Spillovers to Low-Income Countries
AbstractThis paper documents the expanding economic linkages between low-income countries (LICs) and a narrow group of "Emerging Market leaders" that have become major players in regional and global trade and financial flows. VAR models show that these linkages have increased the share of growth volatility that can be attributed to foreign shocks in LICs. Dynamic panel models further analyze the impact of LIC trade orientation and production structure on the sensitivity to foreign shocks. The empirical results demonstrate that the elasticity of growth to trading partners'' growth is high for LICs in Asia, Latin America and the Caribbean, and Europe and Central Asia. However, for commodity-exporting LICs in Sub-Saharan Africa and the Middle East, terms of trade shocks and demand from the emerging market leaders are the main channels of transmission of foreign shocks.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 12/49.
Date of creation: 01 Feb 2012
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-21 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- International Monetary Fund, 2009. "Spillovers From the Rest of the World Into Sub-Saharan African Countries," IMF Working Papers 09/155, International Monetary Fund.
- Jaime Espinosa-Bowen & Nadeem Ilahi & Fahad Alturki, 2009. "How Russia Affects the Neighborhood," IMF Working Papers 09/277, International Monetary Fund.
- Jorge IvÃ¡n Canales Kriljenko & Farayi Gwenhamo & Saji Thomas, 2013. "Inward and Outward Spillovers in the SACU Area," IMF Working Papers 13/31, International Monetary Fund.
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