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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 on theme: "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."— Presentation transcript:

1 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

2 DTBALR (CHN_TWN) (yr on yr difference)

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

4 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

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

6 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

7

8 Textiles Grain China – D, E, I

9 Textiles Grains NAM

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

11 Base share in GDP19952000200520102015 1 grains5.044.985.255.164.80 2 othfood12.2012.5912.9913.1913.07 3 extract19.3619.4418.4019.5120.16 4 textiles3.272.752.182.192.16 5 mnfcs11.1111.2210.3511.8512.48 6 services49.01 50.8348.1147.33

12 policy Share in GDP200520102015 1 grains4.995.054.97 2 othfood12.6112.9713.16 3 extract19.4117.8919.10 4 textiles2.822.692.59 5 mnfcs11.179.7311.45 6 services49.0051.6748.73

13 Cum dif in quantity compvalad[*CHN _TWN]1995-002000-05 2006- 2010 2011- 2015 Base case-14.28-29.93-27.88-28.68 New Base case-12.2-28.47-26.83-27.94 Policy shock -3.01-4.12-6.66

14 Domestic Sales and Outputs base basb- 2000 basb- 2005 basb- 2010 basb- 2015 domestic sale35.5863.21138.35237.77 industry output28.0145.38110.07192.43 policy domestic sale -12.4-11.41-10.94 ind output 21.7920.8620.28

15 Exports qxs[textiles**]NAWEUJapanCHNOthNICSEASoAsiaROW NAmerica-31.55-6.13-21.18-87.78-22.5-23.65-17.59-10.54 WEurope-33.9-9.35-23.87-68.9-25.16-26.29-20.41-13.61 Japan-35.8-11.96-26.137.41-27.31-28.41-22.71-16.11 CHN_TWN262.13157.4231.05203.6728.7526.6436.849.02 OthNICs-33.83-9.25-23.7871.88-25.06-26.19-20.32-13.51 SEA-30.26-4.34-19.67-43.88-21.01-22.21-16.04-8.81 SoAsia-28.19-1.49-17.18-89.3-18.61-19.86-13.61-6.09 ROW-33.35-8.59-23.23-83.82-24.54-25.67-19.71-12.88

16 Export Prices pxw[textiles*]b-2005b-2010b-2015 NAmerica-0.36-0.17-0.01 WEurope-0.070.120.27 Japan0.250.380.51 CHN_TWN-6.35 -6.52 OthNICs0.560.730.77 SEA-0.24-0.15-0.08 SoAsia-0.66-0.43-0.28 ROW-0.150.040.22

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