Does trading with China improve diversification and economic complexity? The case of South Africa and Pakistan
| Název práce v češtině: | Zlepšuje obchodování s Čínou diverzifikaci a ekonomickou komplexity? Případ Jižní Afriky a Pákistánu |
|---|---|
| Název v anglickém jazyce: | Does trading with China improve diversification and economic complexity? The case of South Africa and Pakistan |
| Klíčová slova: | obchod, diverzifikace, ekonomická komplexita |
| Klíčová slova anglicky: | trade, diversification, economic complexity |
| Akademický rok vypsání: | 2021/2022 |
| Typ práce: | bakalářská práce |
| Jazyk práce: | angličtina |
| Ústav: | Institut ekonomických studií (23-IES) |
| Vedoucí / školitel: | Ing. Vilém Semerák, M.A., Ph.D. |
| Řešitel: | skrytý - zadáno vedoucím/školitelem |
| Datum přihlášení: | 02.09.2022 |
| Datum zadání: | 02.09.2022 |
| Datum a čas obhajoby: | 13.06.2023 09:00 |
| Místo konání obhajoby: | Opletalova, O105, místnost č. 105 |
| Datum odevzdání elektronické podoby: | 03.05.2023 |
| Datum proběhlé obhajoby: | 13.06.2023 |
| Oponenti: | Mgr. Bc. Vít Macháček, Ph.D. |
| Seznam odborné literatury |
| Ce ́sar A. Hidalgo and Ricardo Hausmann. 2009. "The building blocks of economic complexity".
Ricardo Hausmann · Jason Hwang · Dani Rodrik.2006. “What you export matters” State Council Information Office of the People's Republic of China. 2019. "China and the World in the New Era" McKinsey Global Institute. 2019. "China and the World: Understanding Changing Economic Connections" Wu Ling-fang and Dai Jin-ping. 2019. "China's Aid and Outward Direct Investment in Africa and African Global Value Chain Upgrading". Linda Calabrese and Tang Xiaoyang. 2020. "African Economic Transformation: The Role of Chinese Investment" |
| Předběžná náplň práce v anglickém jazyce |
| Research question and motivation：
The main research question is the analysis of the role played by China in the development of the trade structure of South Africa and Pakistan. China is one of the larger contributors to world economic growth. From 2013 to 2018, China's average contribution to world economic growth exceeded 28.1%. (State Council Information Office of the People's Republic of China. 2019). According to a report by the McKinsey Global Institute, from 2000 to 2017, the world's comprehensive dependence index on the Chinese economy gradually increased from 0.4 to 1.2. (McKinsey Global Institute. 2019). In the future, the role of stabiliser and power source of China's economy will become more prominent. The McKinsey Global Institute research report believes that by 2040, the integration of China and the rest of the world is expected to create an economic value of 22 trillion to 37 trillion US dollars, equivalent to 15% to 26% of the global economy. Strengthening cooperation with China will create enormous economic value (McKinsey Global Institute. 2019). The data provided by the OEC shows that in 2020, South Africa and Pakistan had the same share of China's export value. The total value of China's exports to both countries is the same: $14.7B. The export value accounts for the same share of China's total export value: 0.55%. From South Africa and Pakistan's perspectives, China remains one of their leading importers of goods. China's exports to South Africa and Pakistan are similar, such as broadcasting equipment, batteries, computers, etc. Broadcasting equipment took the largest share of imports in both countries. (7.63% of China's exports to South Africa and 8.19% of China's exports to Pakistan). Economic complexity is an overall measure of the productive capacity of an extensive economic system, such as a country. It can also be used to explain the cumulative capacity in a population expressed through economic activity in a country. Looking at the time trends of the economic complexity of South Africa and Pakistan (over the period 2010-2020), we can see that the two countries are basically in a horizontal axisymmetric situation (if we take 75 as the axis of symmetry. From 2010 to 2015, the trend in South Africa's economic complexity declined slightly and then increased gradually, while the trend in Pakistan was a slight increase and then a gradual decline. Between 2015 and 2018, the trends in South Africa and Pakistan were both fluctuating. During 2018-2020, South Africa has seen a decline, while Pakistan has seen an uptick.). Overall, South Africa's economic complexity is above Pakistan's. China is the main trading partner of South Africa and Pakistan (China's exports account for 20.7% of South Africa's total trade value, and China's exports account for 29% of Pakistan's total trade value). China is somehow exporting similar goods for the exact value of export trade, whereas the economic complexity of South Africa and Pakistan are moving in opposite directions; what is the role of China in this? How China influences its neighbouring countries, or some of its trading partners has been a hot topic. This thesis will choose two countries, South Africa and Pakistan, to analyse China's role in their trade structure or economic complexity and, to some extent, to compare whom China has a more pronounced effect on in these two countries. Contribution： As mentioned above, economic complexity is an overall measure of the productive capacity of a large economic system. A different way of looking at economic complexity in existing research is that we can view a country's economic complexity as a block, like Lego (Ce ́sar A. Hidalgo and Ricardo Hausmann, 2009). In the study, the authors use a method of bipartite network structure, referred to as a reflection method. The authors interpret the variables produced by the reflection approach as indicators of economic complexity and show that the complexity of a country's economy is related to income, suggesting that countries tend to be close to income levels associated with the set of capabilities available within them. The author takes Malaysia and Pakistan as examples, saying that Malaysia and Pakistan export the same amount of products and the countries that Malaysia exports are more diversified than Pakistan's exports, which shows that Malaysia has a more complex production structure than Pakistan. This thesis will follow some of its methods and ideas. First, summarise the changing trend of China's exports to South Africa and Pakistan (2010-2020). Then focus on analysing whether there was any difference in the types of commodities China exports to South Africa and Pakistan (in the case of the same total trade amount, which country imports more types? --- the diversity of commodities). Here is an assumption that South Africa's economic complexity is higher rank that of Pakistan. One of the reasons is the greater diversity of goods traded with China. Then I want to build a regression equation to see if China is driving the development of the trade structure of these two countries. Methodology： I will first use the data given by the OEC (for the total value of China's exports to South Africa and Pakistan and the change in the value of China's exports to Pakistan) and the trends in economic complexity (ATLAS) for South Africa and Pakistan respectively to show the reader why I want to study this topic and what makes it interesting. The database provided by the OEC reveals changes in the type and share of goods imported into China by South Africa and Pakistan (between 2010 and 2020) and analyses topics involving the economic complexity of the two countries. I will try to find the difference in the diversity of the types of goods imported by the two countries under the premise of the same total export volume. I will also try to determine whether China has played a positive role in the trade structure of the two countries, borrowing ideas from the empirical modelling provided by Wu Lingfang and Dai Jinping (2019) in their research. Their research topic is whether Chinese aid or direct investment in Africa is related to Africa's rise in global value chains. They measure the export upgrade in the global value chain from three dimensions: process upgrade, product upgrade and function upgrade of export products. They selected 14 sub-Saharan African countries as a sample for empirical research. They analysed the results from the dimensions of China's aid to Africa, China's direct investment in Africa, institutions, population, natural resources, and infrastructure. In my thesis, I will build a regression equation. (The dataset here will be primarily sourced from worldbank/data.worldbank.org.) Using the database, I will choose about twenty countries (all of them are China's trading partners, and my selection will include developed and developing countries). I would choose South Africa and Pakistan as my main subjects of analysis. The explained variable is the economic complexity of the country. The core explanatory variable is China's export value (measured as a percentage of the country's total GDP). Control variables include human capital level (Hp) and capital level (Cp). The level of education is an essential reflection of the level of human capital in a country. The level of capital (Cp) is a proxy indicator of a country's capital formation as a percentage of GDP. In order to make the regression more reasonable, other control variables are added to the model: population (Pop), natural resources (Nr), and infrastructure (Infr). Pop is expressed as the total population of each country; Nr is expressed as the proportion of total natural resource rent to GDP; the time range is 2010-2020. Build the database according to the above, and set up the regression formula: ln(Ecx)it=ai+β1ln(Exp)it+ β2ln(Cp)it+β3ln(Hp)it+β4ln(Pop)it+β5ln(Nr)it+β6ln(Infr)it+ εi (i and t refer to country and time, respectively. εi refers to the regression residuals.) Outline： Abstract keywords Introduction Literature review and hypotheses Methodology Results/Empirical analysis Conclusion |