One of the major factors that affect economic growth is FDI - Forgein Direct Investment. BRICS is a newly formed trade bloc that includes 5 of the largest, most heavily populated, and most emerging economies in the world, their economies share various characteristics, yet they also have various differences. The purpose of the thesis is to find the determinants of FDI in this trade bloc. Those determinants were specifically chosen based on multiple accredited previous literature. In this thesis a panel data regression is performed for these 5 partners with data ranging from 1995 to 2018. The results of the thesis were both predicted and surprising, as two determinants were in accordance with the past literature, however the other two  determinants had other results, both of these variables had opposite signs compared to their predicted signs that were expected from the chosen previous literature. Our research tries to answer the question of how do these determinants affect FDI inflows, in order for countries to make strategies to attract it. 

This paper is a descriptive examination and assessment of a ski resort in southern Sweden – Isaberg. The paper describes an emerging threat most ski resorts are faced with today and in the future – the lack of snow. In many countries financial institutions are much less willing to offer funding for investments in ski resorts under certain heights. This is the result of two trends:  the cut off point for the height of the ski resorts is increasing every year, and at the same time some resorts have fewer skiers.  The likelihood of snow and the ability to offer snow-related products are critical to the success of all ski resorts.  Isaberg, which is significantly below any proposed height cut off points, has strong traditions, a promising market with skiers coming from the domestic Swedish market, as well as Norway, Denmark, Germany and Holland, and very modern facilities – but in recent years the resort has been suffering because of the lack of snow. Isaberg is therefore considering building an inside skiing facility to attract customers and support other local products. Our paper examines the potential of this facility and offers practical and theoretical implications for ski resort management.

Nya näringar utvecklas alltid i ett sammanhang som skapats av befintligt närings- och samhällsliv. I detta kapitel fokuserar vi på hinder och möjligheter inför en omvandling av näringslivet i Gnosjöregionen. Regionen karakteriseras mer än de flesta andra i Sverige av en småskalig tillverkningsindustri. Sysselsättningsgraden totalt sett är en av de högsta i landet, såväl bland män och kvinnor som nya svenskar, invandrarna. I takt med utflyttning av verksamhet och automatisering av tillverkningsprocesser minskar behovet av arbetskraft inom traditionell industri vilket ökar kravet på att utveckla nya kompletterande näringar. Omvandling från tillverkningsintensiv produktion till serviceinriktad upplevelseindustri med turism är för många regioner en viktig utmaning. Upplevelseindustrin förväntas bidra till tillväxt och en mer mångsidig arbetsmarknadsstruktur, särskilt attraktiv för unga människor. Omvandlingen mot en mer diversifierad näringsstruktur försvåras av den kulturella fixeringen vid den tidigare så framgångsrika tillverkningsindustrin. Många anonyma ”röster” menar att jobb och företag inom turism och annan upplevelse-industri inte räknas som ”riktiga” jobb och företag. En omorientering av regionens näringsliv måste drivas inifrån/underifrån för att bli beständig, något som tidigare förändringsförsök vittnar om. Samtidigt behövs inspiration utifrån. Kapitlet avslutas med en exemplifiering av Isaberg, som en väletablerad anläggning för friluftsliv, ett etablisse-mang inom upplevelseindustri, som vill vända snöbrist till en möjlighet att överbrygga säsongsvariationer. Ambitionerna för utvecklingen av Isaberg visar potentialen inom turism och annan upplevelseindustri i strävan efter en alternativ näringslivsstruktur.

With the recent influx of foreign-born individuals migrating to Sweden, this study aims to answer the question, “do high skilled foreign-born individuals relate positively to average wages in Sweden?”. We specifically observe high skilled foreign-born individuals and their contribution to the average wage across different municipalities in Sweden between the years 2011 and 2018. The method carried out in this study consisted of an empirical analysis where the significance of economic factors was interpreted in order to understand the variation in wages. The data was extracted from Statistics Sweden. The relationship of the share of highly educated foreign-born individuals has proved to be insignificant with respect to average wages in Sweden. Different theories are discussed in this paper in order to identify the key labour market outcomes due to the labour supply shock. Our findings disclose that differences in wages are present, meaning that natives and foreign-born individuals are complements in the short run

Energy security as a dominant factor in international stability is of great importance for major economies. The global energy market with its current level of supply and demand relies on energy sources in the Middle East, Caucasus, Central Asia and Russia. After the Fukushima disaster nuclear powers in Europe view renewable energy sources as a serious alternative. Europe’s energy vulnerability has deteriorated due to the Russia-Ukraine conflict. However, renewable energy sources are not large enough to replace nuclear power completely. This trend will continue with climbing demand especially in the natural gas sector as clean energy. In this research, Caucasus and Iran are considered the main sources and routes for energy transmission to the global market, including Europe. Caucasus plays a key role in bridging Europe and Asia. Also, Iran is an alternative for energy transmission to Europe after lifted sanctions. As part of the European active supply diversification policy Iran has capacity to reduce Europe’s energy dependency on Russia. However, changes in US new administration America First Policy is harmful for the EUs energy security. Caucasus aims to catch a large share of the European energy market since the Baku-Tbilisi-Ceyhan pipeline has started operations and Iran is also trying to expand its market to become a sustainable source of energy for major consumers. Therefore, Iran and Caucasus are considered reliable energy suppliers for Europe. In this regard, we analyze the best motivation for changing the direction new suppliers’ energy policies towards Europe and suggest alternative solutions to compete with rival countries in order to enhance energy security.

An increasing number of people in Sweden and in the rest of the world are becoming more interested in the mutual fund sector. Investments in mutual funds have grown rapidly these past few years. Nilsson (2004) wrote that 85 percent of the Swedish population invested in mutual funds in 2004. The Swedish Investment Fund Association also found an increase in investments in mutual funds; 83 billion Swedish crowns were invested in mutual funds in 2005, an increase from 56 billion in 2004.

The purpose of this thesis is to evaluate whether or not there is a relationship between low fee, middle fee, and high fee charging Swedish Equity funds and their respective performance (unadjusted and risk-adjusted returns). The Modigliani & Modigliani (1997) risk-adjusted performance measurement was used to calculate the risk-adjusted performance of the 130 mutual funds. And the linear regression was used to analyze whether or not there was a relationship between the variables (management fee vs. returns/risk-adjusted returns). The mutual funds were also divided into three different categories, based on their management fees; low, middle and high fee mutual funds.

The analysis illustrated that there was no clear relationship between the management fee and the returns/risk-adjusted returns. There was some connection found between the management fee and the low, middle fee category. However, this research confirms that investors should not believe that a mutual fund which charges higher fees necessarily generate higher returns.

Institutional theory is employed for examining how and to what extent external pressure leads to changes in the venture idea during the start-up and early life of new, knowledge-intensive ventures. From a population of 321 young, knowledge-intensive firms that underwent a training program at Linkping University, Sweden, structured telephone interview data were obtained from 167 firms. The results confirmed that the venture idea had undergone more change in ventures that had more external owners, a dominant customer, and an incubator location. The results imply that institutional theory is a meaningful tool for understanding why and how venture ideas change over time.

Professor Philippe Aghion is the 2016 recipient of the Global Award for Entrepreneurship Research, consisting of 100,000 Euros and a statuette designed by the internationally renowned Swedish sculptor Carl Milles. He is one of the most influential researchers worldwide in economics in the last couple of decades. His research has advanced our understanding of the relationship between firm-level innovation, entry and exit on the one hand, and productivity and growth on the other. Aghion has thus accomplished to bridge theoretical macroeconomic growth models with a more complete and consistent microeconomic setting. He is one of the founding fathers of the pioneering and original contribution referred to as Schumpeterian growth theory. Philippe Aghion has not only contributed with more sophisticated theoretical models, but also provided empirical evidence regarding the importance of entrepreneurial endeavours for societal prosperity, thereby initiating a more nuanced policy discussion concerning the interdependencies between entrepreneurship, competition, wealth and growth.

The paper examines the contribution of foreign direct investment to economic growth in Africa using graphical and regression analysis. Data for the entire continent and data for eleven countries within the continent were used for the empirical analysis. The time series data is from 1970-2003. It was discovered that the contribution of FDI to growth is estimated to be positive in most of the countries but not significant.

Research on Schumpeterian entrepreneurship identifies new high-growth startup companies as key factors in technological innovation and economic growth. While economists have tended to focus on high-growth, high-tech startup firms as the unit of analysis, economic geographers and urbanists have examined the geographic dimensions of entrepreneurship, particularly the rise of entrepreneurial clusters and eco systems. We focus here on a particular type of Schumpeterian entrepreneurship associated with high-tech startup companies, or what we refer to as “tech-startup entrepreneurship.” We contend that the organization of such Schumpeterian entrepreneurship occurs at two spatial scales. At the macro-geographic level, it is highly clustered and concentrated in a relatively small number of global cities or metro areas. At the micro-geographic level, it is highly concentrated in distinct districts or micro-clusters within these leading cities and metro areas. To examine the geographic dimensions of tech-startup entrepreneurship across these spatial scales, we use previously unused data on venture capital-financed startups at the metropolitan and district levels. Our findings support the hypothesis that tech-startup entrepreneurship is organized across two distinct but related spatial scales, which act on entrepreneurial activity through different mechanisms. These findings suggest that local diversity and local specialization can simultaneously potentiate innovation, and that a multi-scalar approach to the geography of entrepreneurship is prudent.

The pharmaceutical industry is one of Sweden’s most important export industries with 6% of total exports. The purpose of this thesis is to analyse which factors affect Sweden’s ex-port of pharmaceutical products. Further, the different pharmaceutical products group Sweden exports will be identified. The modern trade theory, the monopolistic competition model, the product life cycle theory and the gravity equation are used to explain and to un-derstand the problem at hand.

To analyse the problem, data of Swedish export of pharmaceutical products from 1997 to 2003 was used to the 176 destination countries Sweden exported to during the time period. The following factors were used as independent variables; distance, Gross Domestic Prod-uct (GDP) /capita, Area, Population, dummy variable for EU-membership, dummy vari-able for English or Scandinavian speaking countries, dummy variable for bordering to Sweden, dummy variable for same religion as Sweden and a dummy variable for countries that are not land-locked.

The findings coincide with previous studies in the manner that distance and GDP/capita have a major impact on the sales abroad of pharmaceutical products. Also, countries with a larger population are importing more than countries with a smaller population. However, the strong affinities between the exporter and the importing countries found in previous studies were not found in the export of pharmaceutical products. Further, Sweden exports most of the product group that includes medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses.

The number of investmentfunds have dramatically increased in the last years and so have the interest in funds. 94% of the Swedish population between 18-74 years are investing in some kind of mutual fund. In 2005 the total fund capital was approximately 1.4 billion SEK. That makes this an important topic to investigate further.

Therefore this thesis purpose is to analyse if there is any relationship between administrationfees, returns, the risk-adjusted performances. Furthermore, does the performance of the Swedish mutual funds differ dependent on whether they are managed by banks or if they are listed as Premiepensionsmyndigheten (PPM) funds, or run by other mutual fund companies?

To analyse the problem a panel least square regression was used. The population consisted of 63 Swedish mutual equity funds over 20 quarters. Dummy variables were used to separate the banks- and PPM funds from the total population.

The findings are mixed compared to previous research. There seem to be no relationship between the return, the risk-adjusted return and the administration fee. This indicates that the fund companies do not set their administration fee based on the expected return.

However, a negative relationship was found between the market-adjusted return and administration fee.

In general, the banks, on average, outperformed, the mutual fund companies that were not bank and/or PPM funds, in return, risk-adjusted return and market-adjusted return. Further, the funds with some additional fee had the on average second lowest efficiency in terms of return on the market.

The issue of population ageing becomes more prominent, countries will see a change in the population structure where a majority will belong to the cohort aged 65 and over. This shift in the population structure raises challenges which in turn will affect a country’s economic growth. In the future a larger share of people will enter retirement than ever before, and being able to keep individuals to stay in the labour force is one attempt which can increase the economic growth. Today, elderly tend to retire before the withdrawal age which in many countries is set to 65. The purpose of this research is to identify which factors affect individual’s average age at which they tend to retire. This is conducted by the use of a cross-sectional analysis based upon the 36 member countries of OECD where data has been collected from the year 2016. By the use of an Ordinary Least Squares method, results show that factors such as education, old- age dependency ratio, and average salaries are significant factors which all impacts the average retirement age negatively.

 In international economics and trading, the exchange rate is important. Forecasting theexchange rate helps in minimizing risks and maximizing profits. The study attempts to test threemodels to forecast EUR/USD exchange rate. Based on previous work by Meese & Rogoff(1983), we replicated the authors work of the Random Walk model of AR(1) on different periodand currency to check if the model was able to forecast the exchange rate. Then we ran ARDLand XGBoost models to find which of the two models performed better than the Random Walkmodel based on different measures. The measures are Root Mean Square Error (RMSE) andDirection Accuracy. First difference was taken to remove unit root from ARDL and XGBoostmodels. Adding lags to the independent variables in addition to the dependent, AR(1), generatedbetter outcome. This is an indication of how variables take different periods to affect thedependent variable. Moreover, choosing leading indicators like economic policy uncertaintyindex and Euro futures helped the model in forecasting. The result showed that ARDL andXGBoost models were able to forecast two periods prior the event took place, while the RandomWalk model was not able to forecast rather it replicated the previous period, i.e., it was lagging. 

This thesis examines the relationship between migration and unemployment dynamics across five European Union (EU) countries: Germany, France, Italy, Sweden, and Belgium in the period (2000-2019) using panel data analysis. The aim of the study is to identify the different effects of migration on total unemployment rates, and on native- and foreign unemployment rates. The econometric model used has fixed effects to control for country-specific heterogeneity. According to the results, migration has a negative effect on the unemployment rate of native-born workers, meaning migrants do not replace native workers but supplement the labour force to fill labour shortages and drive economic activity. Foreign-born unemployment, on the other hand, is negatively impacted by better integration mechanisms as well as the establishment of migrant networks that make it easier for migrants to enter the labour market. The study notes that during the significant migration wave between 2015 and 2019, the overall unemployment rate was affected, but the unemployment rate for native-born workers remained stable, suggesting that native labour markets are resilient. The results are in line with Neoclassical economic theory and Lee's push-pull theory, which argue that migration is influenced by wage differences and economic opportunities, resulting in labour market balance and economic growth. The thesis contributes to the debate on migration by offering empirical evidence that highlights the positive impacts of migration on labour dynamics and economic growth in host countries. 

This paper explores the patterns of innovation among firms by using unique survey data on more than 2000 Swedish firms. The purpose of the study is to examine if broadband availability has an impact on firm-level innovation and explore differences between firms in urban and rural municipalities. A probability likelihood method is used estimating the probability of a firm being innovative or not. Using two types of explanatory variables, firm characteristics and location characteristics, the analysis show that firm characteristics are the main determinants of firm innovation. A firm that wants to increase their chances to be innovative should choose an urban location. The availability of broadband increases the probability of innovation. Firms with a good broadband connection can reach other types of knowledge and information. Organisations should therefore strive to have a good broadband connection with a high-speed internet to access external knowledge and increase the innovative activity. 

Profits is among the most important measurements in finance for investors, entrepreneurs, and corporate leaders. The effect of intangible assets on profitability in firms is therefore relevant in the highest regard for these stakeholders. Europe is becoming a service economy with a larger focus on intangible assets. Understanding the importance of intangible assets in firms today and correctly utilizing the intangible assets will allow for firms to stay competitive in the new service economy. The purpose of the study is to find correlations between European publicly listed firms' intangible assets and their profitability. The study was based on the theory of Resource-Based-View. The findings show that intangible assets do have a significant positive correlation with profitability (EBIT). Organizations can use these findings to develop methods to utilize intangible assets to increase profitability.

For the corporate business model to be successful, it is important to align the interests of those who control and finance the firm. Corporate law has here an important task to fulfill. It offers a legal framework that can facilitate parties to conclude mutually preferable agreements at low transaction costs. The purpose of this paper is to show how to design corporate law to fulfill this task and apply this knowledge to a Swedish case. A two-dimension model that simultaneously considers both the regulation intensity and the level of default of corporate law is presented. The earlier literature treats these dimensions separately. By adding a transaction cost perspective to our model, we assess different regulatory techniques and examine how the Swedish legislation can be amended to help corporations by offering a standard contract that lowers the transaction costs of contracting. This can be achieved if default rules or standards of opt-out character are combined with other regulatory techniques with lower transaction costs such as opt-in alternatives and menus. We also show how our model can be used in other studies as a tool to analyze the design of legal rules. 

In 2004 the EU faced its most extensive enlargement ever when ten new countries joined. One can speculate about the reasons for these countries to join the EU and one suggestion that is often found is the access to a larger market and the trade possibilities that would entail; the customs union effect. Therefore this thesis sets out to investigate whether this is plausible; do countries trade more with the EU-countries than their non-EU neighbours? The investigation is conducted through the use of a gravity model. It investigates not only the traditional GDP and distance variables, but also the effects on trade flows caused by sharing borders, being part of the EU and sharing a language. The results show that not much could be seen in the trade flows in 2004; the year of accession. This could be attributed to the existence of preferential trade agreements, which the Eastern European countries had with the EU prior to their accession. It was also found that both the effect of sharing a language and the effect of increased distance are diminishing over the years. In addition a clear difference could be seen in the export from Eastern Europe to EU 15 and the rest of the world; it seems that some extra variables need to be added to explain the non-EU trade. Thus it can be concluded that the motivation for joining the EU should not have been the increased trade possibilities, but rather other factors such as regional development and the possibility to being part of a larger power at international negotiations.

Innovation by firms and industries requires that the individual firm can combine internal and external knowledge resources. This paper studies product innovations as they are reflected by product varieties and destination markets, combined into observations of firms’ destination-specific varieties(variety pairs). The number of varieties (identified in this way) measuresthe extensive margin of exportflows from industries in local economies, reflecting past product and market (destination) innovations made by industries in each local economy. The empirical analysis identifies for each industry and local economy (i) the intra-industry knowledge resources, (ii) the local access to the supply knowledge-intensive producer services, and (iii) the access to the supply of knowledge-intensive producer servicesoutside the local economy. Thepapercontributes to existing knowledgein several ways. First, it introduces a knowledge-supply accessibility measure to model the local innovation milieu. Second, it shows the joint contribution to product innovation from internal and external knowledge sources. The estimation results supports the hypothesis that innovations are generated in the conjunction of internal and external knowledge.

Wage subsidies are commonly used as a tool to reduce the cost of labour and lower the rate of unemployment. The purpose of this study is to analyse what factors influence the use of the New Start Jobs subsidy in the two hundred ninety municipalities of Sweden during 2019. The statistical program EViews was used in the analysis to provide insight into the expansive data set. Three key hypotheses were drawn up to explore different influencing factors including, municipal tax rates, share of foreign-born individuals and educational level. The results of this study can be used to further expand the use of this type of wage subsidy with the aim of expanded enrolment into the program and consequently reducing long-term unemployment.

The effect of immigration on labor-market performance is the subject of various studies; most of those studies focus on the effect of immigrants on wages. The characteristics of the Nordics labor-market cause a shift in the focus to another labor-market outcome. The primary goal of this paper is to study the effect of immigration on the employment rate on a regional level. Two hypotheses are developed to study the correlation between immigration and the employment rate. By utilizing the autoregressive distributed lag technic for panel data, we find a positive association between immigration and the overall employment rate, as well as for immigrants' employment rate. Unit-root tests using both Levin–Lin–Chu and Harris–Tsavalis to test for time trend and cross-sectional dependence, the results show that most of the variables are integrated after the first difference I(1). Following, I perform a Westerlund cointegration test; the results for the two models show a cointegration among the variables. The two estimations developed by Pesaran PMG and DFE show different results for the two hypotheses. For the first hypothesis, Both estimators show a positive impact with the same magnitude of the share of immigrants to the total population on the employment rate, which contradict the hypothesis, and the estimators fail to capture the effect of education on the employment rate. Also, the density tends to affect the employment rate positively. A post estimation diagnostic, namely, the Hausman test, shows that the PMG estimator is both efficient and consistent. The second hypothesis of the correlation between the immigrants’ employment rate and their share of the population produces less clear results. Here the PMG estimators show no association with the share of immigrants, while the human capital coefficient is significant, the density coefficient is in both estimations. The DFE methods for the second hypothesis is similar in results for the first hypothesis, which implies a positive relationship between the share of immigrants and the immigrants' employment rate.

This paper introduces new indices quantifying country's level of e-infrastructure deployment. These indices comprise six components, which include several indicators, and are based on parametric or nonparametric methods. They improve existing indices. Based on index calculations, variations between countries, regions, and over time are analyzed. The data used covers MENA and OECD countries, 2000-2007. Analysis results identified areas, in which countries need improvements, and showed that some MENA countries outperformed some OECD countries. The rankings based on the indices differ only slightly. Additionally, the parametric method-based index produces equally distributed value ranges and shows an overall e-infrastructure improvement over time. 

The purpose of this paper is to test empirically how well three alternative model formulations manage to explain the effect of exchange rate volatility on Sweden’s bilateral trade flows with 15 of its important trading partners. We test this through multiple time series analyses using aggregate data from the OECD, SCB, and Riksbank. None of the models is able to describe Sweden’s bilateral trade flows systematically for the period between February 1995 and October 2011. It is found that the volatility measured with the GARCH method has a significant effect in nine out of the thirty investigated cases. In five cases, we find a negative relationship, while four cases display a positive effect of exchange rate volatility on bilateral trade flows. These mixed results are in line with previous research. Swedish exports seem to be more affected by exchange rate volatility than Swedish imports. In addition, we find some evidence that the volatilities of vehicle currencies have an effect on Swedish bilateral trade flows.  

Family firms are a keystone in many countries as they provide employment opportunities and help the economy grow and prosper. As a result, family firms have been extensively studied; however, there are important aspects that still need to be better understood. One of these is the relationship between family firms and the socio-spatial context in which they act, that is, their local embeddedness. This study adds to existing research by placing family firms in their regional context and assessing whether and to what extent they are more locally embedded than their non-family counterparts. We measure local embeddedness through place tenure and distance to the local firm for key firm stakeholders. Our findings show that family firms rely greatly on more enduring and spatially proximate stakeholders and therefore show a stronger link with the socio-economic milieu in which they dwell. Relevant contributions to family business and regional studies, together with public policy implications, are discussed.

By combining arguments from regional economics and family business research, the aim of this article is to test the relationships among local export spillovers, management characteristics, and export propensity on a large sample of Spanish manufacturing firms over the 2003–2015 period. We find that family-managed firms, compared to their non-family counterparts, benefit more from being located in regions with a high density of exporters. Because of their firm-specific social capital and strong embeddedness in local networks, family-managed firms are better positioned to leverage the spatially bounded flow of knowledge and information in these regions, resulting in a higher likelihood to export than non-family firms. Additionally, our results show that the knowledge spillover effect is stronger for small and low-tech family firms’ export propensity. 

The purpose of this thesis is to investigate whether an increase in the level of human capital and reduction of gender inequality in the labor market affect developing nation’s growth rate and welfare. The data used in this thesis cover 74 emerging and developing countries for the years of 2001 and 2007. Solow’s augmented growth model has been used to estimate how increased rates of females and males completing primary school effects economic growth in order to see what effect the Millennium Development Goal’s (MDG) target of universal primary education has on the economy. The rates of female and male participation rates in the labor force are also tested for to see if one can determine how reduced gender inequality affects economic growth. The main findings are that increased female and male completion rates in primary school do affect economic growth positively as expected. However, what was not expected was that an increased participation rate of female and male in the labor force affect economic growth negatively. The conclusion is that increased levels of primary education among males and females will increase economic growth. Hence the MDGs of achieving universal primary education and homogenous education between females and males in 2015 are important for economic growth and increase of welfare.

The purpose of this thesis is to examine how a depreciation in the exchange rate affects the trade balance in an economy over time. The outcomes of a depreciation are possible to analyze through the J-curve phenomenon that shows the relation between the exchange rate and the trade balance both in the short-run and the long-run. The data used in this thesis cover 39 countries and their quarterly changes in exchange rate between 1982 and 2005. The largest depreciation for each country during these years was detected and is the base for this research. In this thesis, focus is on the trade ratio rather than the trade balance for empirical purposes. The relation between the largest depreciations and its effect on the trade ratio are examined in two sets of regressions. The results show no evidence of a J-curve in neither one of the sets of regressions, even though the trade ratio is positively affected by the depreciation. When testing only for significantly large depreciations in the exchange rate the affect on the trade ratio is stronger, all else equal. According to the findings in this thesis, a depreciation in the real effective exchange rate causes the trade ratio to increase immediately and then decrease over time. The conclusion is that the findings are not in line with the J-curve phenomenon tested for; however, they support standard trade theory with the Marshall-Lerner condition being met i.e. a depreciation in the exchange rate will affect the trade balance positively.