Dynamic Relationships between Seafood Exports, Exchange Rate and Industrial Upgrading
Round 1
Reviewer 1 Report
An excellent piece of research, well documented and elaborated. There is a clear view of the investigation strategy is adequate leading to results. However, a couple of issues can still be improved:
a) The decission to use those Unit Root tests employed (section 3.4.1) need to be further explained. Although basic/simple UR methods have been used, a more detailed discussion about benefits of using other testing tools such as UR test with structural breaks to detect realisticaly whether a trend is present or not, would be needed.
b )Within the splendid research on export performance and industrial upgrading, a more thorough investigation is missing on exchange rate pass-through dynamics. Although this is possbly the most complex of the three, variables, it will be necessary to include some more detailed discussion on exchange rate shocks descomposition and their influence on export performance. The following research paper would be of help: Eva Ortega, Chiara Osbat . Exchange rate pass-through in the euro area and EU countries . April 2020.
c) It is not totally clear whether section 6. Conclusion has been organized in the best manner. I would recommend that this section is reviewed so concluding remarks are organized from the most robust/solid appreciation to the less certain, this will help the reader to appreciate research added value in a more practical way.
Thanks,
Best wishes,
Author Response
a). Stationarity tests.
I ran the tests at levels and first differences. For each estimation, I included the intercept, then both trend and intercept in the test equation. That’s how I tested for the stationarity of the series, which I found stationary after the first difference.
The graphical depiction shows an upward trend.
I used the Zivot and Andrews unit root test and could not reject the null hypothesis at levels but became stationary at first difference at a 5% level of significance. So they are I(1), integrated of order 1.
b). Exchange rate pass-through dynamics.
The paper focuses on examining the long-run relationships between investment in industrial upgrading, exchange rate and export performance. The aim is to ascertain the direction of causation and motivate improved investment expenditure (by the government) in the seafood processing industry. Export is measured in metric tons and not export prices. Therefore, the focus is not on the dynamics of the exchange rate on export price.
In another paper, I will examine:
- The extent to which exchange rate fluctuations affect export prices and imports in the industry.
- Examine the impact of exchange rate shock on domestic prices and perform a forecast error variance decomposition to explain the importance of the exchange rate shocks.
c). The conclusion
We have organised the section as advised.
Author Response File: 
Author Response.docx
Reviewer 2 Report
Dear Authors,
Paragraph 3. It is entitled "Methodology and data" but focuses on the methods used to calculate, rather than the methodology, i.e. the theory on which the measurement is based. In particular, the theoretical relationship that should link "seafood export performance", "industrial upgrading" "exchange rate fluctuations" "the effect of currency depreciation" does not seem to be specified. Instead, the theory is correctly found in section 4.4 as a result of the application of impulse response analysis.
In paragraph 5. Discussion, first it is stated that "previous exchange rate short-run fluctuations affect industrial upgrading" and immediately afterwards, it seems to me contradictorily stated that "Investment in industrial upgrading plays a significant role in mitigating the negative impact of exchange rate volatility. Therefore, developing countries must improve industrial upgrading'.
Author Response
I have re-organised section 3. The theoretical underpinnings are explained in the first two paragraphs of the literature review. In section 4.5, I discussed the empirical relationship based on the results obtained.
Author Response File: Author Response.docx
