International Economics
atefe ahmadi; Abdol Karim Hosainpour
Abstract
1- INTRODUCTION
The expansion of trade among countries in recent years is one of the main reasons for economic growth. In order to achieve export development, it is necessary to use a principled and modern method to identify, determine and prioritize export target markets. In this ...
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1- INTRODUCTION
The expansion of trade among countries in recent years is one of the main reasons for economic growth. In order to achieve export development, it is necessary to use a principled and modern method to identify, determine and prioritize export target markets. In this regard, Bushehr province in the economic field (production, trade and services) with issues such as growth based on a single product and sector economy, weak technical and specialized knowledge in economic sectors, traditional production methods and lack of investment platforms in the sectors private and public aspect. Therefore, in the present research, in order to develop non-oil exports at the regional and national levels, by benefiting from the theories of comparative advantage, the activities with comparative advantage in export in Bushehr province are identified.
2- THEORETICAL FRAMEWORK
Based on different theories in the field of comparative advantage, countries or regions being rich in resources cause countries (regions) to have a potential relative advantage for exporting manufactured goods related to resource abundance. Also, the export of goods should be based on the trade costs and market size of the target countries. Therefore, according to the proposed theories, the export of goods based on the comparative advantage and the concentration of companies in a geographical area, while enjoying the benefits of forming an industrial cluster, causes the organization of industries and the specialization of activities.
3- METHODOLOGY
In this research, the cluster index method is used to investigate the concentration of industrial activities in the province. Due to this issue comparative advantage is one of the key concepts in international trade theory, and also one of the indicators that has been widely used in this field is the Balasa Revealed Comparative Advantage Index. After identification of the concentrated activities through the Balasa index and Balasa symmetry, the concentrated industrial activities with relative export advantage are identified and then based on a series of indicators, the target countries of Bushehr province are prioritized by using the numerical taxonomy method.
4- RESULTS & DISCUSSION
In the recent research, by benefiting from the theories of comparative advantage and using indices such as cluster index, Balassa index and Balassa symmetry index, concentrated industrial activities were identified and then has been determined the activities with comparative advantage in exports in the years 2005 to 2019. In the following, considering the importance of non-oil export development based on five relative import indicators, the number of countries participating in imports, the lack of advantage of the target country in product production, the average tariff and the distance between the target country and Bushehr province using the numerical taxonomy method of the most important markets were identified as the target of the selected product in the last statistical year (2021). According to the results obtained in the recent research, the activity of producing chemicals and chemical products has a relative advantage of export. Also, based on the final prioritization of the countries based on all the introduced indicators, it was determined that the countries of Turkmenistan, Tajikistan, Kyrgyzstan and Qatar are the most important target countries for the chemical products of Bushehr province, respectively, they have the first to fourth priority.
5- CONCLUSIONS & SUGGESTIONS
Bushehr province has opportunities and strengths in various fields of oil, gas, petrochemicals, power plants, agriculture and fisheries, mines, nuclear facilities, marine industries, commercial activities and proximity to the Persian Gulf. The results of calculating the cluster index indicate that each city in Bushehr province has a series of concentrated activities. Each of these activities can be susceptible to the formation of industrial clusters with a more detailed investigation. The results obtained from the calculations of revealed and revealed symmetric relative advantage indicators based on the statistics of added value and export of activities also showed that among the concentrated activities susceptible to cluster formation in Bushehr province, the activity of coke production and oil refining products; production of chemicals and chemical products. The production of pharmaceuticals and chemical and herbal medicinal products has a relative advantage in export. In addition, the results of the prioritization of the target countries showed that the countries of Turkmenistan, Tajikistan, Kyrgyzstan and Qatar are the most important target countries for the chemical products of Bushehr province. According to these results, it is suggested:
It is possible to form an industrial cluster in the production of chemical substances and chemical products in Asaluiye city.
Regional imbalances caused by the concentration of population and facilities in a province occur within a region, which are reduced by identifying and developing susceptible areas.
gholamreza zamanian; javad harati; Hojat Tagizadeh
Abstract
Introduction
In 1980s many countries to finance their spending,used internal resources, especially bank credits. Government spending financing by non-bank was used in low level, because capital markets had not formed or were not strong in most countries and also financial assets were not available. ...
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Introduction
In 1980s many countries to finance their spending,used internal resources, especially bank credits. Government spending financing by non-bank was used in low level, because capital markets had not formed or were not strong in most countries and also financial assets were not available. After World War II and the effectiveness of US aid to Europe, several articles were written about the impact foreign aid. Some theories believe that foreign aid such as loans, block grants can provide economic growth, but increased lending to developing countries in the 1970s and followed debt crisis in 1982 quesioned the impact of external debt on economic growth.
According to International Debt Statistics published by the International Bank for Reconstruction and Development in 2015, total external debt of developing countries is about 5506 billion dollars, which Iran's share is 7647 million dollars . According to the report, China is the largest debtor among developing countries so that the external debt of this country is about 874 billion dollars. China's external debt in 2013 has increased more than 6 times than 2000.
One of the main challenges which most developing countries facing, is ways of financing the budget deficit and its impact on economic growth in these countries. Choosing financing instruments, especially liabilities are important for rapid economic development and being aware of the impact of these policies on macroeconomic variables is very important. How to finance the budget deficit is the key to financial sector reform. The purpose of this study was to estimate the effects of external debt, budget deficits and exports on economic growth in developing countries. For this purpose,panel data for the period 2003-2013 and GMM estimation method have been used.
Theoretical frame work
In general, there are three views to the use of external resources. The first view is theories that consider external sources important for growth and economic development. This view suggests that developing countries are known poor economies in terms of low savings and capital and low investment. In fact, developing countries because of low saving rate can not finance expenditures related to depreciation and replacement of capital goods. As a result, for such countries, external resources are critical to reach ideal economic growth. The second view includes theories that foreign aid is not essential for growth and development. Bauer and Yamey (1989) believe: "For developing countries, foreign aid is not necessary or sufficient for liberation from poverty, but it is possible to grow and develop without foreign aid if necessary conditions are provided and economic and social projects are done. Also if these conditions are not provide, economic development is not possible, even with the presence of foreign aid and foreign resources will be wasted ".The third view includes those views which know foreign unsufficient condition for economic growth, but believe that proper management of external debt, provides the possibility economic growth and development. The management includes allocated loans to the production of export goods and prevents the losses of received aid and so on (Gharabaghi, 1993).
Theoretical models about growth and foreign aid includes two gap patterns, Griffin theory, model three gaps and overhang hypothesis. Before the two-gap model, growth patterns often proposed based on the savings gap, But Chenery & Bruno (1962) showed savings gap is not the only limiting factor. Griffin (1970) by statistical analysis revealed that only 25 percent of the external debt is allocated to growth activities. In the other words , 75% foreign loans taken for consumption expenditures. One of the main criticisms about the two gap pattern was that received foreign loans apart from the savings and exchange gap may be due fiscal gap and budget deficit reduction. So third limitation was introduced for the growth, was the limitation of public financing gap. Bacha (1990) suggests that the economy could fill three gaps savings, foreign exchange and Budget deficit by external sources and enter the growth path. One of the main channels which external debt impact on economic growth through it, is Debt overhang (Krugman, 1988; Sachs, 1989). Large debt burden is an obstacle to investment, because investors expect return on investment reduce due to foreign creditors.
Methodology
In this study, the model Jayaraman & Liu (2009) is used:
That, RGDP represents real production as a numerical index, ED real external debt (GDP%), EXP real exports of goods and services (GDP%), BD real budget deficit (GDP%) and ε random error term. consumer price index (CPI) is used for real nominal variables. In this study the generalized method of moment's (GMM) is used to estimate the model. GMM estimator is developed by Arellano & Bond (1991) and Arellano & Bover (1995). Gmm estimation method used the two sets of cross-sectional data and time series data. The method can solve the endogeneity problems between explanatory variables. In this method, dependent variable is added to the equation with a lag as an explanatory variable (Abrishami et al., 2006). To solve the correlation between the lagged dependent variable and the error term, lag variables are used as instruments in GMM. Also consistent estimators of GMM, depends on the validity of the instruments used. To test this, the use of statistics proposed by Arellano & Bond (1991) and Arellano & Bover (1995), which is called Sargan test and validate the instruments used to measure (Yavari, et al.2010).
Results & Discussion
Based on the results, the total external debt and budget deficits have negative impact on economic growth so that one percent increase in the total external debt reduced economic growth by 0.7%. Also increase one percent in the budget deficit reduced economic growth 0.035%. While exports have a positive impact on economic growth so that one percent increases in exports increase economic growth 0.21%.
In the second model, short-term external debt has positive effects, but long-term external debt has a negative impact on economic growth. So that a one percent increase in short-term external debt, increases economic growth 0.032% and with an increase in long-term external debt, reduces economic growth of 0.12%. Budget deficit has a negative impact on economic growth, while exports had a positive effect, as a one percent increase in budget deficit, reduced economic growth 0.005% and a one percent increase in exports increased 0.24%.
Also estimated results for the two groups of countries: countries with upper-middle per capita income and lower-middle and lower-income countries , have been reflected. According to estimates, total external debt in both countries has a negative impact. While short-term external debt has positive impact on economic growth, but long-term external debt has negative impact on economic growth. Budget deficit and exports in countries with low and lower-middle income have positive impact on economic growth, while the upper-middle income countries have negative effects.
Conclusions & Suggestions
The results show that, long-term external debt and budget deficit have significant negative effects on economic growth in developing countries. However, exports and short-term external debt have positive impact on economic growth in developing countries. While the external debt is divided into 2 groups: short-term and long-term external debt, the results show that short-term external debt have positive impact on economic growth but long -term external debt have negative impact on economic growth. However, the budget deficit is a negative impact on economic growth but exports have positive impact n economic growth. According to the results, measures to reduce long-term external debt should be taken in developing countries and prevent the adoption of long-term debt or long-term debt become short-term debt. Also, due to the positive impact of exports on economic
