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Topics in International Trade and Development

Paper Session

Friday, Jan. 7, 2022 10:00 AM - 12:00 PM (EST)

Hosted By: International Trade and Finance Association
  • Chair: Joseph Pelzman, George Washington University

The Relationship between International Trade and Economic Growth and Development

Dominick Salvatore
,
Fordham University

Abstract

The contribution of international trade to economic growth and development has long
interested economists. I present the results of the study that I am
completing on the relationship between international trade and economic growth and development
that reflects the dramatic structural changes that have occurred in the global economy since the
1980s in both advanced and developing economies.

Financial Inclusion and Macroeconomic Stability, Shadow Economy

Ahmed Mohamed Tawfick Rostom
,
World Bank
Hayot Berk Saydaliev
,
Suleyman Demirel University
Murat Issabayev
,
Narxoz University

Abstract

Financial inclusion plays a critical role in facilitating financial transactions through formal financial channels and hence ease of flow of funds across economic agents. This is associated with dynamics in savings, consumption and other macroeconomic aggregates in the economy. The main purpose of this paper is to empirically investigate the impacts of financial inclusion on macroeconomic stability. We test the hypothesis whether financial innovations may help to construct an inclusive financial system which eventually leads to macroeconomic stability at both the macro-economy level as well as the micro - bank-level in low middle-income fragile states. Using Generalized Method of Moments (GMM) and Dynamic Panel Threshold Model (DPT), our results reveal that the effect of financial inclusion on macroeconomic stability is heterogeneous, where the first type of innovation - disruptive financial innovations that make financial services affordable and accessible have a positive effect on stability, while further, inclusion tends to trigger vulnerable segment of the population enrollment to the mainstream financial system which eventually leads instability. Secondly, efficiency innovation makes financial services affordable, however, pressures stability by shrinking the labor market. Third, sustaining innovation seems to be insignificant. This implies that the policies to improve financial inclusion status are of great importance and could contribute to escaping the middle-income trap. To this end, our empirical study helps to shed light on the dynamics of the financial system stability and its association with financial inclusion.

Firm Innovation and Employment in South Africa: Examining the Role of Export Participation and Innovation Novelty

Karmen Naidoo
,
International Monetary Fund
Marta Bengoa
,
City University of New York and University of Johannesburg
Erika Kraemer-Mbula
,
University of Johannesburg
Fiona Tregenna
,
University of Johannesburg

Abstract

This paper studies the effect of process and product innovation on firm-level employment growth in South Africa. We contribute through two novel extensions, analyzing how exporters and the degree of novelty of innovation affect the innovation-employment relationship. We find process innovation to be more employment generating than product innovation. Furthermore, both process and product innovations have larger positive effects on employment growth for exporting firms relative to non-exporting firms. Finally, firms that introduce more radical innovations (new to the market) experience a higher positive employment effect than firms that introduce less radical innovations (new to the firm).

Weaponizing the COVID-19 Vaccine: The Geopolitical Struggle

Ofra Bazel-Shoham
,
Temple University
Joseph Pelzman
,
George Washington University
Amir Shoham
,
Temple University

Abstract

A battle over Covid-19 vaccine patents is reaching boiling point as overflowing hospital wards in India and Brazil have highlighted the desperate need to rapidly produce more shots to inoculate the world. It is estimated that by the end of May2021, 11billion Covid-19 vaccine doses will have to be produced globally to immunize 70 per cent of the world’s adult population.
India and South Africa are leading the push for a Trade-Related Aspects of Intellectual Property Rights (TRIPS) waiver, arguing that it is the only way to ensure “fair, equitable and affordable access” to Covid-19 vaccines. Along these lines the World Health Organization (WHO) is proposing the pooling of intellectual property — the Covid-19 Technology Access Pool. To date that proposal has received limited interest from countries and companies holding the IP rights.
This paper puts this debate in the context of a multi country strategic game where the major players that have been able to produce an effective vaccine for Covid-19, the USA, the PRC, and Russia have global aspirations to build strategic alliances with the developing and emerging economies. Two of the players, the PRC and Russia are not bound by private sector IP rules. For the USA, it has always been the assumption that the Covid-19 vaccines are owned and controlled by private companies that are not accountable to the US government. That assumption turns out to be incorrect. The US government can in fact use its ownership of a crucial vaccine patent to push companies to share their expertise with other manufacturers and boost global access to the Covid-19 vaccines.
Discussant(s)
Dominick Salvatore
,
Fordham University
Ahmed Mohamed Tawfick Rostom
,
World Bank
Murat Issabayev
,
Narxoz University
Marta Bengoa
,
City University of New York and University of Johannesburg
JEL Classifications
  • F6 - Economic Impacts of Globalization
  • O3 - Innovation; Research and Development; Technological Change; Intellectual Property Rights