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Financial market imperfections severely restrict international trade flows because exporters require external capital. This article identifies and quantifies the three mechanisms through which credit constraints affect trade: the selection of heterogeneous firms into domestic production, the selection of domestic manufacturers into exporting, and the level of firm exports. I incorporate financial frictions into a heterogeneous-firm model and apply it to aggregate trade data for a large panel of countries. I establish causality by exploiting the variation in financial development across countries and the variation in financial vulnerability across sectors. About 20%-25% of the impact of credit constraints on trade is driven by reductions in total output. Of the additional, trade-specific effect, one-third reflects limited firm entry into exporting, while two-thirds are due to contractions in exporters' sales. Financially developed economies export more in financially vulnerable sectors because they enter more markets, ship more products to each destination, and sell more of each product. These results have important policy implications for less developed nations that rely on exports for economic growth but suffer from weak financial institutions.

This paper examines the role of Japan against that of China in the exchange rate regime in East Asia in light of growing interest in forming a currency union in the region. The analysis suggests that currency unions with China tend to generate higher average welfare gains for East Asian countries than currency unions with Japan or the United States. Overall, Japan does not appear to be a dominant player in forming a currency union in East Asia, and this trend is likely to continue if China's relative presence continues to rise in the regional trade.

The study investigates the potential of the African Continental Free Trade Area (AfCFTA) agreement in fostering diversified export baskets through increased intra-continental trade partnerships. It aims to evaluate how these trade partnership influence export diversification within Africa. Using network analysis, it develops three indices to measure the degree, closeness, and prestige of trading partners across 54 African countries from 2000 to 2020. These indices, along with traditional estimators, reveal two key findings. Firstly, the quality of trade partnerships, focusing on ‘who’ a country trades with, holds more significance than quantity. Secondly, there is a geographical imbalance, where the effect of trade partnerships turns negative for countries with higher product diversification. In conclusion, while intra-continental trade diversification shows promise, more advanced African nations may experience diminishing returns, suggesting a need for expanding trade networks beyond the continent for sustained export diversification.

New horizons are opening for Africa, with a growing number of Chinese andIndian businesses fostering its integration into advanced markets. However,significant imbalances will have to be addressed on both sides of the equation to support long-term growth.

The quality of the estimated data in DOTS depends on the availability and accuracy of direction of trade reports and the estimation methodology. Because of the low coverage of monthly reporting, the estimating procedure plays a role of increased importance. This study, however, reveals two deficiencies in current DOTS estimation methodology: The information on total trade in IFS is not efficiently used, and the assumed uniform 10 percent CIF/FOB factor is inappropriate. Accuracy would be improved if IFS total trade were allocated, when available, according to the shares of total trade derived from partner data; and the uniform 10 percent CIF/FOB factors were replaced by adjustment factors derived from historical data.

What determines the currency to which countries peg or \"anchor\" their exchange rate? Data for over 100 countries between 1980 and 1998 reveal that trade network externalities are a key determinant. This implies that anchor currency choice may well be suboptimal in that certain currencies, e.g., the U.S. dollar, could be oversubscribed. It also implies that changes in anchor choices by a small number of countries can have large and rapid effects on the international monetary system. Other factors found to be related to anchor choice include the symmetry of output shocks and the currency denomination of liabilities.

Saudi Arabia implements a wide range of non-tariff measures on imports and exports. Different research articles have quantified the effect of non-tariff measures on trade, but their effect on Saudi Arabia has not been quantified. The major objective of this paper is to quantify the effect of non-tariff measures on the imports of Saudi Arabia. Panel data from 2000 to 2022 for four major regions trading with Saudi Arabia are used to estimate the panel ARDL gravity model. The results of the bound test confirm the presence of a long-run association between the model variables. In the long-run, the per capita income of Saudi Arabia is the main determinant of imports. In contrast, in the short-run the per capita income has no influence, and the non-tariff measures have a negative effect on import value. At the cross-sectional level, the results confirm the negative effect of non-tariff measures on the selected trade partners with varying degrees. The results ascertain the detrimental effect of the application of technical and non-technical measures on Saudi Arabia’s imports. We recommend policymakers in Saudi Arabia adopt a more transparent policy of NTMs application that leads to a sustainable supply of goods and services and ensures sustainable trade.

Should policymakers still be concerned about economic growth in trading partners? Have developing and emerging market countries decoupled from the US enough to grow despite significant recession in the US? Using VAR models, this paper addresses these questions for Nigeria in the context of the global crisis. The results seem to debunk the \"decoupling theory\" and suggest there are still significant spillovers from Nigeria''s main trading partners, including the US, with trade and commodity price linkages being the dominant transmission channels. Given the sharp fall in both trade financing and commodity prices in aftermath of the crisis, these results provide some explanation to the realization of adverse second-round effects in Nigeria.