From the Editor

The International Trade Journal, Vol. 31, No. 4 (September–October 2017)

Dear Readers,

Welcome to the fourth issue of The International Trade Journal (ITJ)’s thirty-first volume. The five articles in this issue discuss the effect of exchange rate volatility on exports of educational services, the effect of market integration on product quality, commercial diplomacy, the presence of spillovers from foreign investment in Turkey, and how a regional integration agreement between the European Union and Tunisia affected foreign direct investment in Tunisia.

The first article, by Charles Braymen and Kristie Briggs, looks at how exchange rate volatility affects educational expenditures by students studying abroad.¹ Using a gravity model, the authors find that exchange rate volatility significantly reduces these expenditures. They argue that universities could offset this tendency by allowing students to prepay tuition for their course of study or by setting tuition rates in the students’ home currencies.

The second article, by Tsuyoshi Toshimitsu, presents a theoretical model of a price-discriminating monopoly before and after market integration between countries with different income distributions. The author concludes that market integration will affect social welfare and product quality differently, depending on how similar the two countries’ income distributions are and how high trade costs are. The model assumes that parallel trade between the countries will not occur when markets are segmented.² In the final section, the author discusses the conditions under which trade costs will prevent parallel trade from occurring.

The third article, by Olivier Naray and Valéry Bezençon, surveys the recent literature on commercial diplomacy—support for commercial activities, including trade promotion, by diplomats and state actors. They argue that studies of commercial diplomacy can be divided into four main groups: (1) studies that look at the government’s role in promoting trade; (2) studies that look at how commercial diplomacy is organized and funded; (3) studies that look at the roles that commercial diplomats play and the activities they perform; and (4) studies that focus on how commercial diplomats interact with the business community. The authors identify gaps in the growing literature and suggest areas for further research.

The fourth article, by Syeda Tamkeen Fatima, looks at how spillovers from foreign direct investment affect domestic firm performance in Turkey. In general, total factor productivity of Turkish firms is lower in sectors where foreign direct investment is higher, but it is higher for upstream and downstream firms. The effect of foreign investment varies, depending on how productive Turkish firms are relative to other Turkish firms and on the firms’ absorptive capacity.

The final article in this issue, by Oubeid Rahmouni and Imene Debbiche, also focuses on foreign direct investment. Rahmouni and Debbiche ask whether the bilateral Euro-Mediterranean Agreement between the European Union and Tunisia, which liberalized trade and investment between the two partners, affected foreign direct investment into Tunisia from the European Union. The authors conclude that it did not succeed in this respect.

As usual, we would like to acknowledge the people without whom the ITJ would not succeed. We would like to thank the authors for their contributions, the anonymous referees for the detailed and timely comments they provide, the team at the International Trade Institute at Texas A&M International University who ensure that submissions are processed quickly and efficiently, our Editorial Board for their expert guidance, and our publisher, Taylor and Francis, for ensuring the high quality of the ITJ.

Notes

¹ Several recent articles in the ITJ, including those by Bahmani-Oskooee and Bolhassani (2014) and Bahmani-Oskooee, Nosheen, and Iqbal (2017), have looked at how exchange rate volatility affects exports of goods and services overall. Bouoiyour and Selmi (2016) conduct a meta-analysis of previous studies on this topic.

² In a recent article in the ITJ, Yun (2017) discusses parallel imports.