How do capital flows affect trade balance? Baseline vs. Policy simulation (Quotas eliminated in 2005) S – I = X - M + Net Transfer Trade balance: X –M.

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Presentation transcript:

How do capital flows affect trade balance? Baseline vs. Policy simulation (Quotas eliminated in 2005) S – I = X - M + Net Transfer Trade balance: X –M DTBALR

DTBALR (CHN_TWN) (yr on yr difference)

Change in Saving and investment (yr on yr difference) Investment Saving

Change in Saving and investment (yr on yr difference) S – I = X - M + Net Transfer Initial investment inflow results in deterioration of trade balance, relative to baseline

Changes in Net Transfer (yr on yr difference) yqtf yqht

Changes in Net Transfer (yr on yr difference) S – I = X - M + Net Transfer Increased capital earnings payments to trust require subsequent improvement in trade balance, relative to balance

Textiles Grain China – D, E, I

Textiles Grains NAM

How does China and Taiwan’s accession to WTO affect textile sector and structural change?

Base share in GDP grains othfood extract textiles mnfcs services

policy Share in GDP grains othfood extract textiles mnfcs services

Cum dif in quantity compvalad[*CHN _TWN] Base case New Base case Policy shock

Domestic Sales and Outputs base basb basb basb basb domestic sale industry output policy domestic sale ind output

Exports qxs[textiles**]NAWEUJapanCHNOthNICSEASoAsiaROW NAmerica WEurope Japan CHN_TWN OthNICs SEA SoAsia ROW

Export Prices pxw[textiles*]b-2005b-2010b-2015 NAmerica WEurope Japan CHN_TWN OthNICs SEA SoAsia ROW