The effect of competitive devaluation on export: Asian countries panel data analysis

In the globalized system, the concepts of export and import that emerged as a requirement of the free market economy enabled countries to have a say on their development and economic power. If exports exceed imports, it means foreign trade surplus against other countries. This situation has become a great trump card in the hands of countries and provided a competitive advantage in both technological and socioeconomic lanes. Countries with foreign trade deficit aim to close this deficit as much as possible, and developed countries aim to make it sustainable. One of the ways to achieve this goal has been interventions in the exchange rate. Countries decrease the value of national currencies, making imports more expensive and encouraging exports. The devaluation will lead to an improvement in the foreign trade balance, so countries will gain an advantage in competition. In this study investigates the effect of competitive devaluation within the scope of currency wars on the foreign trade balance of countries. In the first part of the study; exchange rate formation, regimes, the concept of devaluation and the effects of devaluation are explained. In the second part, the transformation of trade wars into currency wars, the currency dimension of competition, the phenomenon and history of currency wars, and the effects of currency wars are explained. In this context, 9 Asian countries were considered and annual economic data between 1994 and 2018 were used. The effects of devaluation on exports and foreign trade balance were demonstrated with the panel data analysis method.