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Trade Liberalization and Import Intensity in the Mongolian Manufacturing

Author

Listed:
  • Oyunbadam Davaakhuu
  • Kishor Sharma
  • Yapa M. W. Y. Bandara

Abstract

This article presents an empirical analysis of the consequences of trade liberalization on import intensity in Mongolia, a ‘least-developed landlocked country’ with weak institutions and severe infrastructure bottlenecks. The theoretical framework employed in modelling is based on industrial organization and international trade literature. Our results suggest that foreign investment stimulates import intensity possibly due to the prevalence of intra-firm trade between subsidies, while the protection of domestic market and state ownership reduces import intensity. There is no statistically significant evidence to suggest that import intensity is lower in unskilled labour-intensive industries. These findings have significant policy implications for further liberalization in order to improve Mongolia’s trade competitiveness.

Suggested Citation

  • Oyunbadam Davaakhuu & Kishor Sharma & Yapa M. W. Y. Bandara, 2018. "Trade Liberalization and Import Intensity in the Mongolian Manufacturing," Global Business Review, International Management Institute, vol. 19(6), pages 1436-1448, December.
    • Handle: RePEc:sae:globus:v:19:y:2018:i:6:p:1436-1448
    DOI: 10.1177/0972150918794979
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    References listed on IDEAS

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    1. Kishor Sharma & Oyunbadam Davaakhuu, 2015. "Trade Policymaking in a Resource‐rich Landlocked Country: The WTO Review of Mongolia," The World Economy, Wiley Blackwell, vol. 38(9), pages 1350-1367, September.
    2. Gerald K. Helleiner, 1981. "Intra-Firm Trade and the Developing Countries," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-05078-9, October.
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    4. Kosteas, Vasilios D., 2008. "Trade Protection and Capital Imports in the Mexican Manufacturing Sector," World Development, Elsevier, vol. 36(12), pages 2822-2837, December.
    5. Oyunbadam Davaakhuu & Kishor Sharma & Edward Oczkowski, 2015. "Has foreign investment played a role in Mongolia's export success?," Post-Communist Economies, Taylor & Francis Journals, vol. 27(2), pages 256-267, June.
    6. Penélope Pacheco‐López, 2005. "Foreign Direct Investment, Exports and Imports in Mexico," The World Economy, Wiley Blackwell, vol. 28(8), pages 1157-1172, August.
    7. Sharma, Kishor & Oczkowski, Edward & Jayasuriya, Sisira, 2001. "Liberalization, export incentives, and trade intensity: new evidence from Nepalese manufacturing industries," Journal of Asian Economics, Elsevier, vol. 12(1), pages 123-135.
    8. World Bank, 2007. "Mongolia - Sources of Growth : Country Economic Report," World Bank Publications - Reports 7806, The World Bank Group.
    9. Oyunbadam Davaakhuu & Kishor Sharma & Yapa M.W.Y. Bandara, 2014. "Export performance during economic transition in Mongolia," Economic Analysis and Policy, Elsevier, vol. 44(4), pages 442-450.
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