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Trade Advantage and Competitiveness of Hungarian Agri-food Exports with the European Union
87-102Views:111The complementarities of trade advantage and trade competitiveness measures for Hungarian agro-food trade with the European Union are analyzed. The stability and duration of the trade measures over time is investigated by survival analysis using the nonparametric Kaplan-Meier product limit estimator and the consistency test between the trade measures is conducted by the stratified Cox proportional hazard model. Hungary experienced a greater number of products with relative trade disadvantages and a greater significance of one-way imports. Hungary also experienced relative trade advantages for bulk raw commodities, processed intermediates, and horticulture, with the greatest significance of successful quality competition and one-way exports, and the lowest significance of unsuccessful price
and unsuccessful quality competition. The duration of relative trade advantages is longer than the duration for the successful trade competition categories. Our results confirm that relative trade advantage is consistent with the one-way export and the successful price and successful quality competition categories in two-way trade on the one hand, and relative trade disadvantage with the one-way import and the unsuccessful price and unsuccessful quality competition on the other.Journal of Economic Literature (JEL) classification: Q12
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Deep vs. Shallow Integration. The Case of NAFTA and Mercosur
68-82Views:169Integration processes began in the 1960s and have become increasingly intense, bringing with them a growing share of intra-industry trade flows in international trade. According to the Smooth Adjustment Hypothesis (SAH), trade between similar industries or products results in lower adjustment costs in the factor markets. Due to the liberalizing effect of trade integrations trade flows intensify, causing an increase in intra-industry trade flows and consequently a decrease in adjustment costs at the same time. The alteration of trade patterns can be caused by changes both in quantity and in quality. Analyzing these effects separately allows us to better understand the trade policy practices of the chosen countries and to provide the decision makers with information.
In this paper we analyze NAFTA and Mercosur, two integrations which differ both in factor endowments and in depth of integration (deep vs. shallow). We used SITC Rev. 1 AG3 (industrial level) and HS92 AG6 (product level) bilateral trade data from the UN COMTRADE database to analyze the evolution of intra-industry trade flows.Journal of Economic Literature (JEL) classifications: F13, F14, F15
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Integration of the CEE agri-food sector into the EU: What does trade theory and empirical evidence tell us?
62-77Views:149The article provides an overview on the main results of empirical research into the Integration of the CEE agri-food sector into the EU. Contrary to early expectations, countries in the region have not become major agri-food exporters. We can observe great diversity in trade specialisations, the patterns of intra-industry trade and price and quality competitiveness among countries and major product groups. These outcomes derive mainly from the differences in relative factor endowments and the different initial conditions of the countries concerned. The recent theoretical and empirical developments in international
trade may help us to better understand the agri-food trade integration of new member states.JEL classification: Q12
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The probable impact of policies and policy measures on globalisation
49-72Views:162This paper aims to identify the impact of the recent economic and non-economic shocks on the globalisation of trade in terms of trade policy and structural openness, and to take a side in the discussion about the reversal, the slowdown, and the continuation of trade globalisation. The report argues that geopolitical decisions based on pure political priorities and different macro- and micro-policies may
harm trade globalisation temporarily. Nevertheless, in the long run, underlying
economic factors, such as decreasing trade costs and expanding services trade remain the critical driving forces of globalisation. The speed of the process is likely
to be slower than before, and its characteristics are different. With weakening multilateralism and increasing fragmentation, the emerging global world order will be suboptimal from the point of view of economic efficiency.Journal of Economic Literature (JEL) codes: F01, F02, F13, F60.
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The impact of regional trade agreements on bilateral trade flows: A Systemic Literature Review
119-133Views:357This paper reviews the theoretical and empirical literature on the impact of regional trade agreements on trade. The empirical literature is arranged based on the econometric
methods used to estimate the gravity model. Advantages and disadvantages of each method were highlighted. Papers covering RTAs from Africa, Asia, the Americas, and Europe were reviewed to gain a more representative understanding. The covered empirical literature suggests that the Poisson Pseudo Maximum Likelihood (PPML) estimator is more reliable than OLS in estimating gravity models, as it can deal with zero trade flows. The Fixed Effects (FE) approach produces more consistent estimates than the Random Effects (RE) approach when quantifying the effects of RTAs. This is because it allows one to control for the unobserved time-invariant variables. Surprisingly, the covered literature suggests that a great majority of African RTAs generated trade, regardless of the method of estimation used.Journal of Economic Literature (JEL) codes: F13, F15
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A Conjectured Cournot Duopoly Model for the EU–US Automobile Trade: A Game Theoretic Analysis of the TTIP’s Most Traded Product
48-70Views:229Economic actors, in their interactions with each other, certainly make decisions which are able to improve their original situation. In the case of free trade agreements, tariffs have the effect to manipulate countries’ trade and welfare. In this paper, we try to estimate the impacts of the Transatlantic Trade and Investment Partnership (TTIP) on the profit level of participating countries in the context of the Cournot duopoly model. More specifically, we elaborate the most traded product (MTP) and determine the profit levels in the equilibrium regarding two scenarios (pre and post situations of the TTIP). The findings suggest that the Cournot model seems suitable since it illustrates the possible options and provides a guideline for the decision-making process. Based on the model, it can be shown at which point the highest benefit can be achieved for the participating economies (EU, US) i.e. how long it is worth for the parties to apply additional automotive tariffs.
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A Review of Hungarian Research Antecedents and the Assessment of Fair Trade in Hungary
54-68Views:521Fair trade is a civil initiative aiming to provide fair conditions to the poor producers of the Third World and enable them to follow a sustainable model of development. This realigned commercial partnership is to modify the rules of traditional international trade between the producers of the southern nations and purchasers of the northern hemisphere and replace them with a novel alternative. Fair trade has unified techniques of labeling and a well-established institutional system in order to change the rules of the game that have controlled the dominant economic model. The main tool of the movement is the engagement of conscious and socially responsible consumers towards the topic. This review summarizes the Hungarian reports and studies done about the issue so far and introduces the present circumstances in Hungary.
Journal of Economic Literature (JEL) code: F13, F18, J81, P45
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Analysis of the Competitiveness in the Agri-food sector: The case of Latin America and the Caribbean Region
92-117Views:247Latin America and the Caribbean (LAC) countries are among the global leaders in the production and exports of agricultural and fisheries commodities, accounting for 15% of the world’s average agri-food export from 1995 to 2019. With rising global market competitiveness, considering the agri-food sector, it is important to assess if the region can compete against other global rivals, and in what products. Accounting for regional potential economic power, remarkable agricultural food export and market expansion, this paper explored the LAC agricultural trade patterns and export competitiveness through the analysis of the Revealed Comparative Advantage (RCA) index, and its modifications - SRCA (Symmetric Revealed Comparative Advantage), RTA (Relative Trade Advantage, and RC (Revealed Competitiveness) - in the agricultural sector for the period of 1995-2019. This paper contributes to the literature by presenting the export characteristics in Latin American developing countries, which can be an important instrument for decision-makers in the agricultural trade policy. Throughout the research period, the results indicated that Brazil, Argentina, and Mexico were the TOP agri-food exporters in LAC. The highest RCA, SRCA, and RTA were found in Guatemala, whereas the greatest RC was found in Argentina. At the product level analysis, oil seeds and oleaginous fruits, miscellaneous grains, seeds and fruit, industrial or medicinal plants, and straw and fodder (HS12) were the most exported items at the 2-digit level. Fruit and nuts, edible; peel of citrus fruit or melons (HS08) had the most competitiveness in the worldwide market, with the highest SRCA and RC indices, whereas coffee, tea, mate, and spices (HS9) had the highest BRCA and RTA values. The evidence suggests that among the TOP 10 exporters in LAC, all indices in the global agri-food trade are said to be relatively stable, whereas survival rates do not persist over time.
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The role of the voluntary unemployment insurance system in the trade union movement
43-70Views:240The purpose of this study is to analyse the institutional environment of the state-subsidised, trade union-managed national voluntary unemployment insurance system (the so-called Ghent-system) that influences the selective incentive feature of this system based on the literature. Another goal is to run cluster analysis in order to show whether Ghent-countries – Denmark, Finland and Sweden – differ from other countries based on this environment. The analysis is based on Olson’s (1965) concept of by-product theory. The essence of this theory is that large groups are able to increase, maintain and thus realize their lobbying activities by applying incentives to individuals. In the case of trade unions, the availability of voluntary unemployment insurance is a significant incentive. Its impact on trade union movement is usually analysed as a dummy variable, but this article focuses on institutions that are important to the Ghent-system.
Journal of Economic Literature (JEL) code: J51
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The influence of intra-industry trade on adjustment costs and the synchronisation of boom cycles
61-82Views:122For researchers studying intra-industry trade and the methodology involved in measuring the phenomenon one of the most important driving forces was the assumption that the creation of economic integration would lead to lower adjustment costs than were characteristic of the traditional commercial model. Another result was that - according to empirical data - intra-industry trade would receive a strong incentive from liberalisation, and that the accompanying adjustment costs would be lower than in cases there there was specialisation bewteen branches. In so far as this is demonstrable, proponents of attempts to achieve general integration offered a convenient weapon to their opponenets, who consistently argued back that it was precisely the difficult application of this process and its drawn-out and 'painful' nature that caused high costs. The first part of the article is devoted to a discussion of this debate, while the second part focuses on the role intra-industry trade plays in harmonisation with business cycles. The article shows that an examination of the intensity and dynamism of intra-industry trade allows a much more sophisticated analysis of a country's position in the world economy than is usually possible.
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The Role of VAT Registrations in the Hungarian International Trade
43-59Views:167Foreign companies generate more and more international trade through their non-active VAT registrations but these firms do own Hungarian tax numbers. Although these specialpurpose firms are present in various fields of economy e.g. storage, re-export, etc. their most important function is their involvement in global manufacturing. Because of their special legal status following the actions of VAT registrations in international trade statistics and in GDP compilations leads to diverse results, which causes significant difference in the data of these fields. The detachment of the product flow, the change of ownership and the money flow that is experienced today also makes it hard to follow the economical processes. Because of the above mentioned changes one of the most important methodological tasks for statisticians became to measure the activity of the VAT registrations and to ensure the consistency of data at national and an international level. We are demonstrating these complex transactions in three case studies at the end of our article.
Journal of Economic Literature (JEL) codes: F10, F23
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A review of the border effect literature – is domestic trade really biased?
81-102Views:163The aim of this article is to give a comprehensive review of the border effect literature. The author demonstrates through a number of empirical results that state borders still obstruct commodity trade flows between countries significantly, even in the twenty first century’s globalized world market. Countries’ trade patterns show a massive bias toward domestic markets, which can be only partially justified by formal factors such as income differences, distances, tariffs, cultural or linguistic dissimilarities and different currencies. Controlling for all these factors does not abolish the hindering role of borders, which suggests that the preference for domestic partners is excessive. The paper analyses major gravity model specifications and estimation methods in order to shed light on solving the border puzzle.
Journal of Economic Literature (JEL) kódok: F14, F15
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The dynamic of Hungary's Agro-Food Trade in the Global Economy
26-35Views:124We analyse the evolving pattern of Hungary's agro-food trade using recently developed emprirical procedures based around the classic Balassa index and its symmetric transformation. The extent of trade specialisation exhibits a declining trend; Hungary has lost comparative advantage for a number of product groups over time. The indices of specialisation have also tended to converge. For particular product groups, the indices display a less persistent pattern. They are stable for product groups with comparative disadvantage, but product groups with weak or strong comparative advantage show significant variation. The results reinforce the finding of a general decrease in specialisation but do not support the idea of self-reinforcing mechanisms, emphasised strongly in much of the endogenous groeth and trade literature.
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Intraindustrial trade in the light of theoretical explanations and empirical investigations
78-104Views:192The Heckscher-Ohlin (HO) model regarde as a modern theory of trade, dominant for more than a quarter of a century had to face more and more challenges in the second half of the 20th century. It seemed that the 2*2*2 (product-factor-country) model, which assumed perfect competition, constant return to scale and homgeneous products and whose elegance was rooted in its simplicity, could not offer appropriate answers for the explanation of empirical facts in two significant areas. The conclusion of the model, namely that countries will have a comparatvie advantage in the productions of goods for which they use factors of production relatively abundant in the country, was first questioned by the Leontief paradox and later by the empirical facts of intraindustrial trade. The study focuses on this latter phenomenon. In the first part it presents and classifies the major theoretical models of the phenomenon, and in the second it discusses, on the basis of empirical surveys in this field, the most important factors influencing intraindustrial trade.
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Revealed comparative advantage in Hungarian agriculture: a chaotic or coherent pattern?
59-82Views:140We describe the evolving pattern of Hungarian agri-food trade using recently developed empirical procedures based around the classic Balassa Index at various aggregation level and different bechmark between 1992 and 2002. Our results shows a significant geographical differences and across sub-sectors of 1, 2, and 3 digit SITC classification. The extent of trade specialisation exhibits a declining trend for all benchmarks; Hungary has lost comparative advantage for a number of product groups over time. The indices of specialisation have also tended to converge. For particular product groups, the indices display greater variation. They are stable for product groups with comparative disadvantage, but product groups with weak to strong comparative advantage show significant variation.
Journal of Economic Literature (JEL) classification: Q12
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Western Balkans: Opportunities for Agriculture on the Eve of EU Accession
52-73Views:156The Western Balkan countries can be characterised by their shared goal, which is to achieve the quickest accession to the European Union. Agriculture is an important obstacle to achieving this goal. The role of agriculture differs widely among the countries analysed but is more important than the average of the EU. This study gives a comprehensive overview of the most important agricultural indicators. These indicators allow us to acquire a precise picture of the sector’s relevance, production structure, efficiency and international relations. After demonstrating changes in input use, production structure, prices, terms of trade and agricultural policies, the next section identifies some of the reasons for these changes. The analysis concentrates on the most recent years for which data is available. In the last few years Serbia became the leading producer and the only net exporter of agricultural goods in the region. Nevertheless, the current situation is endangered by several issues, such as imbalanced sectoral production, fragmented production structure, relatively low yields, unfavourable export composition, and poor food hygiene and quality control, which anticipate painful and difficult measure which need to be carried out.
JEL classification: Q15, Q17, Q18
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The future of Russian outward foreign direct investment and the eclectic paradigm: What changes after the crisis of 2008–2009?
31-54Views:201This article explores the future of Russian outward foreign direct investment in the aftermath of the crisis of 2008–2009. As it is too early to analyse the full impact of the crisis, it develops hypotheses about the degree of slowdown in the foreign expansion of Russian transnational corporations. It uses an extension of the eclectic paradigm to home country advantages (competitive environment, business environment, development strategy, State involvement) applied to a comparison of the Russian Federation with other economies in transition as an analytical tool. Systematic differences between transnationals from the Russian Federation (global firms, based on natural resources, aiming for vertical integration of assets) and from new European Union member countries (regional firms, based on downstream activities or services, aiming for horizontal integration) allow us to formulate more solid conclusions about the future of the Russian firms facing lower export prices, lower market capitalizations and higher debts. In turn, this article argue that a comparison with the large emerging economies of Brazil, China and India, under the acronym of BRIC can be less useful in the current context, as these economies are significantly less affected by the crisis of 2008–2009 than the Russian Federation; hence they can not expect a slowdown in their outward foreign direct investment similar to that of Russian transnationals.
JEL: F23; F21; O52; P29
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Openness and growth
126-134Views:128The classical theory of commerce encourages the liberalization of international trade on the grounds that this contributes considerably to the growth of welfare. This study sets out to explore this hypothesis empirically by analysing the relationship between external market openness and per capita GDP examined in twenty-two OECD countries between 1950 and 2000. The results bear out to support the existence of a positive correlation. The novelty of the study is that the author pays special attention to the temporal aspects of the interaction between openness and per capita GDP which can be characterised in terms of a nonstationary and nonlinear trend, as expected.
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Sustainability of growth in countries with diverse backgrounds in the light of main international indices
145-168Views:120The paper tries to answer why fossil fuel abundant countries with diverse backgrounds perform differently depending on the dominance of the advantages or disadvantages accruing from natural resource wealth. With the contribution of the most popular competitiveness and institutional indices the determining factors are indentified. The distinctive factors are market efficiency, the quality of the business environment, innovative capability, the quality and efficiency of governmental, market and judicial institutions, the low level of corruption and the existence of political and civil freedom.
Journal of Economic Literature (JEL) codes: O13, O17, Q32
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The international competitiveness of the domestic economy: interpretations, figures and a few considerations
20-41Views:113Although the (improvement of) international competitiveness of the Hungarian economy is in the foreground of both the proclaimed efforts of the economic policy and that of the discussions of the trade, the fact that competitiveness at national level is a less precise term of economics with various meanings. This paper first discusses whether competitiveness at national economy level is interpretable at all. Then it examines what this notion does not mean and what it might mean. After reviewing the possible interpretations, the paper describes some of the figure of competitiveness of the domestic economy relating to a few international comparisons. Finally, it draws up some considerations as to what might and what might not be (or only with limitations) the means for the economic policiy to improve domestic competitiveness in the short and long terms.
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Limits of Economic Theories in Border Research
98-116Views:162The paper approaches the possible consequences of further trade liberalization, integration and the disappearance of borders from the perspective of well-known economic theories. After putting forward the questions and hypotheses, the author shows the different conclusions of economic approaches in the case of further integration and disappearing borders in borderlands. Using the results of economic theories the paper outlines the development path of those spatial units where state borders still play an important role in forming economic interactions. It comes to the conclusion that only regional reshuffling
can be mentioned in relation to further integration. The paper also draws attention to the fact that economic theories do not give clear-cut and comprehensive answers for development, so the economic approach could be too simplistic. Consequently, a wellelaborated empirical research programme could provide a genuinely nuanced picture of the development path of borderlands.Journal of Economic Literature (JEL) classifications: F15, O18, R12
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The Effect of Globalization on the Transmission of Monetary Policy
161-178Views:130Investigating how globalization and the new technological environment which drives and supports the integration process affect the monetary transmission mechanism, I find that the transmission mechanism is affected at every step, in a way which makes this complex linkage between economy and monetary policy even more unpredictable, strengthening the interest rate and wealth affects but weakening the credit channel and the exchange rate channel, if foreign exchange rate loans or carry trades are significant.
Journal of Economic Literature (JEL) Code: E44, E52, F42
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On the interconnectedness of the skill-premium concept
175-188Views:101The skill-premium concept, and its interconnectedness with technological development and international trade, has become an important area of economic research in recent decades. The aim of the present study is, using the latest academic work in the field, to bring together the most important theoretical developments and to serve as an introduction to the subject.
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The importance of foreign direct investment in Hungarian economy on the Millenary
10-25Views:126In the last two decades foreign direct investments has increased tremendously all over the world. Therefore the study of their economic influences and consequences is in the centre of international and Hungarian research. The paper without aiming at completeness gives a short summary of their influences on the recipient country, which is followed by the analysis of the Hungarian statistical data. These investments are of primary importance in Hungary. They played an important role in putting the country on an export-governed growth path at a time when inner accumulation did not make this possible. Their import demand exceeding export can be considered as an infavourable influence, with which FDI contributed to foreign trade deficit to a great extent. The annual capital influx helos compensate for the deficit of the balance of payment, however a major part of this deficit results from the withdrawal of the earnings realised with the help of FDI, which has been at a growing rate since 1998. The figures of the Hungarian companies (between 1998 and 2001) show that the duality of the Hungarian economy is not spreading.
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Strategic market entry barriers in Hungary
91-107Views:217This study is a continuation of a former project of the same research team. The focus of the research is market entry in Hungary for foreign firms, along with strategic entry barriers to both domestic and foreign importers to Hungary. A comparison of our findings from 2003 and 2008 gives some insights into the integration of the Hungarian domestic market into the Single European Market. Practical advice is offered to Hungarian market players on the scope of strategic entry barriers in Hungary as well as the ways entrepreneurs assess them.
JEL classification: F13, F14, F15