact of Natural Environment, Regional Integration, and Policies on FDI

    Walid Y. Alali

    FDI is an important source of capital, technology, and skills transfer for both developing and developed economies, this paper explores the effects of three determinants of bilateral FDI, including natural barriers, the “at-the-border” barrier (regional trade agreement), and the “behind-the-border” barrier (domestic regulatory environment). An augmented gravity model is deployed to carry out the test for the inter-OECD and intraOECD regions in 60 economies for the period 1985 – 2006. The main aim is to study the roles of external institutions vis-à-vis domestic institutions on FDI. We perform several estimation strategies for our panel data analysis, finding geographical, historical, and cultural proximities all explain bilateral FDI significantly, even after controlling for unobserved country-pair heterogeneity and time effect. Using a “catch-all” regulatory environment index and a dummy variable for country-pair membership of RTA, our analysis shows that lax regulatory environment and RTA are seemingly associated with FDI positively in both regions.

  8. 08

    Research Article · Pages 278–301

    Expending Cities and Commercial Cultures: Impact of Urbanization on Foreign Trade

    Beining Liu, Kaitong Liang

    The prosperity of urbanization is accompanied by the rise of foreign trade. Urbanization, as a phenomenon of economic expansion of cities and towns, breeds cultures that make local people attach importance to, and are willing to engage in business, which could promote the regional foreign trade. Using the urbanization rate of permanent residents in each city as an indicator, and the number of earthquakes recorded between 780 BC and 1970 AD as an instrument, we find that for every 1% increase in the urbanization rate of a region, its foreign trade increased by 3.92%. We also find that commercial culture is shaped by urbanization through residents' income and influences the foreign trade by creating an atmosphere of innovation in society.

  9. 09

    Research Article · Pages 302–357

    Economic Growth with Foreign Trade on the Reverse Gear: India's Re-experimentation

    Jayanta Kumar Mallik

    Concerns about the de-globalization attributable to protectionist trade practices are growing. The evidence that the actions of the countries concerned are inimical to their own interests might lead to an effective solution of the problem. Guided by this thought, this paper probes the role of foreign trade and other factors in India’s economic growth. Tariffs increased in India from 2011, a de-facto reversal of the tariff reforms done during the 19922008 period. This and the use of a large number of anti-dumping measures make it a phenomenon of foreign trade on the reverse gear (FTRG). Autoregressive distributed lag models show that the import restrictions negatively impacted import demand, and the loss of competition in domestic product market attributable to the import curbs and the reduction in innovation efforts, among other things, reduced productivity growth, which, in turn, hurt export performance and GDP growth in recent years. Manufacturing in Asia and North America is severely impacted by the deglobalization, the problem of protectionism being more acute in these regions. This and the data on two industries elucidate that the tariff/subsidy support may not enable domestic manufacturing to endure the de-globalization; efforts for re-globalization might help. The stylized patterns on exports and GDP growth in India, covering two spells of FTRG (1956-75; 2012-20) and one when it was foreign trade on the front gear (FTFG) (1987-2012), reinforce the point. Both FTRG spells had a fall or a virtual stagnation in India’s share of world exports, unlike the increase recorded during the FTFG phase. GDP growth improved with FTFG; worsened with FTRG. The slide in GDP growth was faster during 2012-20 than in the 1956-75 phase. Import curbs, albeit in varying forms, were used in both spells. Erosions in the efforts for human capital formation and innovation also dampened economic growth during 2012-20.