The aim of the present study is to investigate how depreciation could affect the export sector in selected Asian countries. The current economic environment makes it difficult to sustain trade balance among developing countries with a flexible exchange rate system among emerging economies. Theoretically, depreciation will bring positive impact on trade balance. However, it is only possible when the sum of the elasticities of demand for export and import goods is greater than unity. Accordingly, the present study first analyzed the effect of depreciation on trade balance among 14 Asian economies and found no evidence that depreciation improves trade balance. This was perhaps due to the fact that exports did not respond as expected, mainly due to the decrease in primary exports as well as manufactured products. An increase in import burden may also affect trade balance. However, the above result was challenged when we focused only on eight Asian countries that are relatively bigger, industrialized, and stable economies, and eventually we found that depreciation improved trade balance among the second group of countries.

1. Abeysinghe, T., & Yeok, T. L. (1998). Exchange rate appreciation and export competitiveness: The case of Singapore. Applied Economics, 30 (1), 51-55.
2. Agbola, F.W. (2004) Does devaluation improve trade balance of Ghana? Paper Presented at the International Conference on Ghana's Economy, M Plaza Hotel, 18-20 July, Accra, Ghana.
3. Aurangzeb, & Haq, A.U. (2012). Factors affecting the trade balance in Pakistan. Economics and Finance Review, 1 (11), 25-30.
4. Bahmani-Oskooee, M., & Niroomand, F. (1998). Long-run price elasticities and the Marshall-Lerner condition revisited. Economic Letters, 61(1), 101-109.
5. Bahmani-Oskooee, M., & Ratha, A. (2004). The J-Curve: A literature review. Applied Economics, 36 (13), 1377-1398. DOI:10.1080/0003684042000201794
6. Bahmani-Oskooee, M., & Hegerty, A. (2011). The J-curve and NAFTA: Evidence from commodity trade between the U.S. and Mexico. Applied Economics, 43 (13), 1579 - 1593. DOI:10.1080/00036840802360328
7. Bahmani-Oskooee, M., & Xu, J. (2013). The J-Curve and Japan-China commodity trade. Journal of Chinese Economic and Business Studies, 11(1), 13-28. DOI:10.1080/14765284.2012.755300
8. Bunda, I., Subir L., & Sharma, S. (2011). The impact of the global financial crisis on emerging and newly industrialized Asia. In J. A. Batten & P. G. Szilagyi (Eds.). The impact of the global financial crisis on emerging financial markets (Contemporary Studies in Economic and Financial Analysis , Volume 93, pp. 127-153). Emerald Group Publishing. DOI:10.1108/S1569-3759(2011)0000093006
9. Chiu, Y. B., Lee, C. - C., & Sun, C.-H. (2010). The US trade imbalance and real exchange rate: An application of the heterogeneous panel co-integration method. Economic Modeling, 27 (3), 705-716. DOI: 10.1016/j.econmod.2010.01.011
10. Engel, C., & Rogers, J.H. (2006). The U.S. current account deficit and the expected share of world output. Journal of Monetary Economy, 53 (5), 1063-1093.
11. Gujarati, D. (2003). Basic econometrics. Singapore: McGraw-Hill Inc.
12. Hausman, J. A. (1978). Specification tests in econometrics. Econometrica, 46(6), 1251- 1271.
13. Hooy, C., & Chan, T.-H. (2008). Examining exchange rates exposure, J-curve and the Marshall - Lerner condition for high frequency trade series between China and Malaysia. MPRA Paper No. 10916, pp. 1-10. Retrieved from <a href=http://mpra.ub.uni-muenchen.de/10916/ target="_blank">http://mpra.ub.uni-muenchen.de/10916/</a>
14. Hsing, Y. (2008). A study of the J-curve for seven selected Latin American countries. Global Economy Journal, 8 (4), 1524 - 5861. DOI: 10.2202/1524-5861.1438
15. Hsing, Y., & Sergi, B. S. (2010). Test of the J-curve hypothesis between the U.S. and six Western European countries and policy implications. Journal of Transnational Management, 15(2),176 - 185. DOI:10.1080/15332667.2010.481254
16. Junz, H., & Rhomberg, R. (1973). Price competitiveness in export trade among industrial countries. American Economic Review, 63 (2), 412 - 418.
17. Kalyoncu, H., Ozturk, I., Artan, S., & Kalyoncu, K. (2009). Devaluation and trade balance in Latin American countries. Journal of Economics and Business, 27 (1), 115-128.
18. Kwalingana, S., Simwaka, K., Munthali, T., & Chiumia, A. (2012). The short-run and long-run trade balance response to exchange rate changes in Malawi. Journal of Development and Agricultural Economics, 4 (8), 221-232. DOI: 10.5897/JDAE12.023
19. Lerner, A. (1944). The economics of control. New York: Macmillan and Co.
20. Magee, S. P. (1973). Currency contracts, pass-through and devaluation. Brookings Papers on Economic Activity, No. 1, 303 - 325. Retrieved from <a href=http://www.brookings.edu/~/media/Projects/BPEA/1973%201/1973a_bpea_magee.PDF target="_blank">http://www.brookings.edu/~/media/Projects/BPEA/1973%201/1973a_bpea_magee.PDF</a>
21. Marshall, A. (1923). Money, credit and commerce. London: Macmillan and Co.
22. Mattoo, A., & Subramanian, A. (2008). Currency undervaluation and sovereign wealth funds: A new role for the World Trade Organization (WP 08-2). Retrieved from <a href=http://www.iie.com/publications/wp/wp08-2.pdf target="_blank">http://www.iie.com/publications/wp/wp08-2.pdf</a>
23. Musila, J.W., & Newark, J. (2003). Does currency devaluation improve the trade balance in the long-run? Evidence from Malawi. African Development Review, 15 (2-3), 339-352. DOI: 10.1111/j.1467-8268.2003.00076.x
24. Nguyen, D.T. (1993). The dynamic effect of devaluation on the balance of payments of a small debt-ridden open economy. The Economic Record, 69 (3), 285- 294. DOI: 10.1111/j.1475-4932.1993.tb02108.x
25. Rajan, R. S. (2012). Management of exchange rate regimes in emerging Asia. Review of Development Finance, 2 (2), 53-68. DOI: 10.1016/j.rdf.2012.05.001
26. Rawlins, G. (2011). Currency depreciations and the trade balance: The case of Sub- Sahara Africa. Journal of Applied Business and Economics, 12 (6), 132-148.
27. Rawlins, G., & Praveen, J. (1993). Devaluation and the trade balance: The recent experiences of selected African countries. NJ, USA: Centre for Economic Research on Africa, School of Business, Montclair State University.
28. Raza, A. Larik, A., & Tariq, M. (2013). Effects of currency depreciation on trade balances of developing economies: A comprehensive study on South Asian countries. Journal of Humanities and Social Science, 14 (6), 101-106.
29. Rose, A.K., & Yellen, J.L. (1989). Is there a J-curve. Journal of Monetary Economics, 24(1), 53-68.
30. Tuan, C., & Linda F.Y. Ng (1998). Regionalization of the financial market and the manufacturing evolution in Hong Kong: Contributions and significance. Journal of Asian Economies, 9 (1), 119-137. DOI: 10.1016/S1049-0078(99)80074-8
31. United Nations Conference on Trade and Development (UNCTAD). (2013). Handbook of Statistics. Retrieved from <a href=http://unctad.org/en/PublicationsLibrary/ tdstats_en.pdf target="_blank">http://unctad.org/en/PublicationsLibrary/ tdstats_en.pdf</a>
32. Vitale, P. (2003). Foreign exchange intervention: How to signal policy objectives and stabilize the economy. Journal of Monetary Economics, 50 (4), 841-870. DOI: 10.1016/S0304-3932(03)00039-4
33. World Bank. (2013). World development indicators. Retrieved from <a href=http://data.worldbank.org/products/wdi target="_blank">http://data.worldbank.org/products/wdi</a>