Abstract: In this paper, the author attempted to study the patterns of the export and import shares of the developing countries and found out the relation of export and import share with its determinants like growth rate, inflation rate, FDI, current account balance, REER, concentration index, and diversification index respectively during 1980-2016 where FDI, REER, and diversification index significantly influenced the export and import shares respectively. Both the export and import shares have upward structural breaks and smooth cyclical trends. Their VAR models are unstable and non-stationary.
Keywords: Export shares; Import shares; Concentration index; Diversification index; Growth rate; foreign direct investment; Inflation rate; real effective exchange rate; Co integration; Vector auto regression
░ Introduction
The general macroeconomic fundamentals of the developing
countries are high inflation, low growth, high unemployment,
chronic BOPs deficits, and current account deficit, adverse
terms of trade, low shares of export and import, exchange rate
instability, poverty and inequality and so on. The banking and
financial system of these economies are not identical to the
developed countries. Yet in recent years from 21st century, the
revival of African economy, emerging Asian economies,
especially East Asia, Latin American development prospects
have shown great attention to the economists of the present
century. Even, terms of trade have gone in favor of the
developing economies, current account surplus of East Asia
and Euro Area outweigh US current account deficit which
provided flow of liquidity out of USA whose liability began to
increase by degrees. Even, monetary and trade integration in
Asia, Africa, and Latin America have been improved because
ASEAN common currency and African regional common
currencies have challenged US dollar hegemony. Obviously
exchange rate adjustment through floating exchange rate with
US dollar and other key currencies have not been gone in
favor of developed economies. Regional currencies in regional
trading blocs have started trade with their bloc currencies
.Therefore, international liquidity problem of the developing
countries somehow improved. The trading shares of the
developing countries are of very much important in context of
the development of the world economy as a whole. The author
presently gives importance on the developing countries’
international trade share so that the role of international
current account balance and terms of trade can be understood
easily. Therefore, the author studied the export and import
shares of the developing countries and their important
indicators during 1980-2016.
░ Literature Review
There are huge economic literatures on the developing
economies. Some of them are being introduced here. Jha [1]
described the developing countries’ basic indicators,
macroeconomic policies, trends of growth, inflation, exchange
rate, financial liberalization, international financial
architecture and IMF programme for the developing countries
in his book. UNCTAD [2] reported African recovery,
agricultural development and growth, agricultural exports, and
industrial competitiveness in details. SESRTCIC [3] published
a report on the development of OIC least developed member
countries and examined the trends in their major economic
indicators during 2000-2004. On the basis of the report, it
highlighted UN programme of action for LDC for 2001-2010
and suggested implementations. Bardhan & Mukherjee [4]
described trade off involved in decentralization and de facto
implementation is highly endogenous to the historical,
political, and economic context of the developing countries.
They did not explain a rigorous impact assessment and did not
offer generalization. The case studies they explained are India,
China, Pakistan, Brazil, Indonesia, Bolivia, Uganda and South
Africa.
UNCTAD Trade and Development Board (2010) published
LDC’s trends of growth, inflation, FDI inflows, BOPs and
recommended new development approach emphasizing
agriculture and food security, trade diversification, investment
promotion, infrastructure development, science technology
and innovation and south-south cooperation. Choudhury [5]
formulated macroeconomic models in the Klein-Timbergen
tradition and have been used to explain demand oriented
fluctuations and to deal with short run instability of output and
employment using stabilizing policies for the economy of
Malawi. Authors used Cobb-Doglous production function and
input output model for national accounts. Vegh Gramont &
Vegh [6] focused monetary and fiscal policy, exchange rate
policy, inflation, trends of growth of the developing countries.
They prescribed stabilization policy, process of dollarization,
BOPs crisis, and financial crises which induced the developing
countries. Nayyar [7] presented a large number of empirical
observations regarding the gap between the less developed
nations and the more developed countries from 1820 to
2010.He analyzed the trade, growth, inequality,
industrialization between less developed and developed
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