Essays on international trade and portfolio investment

This dissertation comprises of three independent essays in international trade and portfolio investment. In the first essay I econometrically investigate the export of higher education service of the United States to other countries from 2003 to 2013, using international trade theories and the gravity model. An extended gravity model was used to examine the extent to which the enrollments of students from 178 countries in the United States can be related to the quality of higher education system in their own countries and in the United States. Results from panel data analysis indicate that traditional measures of international trade such as the distance and the size of the economy are significant to trade in higher education. I also find that the quality of higher education has a significant effect on the size and direction of flows of students from 178 countries to enroll in U.S. higher education institutions. In addition, human development index is also an elastic variable in determining the enrollments of foreign tertiary students in the United States.

In the second paper, I investigate the patterns and determinants of cross-border portfolio asset holdings in 10 ASEAN countries and 6 countries of ASEAN plus. The paper also explores the degree of financial integration of 10 ASEAN countries and 6 countries of ASEAN plus within themselves and with two ASEAN strategic partners: the United States and Russia. Empirical analysis is based on the extended gravity model. The data set includes cross-border portfolio investment holdings over the 2001 – 2014 period. I find that cross-border holdings of financial assets are strongly linked with the volume of bilateral trade in goods and services. Large financial centers also play an important role in attracting international portfolio investment. The size of the economy, colonial links and a common language have a positive impact on portfolio holdings but unlike the trade in goods and services, with OLS estimation, distance has little impact on foreign portfolio investment and a shared border is insignificant . Furthermore, I find that the financial integration among ASEAN countries is lower than among 6 countries of ASEAN plus.

The third essay examines whether there is a relationship between the volume of exports and CO2 emissions levels from domestic product in current production of exporting countries. Beside the total emissions levels, this paper examines whether coal emissions, oil emissions and gas emissions from domestic product in current production of the exporting countries will affect the volume of exports of a country. I also explore whether the Kyoto Protocol commitment will affect the export volume of ratifying countries. Results from data analysis indicate that most traditional measures of the gravity model in international trade such as the distance and the size of the economy are significant to the volume of exports. I also find that the emissions levels have a positive and significant impact on the volume of exports and the commitment to the Kyoto Protocol does not affect the exports negatively. However, the commitment to the Kyoto Protocol is negative and significant to the CO2 emissions.