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The Developing Economies

Volume 38, Number 2 (June 2000)

The Developing Economies ■ The Developing Economies Volume 38, Number 2 (June 2000)
■ B5
■ 105pp.
■ Published in June 2000
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Panos Afxentiou and Apostolos Serletis,"Output Growth and Variability of Export and Import Growth: International Evidence from Granger Causality Tests," pp. 141-63.

A sample of fifty developing countries was investigated from 1970 to 1993 in terms of causality from export and import growth as well as from anticipated and unanticipated export and import growth volatility to per capita GNP growth. No credible evidence of causality was detected by the various tests. This lack of causal evidence does not imply that international trade is not a contributory development force, but inferentially suggests that growth should be sought mainly within the domestic dynamic, with international trade extending a helpful hand to the development process of the highly heterogeneous developing countries.

Sun Lixing, "Time-Varying Estimates on the Openness of Capital Accounts in East Asia and Mexico," pp. 164-85.

In this paper I estimate the model of interest determination to obtain the time-varying estimates on the openness of capital accounts in the Republic of Korea, Indonesia, Thailand, and Mexico. Instead of adopting a perfect foresight method and using the actual depreciation rate, I present an alternative empirical measurement of unobserved expected exchange rate by estimating a univariate SARIMA model. This study shows the significant steps since the 1980s in the liberalization of capital accounts of the above countries, and also points out the regional differences in the approaches to liberalization between East Asia and Mexico. My empirical estimates of capital account openness strongly support the view that maintaining an domestic monetary target such as the price level becomes more and more difficult with a fixed exchange rate, and thus highlight that a sterilized intervention policy is necessary in most developing countries in order to keep independent domestic monetary targets.

K. V. Ramaswamy and Gary Gereffi, "India's Apparel Exports: The Challenge of Global Markets," pp. 186-210.

In order to gain a better understanding of the problems facing India's apparel exports, this paper focuses on two themes. First it looks at the globalization of apparel production and the changing competitive conditions in the global apparel market. The second theme is the characteristics of India's apparel exports, the production structure that supports the export profile, and the effects of policy regulation. In the world apparel market retailers and brand-name marketers exercise the main leverage. They outsource apparel to meet customer demand and depend on package suppliers. India is at present a niche player in the low-value segment of the market for seasonal and fashion garments made of cotton fabric. India needs to restructure its production base to meet the challenge of changing global markets. Government policy should remove the impediments hindering the entry of large domestic firms and foreign investment into the apparel industry.

Hettige Don Karunaratne, "Ages as a Factor Determining Income Inequality in Sri Lanka," pp. 211-42.

Using decomposable inequality measurements and shift-share analysis, this paper empirically examines the importance of age as a factor determining income inequality in Sri Lanka during the 1963-87 period. Although total income inequality behaved in a "V" shape, the contribution of the age effect to this inequality followed a modest inverted-U shape. The importance of age is significant in urban areas when compared with rural areas. In explaining within-age-group inequality, sector is important, while region and gender are negligible factors. Since the income-inequality level is high among the over thirty-five age groups, increasing their share in the total income will lead to an increase in total income inequality. In particular, the growing share of elderly people has a strong impact on increasing income inequality. To reduce income inequality, two possible target areas are over fifty-five age females and sectoral differences of the mean income of all the groups aged above thirty-five.