nep-int New Economics Papers
on International Trade
Issue of 2005‒07‒18
ten papers chosen by
Martin Berka
University of British Columbia

  1. Trade And Structural Adjustment Policies In Selected Developing Countries By Jens Andersson; Federico Bonaglia; Kiichiro Fukasaku; Caroline Lesser
  2. Endogenous Timing in a Mixed Triopoly with a Foreign Competitor By Yuanzhu Lu
  3. The Effect of Labor Market Institutions on FDI Inflows By Chang-Soo Lee
  4. Accelerating ASEAN Economic Integration: Moving Beyond AFTA By Hadi Soesastro
  5. Specialization and Geographical Concentration in East Asia: Trend and Industry Characteristics By Soon-Chan Park
  6. Geographic Concentration and Industry Characteristics: An Empirical Investigation of East Asia By Soon-Chan Park,; Hongshik Lee,; Mikyung Yun
  7. National Key FDI Policies and International Investment Agreements Development By Anthony Ho
  8. Growing Demand for Animal-Protein-Source Products in Indonesia: Trade Implications By Fabiosa, Jacinto F.
  9. Import competition and the exit of firms in belgian manufacturing By Coucke, Kristien
  10. Analysis on Major Issues in International Investment Agreements and Future Options By Anthony Ho

  1. By: Jens Andersson (Swedish Minsitry of Foreign Affairs); Federico Bonaglia (OECD Development Centre); Kiichiro Fukasaku (OECD Development Centre); Caroline Lesser (OECD Development Co-operation Directorate)
    Abstract: The experience of the five examined industries (agro-food in Chile, cut flowers in Kenya,garment in Lesotho and in Mauritius and seafood in Thailand) demonstrates that non-traditional industries can emerge and achieved strong growth rates in very diverse settings in terms of geography and initial economic and social conditions. In most of these cases, the government adopted a relatively export-oriented, business- friendly attitude and adapted its policies as the industries developed. Hence, a key factor for successful structural adjustment has been the pro-active role of government in establishing an enabling economic and policy environment that allows local firms to operate on a level-playing field and strengthen their competitive edge in international markets. This highlights the importance of implementing trade policies in the framework of comprehensive development strategies and establishing a consultative national policy-making process for ensuring a coherent approach to trade and structural adjustment. The case studies also underscore that countries (government and industry) are compelled to constantly adapt in light of new sources of competition, growing wage levels, environmental constraints, technological advances and demanding product and process standards. Policy-makers in most countries under review are aware of this challenge. As a consequence, some of them have taken the initiative to set up specific mechanisms or programmes for further enhancing the competitiveness of existing export sectors and/or promoting emerging non-traditional export industries.
    Keywords: Trade and structural adjustment, export diversification, trade capacity building
    JEL: O P
    Date: 2005–07–11
  2. By: Yuanzhu Lu (National University of Singapore)
    Abstract: Endogenous order of moves is analyzed in a mixed triopoly with one public firm, one domestic private firm and one foreign private firm. The public firm produces most inefficiently, the foreign private firm produces most efficiently, and the efficiency of the domestic private firm is in between. We consider the observable delay game of Hamilton and Slutsky (1990) in the context of a quantity setting mixed triopoly where firms first choose the timing of choosing their quantities before quantity choice and find subgame perfect Nash equilibria (SPNE). The main result is that the public firm chooses to produce in the last period while the domestic private firm chooses to produce in any period except the last one in such a mixed triopoly, provided that efficiency differential between domestic and foreign private firm is not big.
    Keywords: Mixed Oligopoly; Endogenous Timing; Foreign Competitor; Simultaneous; Sequential; Efficiency Differential
    JEL: C72 D43 H42 L13
    Date: 2005–07–12
  3. By: Chang-Soo Lee (Korea Institute for International Economic Policy)
    Abstract: This study examines the impact of strengthening employment protection legislation, the structure of collective bargaining (centralization and coordination) and the labor market variables (national levels of unionization, strike levels and tax wedges on labor income) on a country's FDI inflows. Examining 29 OECD nations, our statistical analysis shows that strict EPL, which increases labor market rigidity, is usually associated with lower levels of FDI shares. Japanese investors are more sensitive to employment protection measures in choosing destinations for FDI than others. A 1-percentage-point increase in EPL causes a decrease of about 4.2 percent to Japan’s FDI share, compared to the decrease of 2.2 percent that results in the worldwide share. Finally, we discuss the implications of the recent employment protection policies in Korea that focus only on the interests of inside labor, reducing FDI inflows as well as neglecting the interests of outside labor (unemployed and future labor). Thus, policies for spending on outside labor and promoting entrepreneurship are necessary for national welfare to increase.
    Keywords: Labor Market , FDI Inflows, entrepreneurship
    JEL: E24 J23 J31 J51
    Date: 2003–10
  4. By: Hadi Soesastro (Centre for Strategic and International Studies)
    Abstract: Progress and realisation of the ASEAN Economic Community (AEC) can only be achieved if there is a clear blueprint, which identifies the end goal, the process to reach the end goal and a framework for proper assessment of the costs and benefits of an ASEAN Economic Community. AEC should not be based on the AFTA in which an agreement was reached first and the details negotiated afterwards earning it the nickname of "Agree First Talk After". A "new ASEAN way" will have to be developed and accepted as the rule of the game before the AEC has any serious chance of fulfilling the role of making ASEAN more competitive and attractive for world business.
    Keywords: ASEAN Economic Community (AEC), regional integration, economic cooperation
    JEL: E61 F33 F41
    Date: 2005–03
  5. By: Soon-Chan Park (Korea Institute for International Economic Policy)
    Abstract: In this paper, we examine changes in patterns of specialization and geographical concentration in East Asia. we found that relative specialization, on average, has decreased in East Asia, implying that the economic structures of East Asian countries have been converging. Investigation in the industrial characteristics, it is shown that the differences in economies of scale between east Asian countries have been greatly reduced over time. I addition, we also identified that geographical concentration has increased. During the 1989/91-1995/96 period, 17 industries experience the increase of geographical concentration more than 10 percent, while only three industries show the decline in geographical concentration more than 10 percent. The industries with increased concentration are characterized by above the medium level of economies of scale, capital and skill intensity. In comparison with the United States and the EU, East Asian countries show a low level of specialization and concentration. Thus, if East Asia countries follow the development patterns of the more integrated regions, a regional trading agreement in this region may lead to further specialization and concentration.
    Keywords: Economic geography, specilization, industrial concentration
    JEL: C21 F14 F15
    Date: 2003–12
  6. By: Soon-Chan Park, (Korea Institute of International Economic Policy); Hongshik Lee, (Korea Institute of International Economic Policy); Mikyung Yun (Korea Institute of International Economic Policy)
    Abstract: In this paper we assess the geographic concentration of 26 manufacturing industries over the 1986-1997 period, based on annual employment data for 8 East Asian countries. The average level of geographic concentration, in the relative term, has decreased continuously during the period in this regio. We show that intra-industry linkage and inter-industry linkage have a positive and significant influence on relative concentration. Furthermore, the industries with large demand bias, high scale intensity and low capital intensity are geographically concentrated. Finally, we find the evidence that regional integration in East Asia will lead to agglomeration of industries.
    Keywords: economic integration, location of industries, economic geography, industry characteristics
    JEL: F12 F13
    Date: 2004–12
  7. By: Anthony Ho (Department of Economics, Shanghai University)
    Abstract: National FDI policies play an important part in attracting FDI, which covering attracting FDI, gaining from FDI, and addressing TNCs. Recent years have seen great changes and developments in national FDI policies, and IIAs with respect to the form and amount as well. IIAs at different levels have their own advantages and disadvantages, therefore, when entering into IIAs, countries have to balance their own benefits and development needs with costs. To a great extend, IIAs supplement national FDI policies, making those of different countries tend to be the same. IIAs provide investors with a more transparent, more stable, more predictable, and safer environment, and an opener environment as well.
    Keywords: FDI Policies, International Investment, National Policies and International Agreements
    JEL: F1 F2
    Date: 2004–07
  8. By: Fabiosa, Jacinto F.
    Abstract: New elasticities were estimated from Indonesia’s 1996, 1999, and 2002 National Socio-Economic Survey, or SUSENAS, data using a double-hurdle demand specification. The estimates suggest that major changes in Indonesian household diets are expected in the coming years, as income growth is sustained and as urbanization proceeds at a fast pace. The consumption “trading-up” pattern for animal-protein source products observed in many countries may also occur in Indonesia. In this particular case, households will shift from fish to dairy and meat products. The trade impacts of this emerging consumption pattern will be determined by the cost of adjustment in Indonesia’s domestic productive capacity and the influence of the country’s predominantly Islamic tradition.
    Date: 2005–07–11
  9. By: Coucke, Kristien
    Abstract: In this paper we investigate the different effects of import competition on the exit behaviour of different types of firms. We find that import competition in Belgian manufacturing has a strong positive effect on the exit behaviour of firms that are not part of a multinational network. However, domestic firms with outsourcing activities (through a network of independent firms) experience a less important crowding out effect. Strong import competition especially increases the exit behaviour of larger domestic firms. But also multinational firms that do not specialise their production process through sourcing of less cost efficient activities abroad, have a higher probability to exit in industries characterised by strong import competition. The finding that import competition also increases the competitive pressure between multinational firms, reflects the increased importance of specialisation of production processes and vertical oriented FDI during the last decade. Note
    Keywords: exit, import, multinational presence
    Date: 2005–07–14
  10. By: Anthony Ho (Department of Economics, Shanghai University)
    Abstract: Since World War II, international investment agreements experienced a rapid development. However, some differences exist greatly in different agreements in the following aspects: Definition of Investment, FDI Entry and Treatment, Nationalization and Expropriations, Investment Dispute Settlement, Performance Requirements, Incentive Measures, Technology Transfer, and Competition Policies. All eight areas reviewed here are key sensitive issues that arise in the interface between national and international rule-making. When entering to international investment agreements, governments should take into consideration its development level and needs to opt provisions beneficial to it.
    Keywords: International Investment Agreements, Issues in Negotiation, Provision Options
    JEL: F1 F2
    Date: 2004–07

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