nep-int New Economics Papers
on International Trade
Issue of 2006‒01‒24
fifty-five papers chosen by
Martin Berka
Massey University

  1. What%u2019s So Special about China%u2019s Exports? By Dani Rodrik
  2. Service Offshoring and Productivity: Evidence from the United States By Mary Amiti; Shang-Jin Wei
  3. Income distribution, technical change and the dynamics of international economic integration By Michael Landesmann; Robert Stehrer
  4. Market Imperfections, Wealth Inequality, and the Distribution of Trade Gains By Manuel Oechslin; Reto Foellmi
  5. Modeling the Offshoring of White-Collar Services: From Comparative Advantage to the New Theories of Trade and FDI By Markusen, James R.
  6. Relationship Specificity, Incomplete Contracts and the Pattern of Trade By Nathan Nunn
  7. Trade, Poverty and Employment: The Social Consequences of Integration with China By Lucio Castro; Daniel Saslavsky
  8. Implications of Domestic Support Disciplines for Further Agricultural Trade Liberalization By Keith Walsh; Martina Brockmeier; Alan Matthews
  9. Trade balance and terms of trade in U.S.: a time-scale decomposition analysis By Luca De Benedictis; Marco Gallegati
  10. From Uruguay to Doha: Agricultural Trade Negotiations at the World Trade Organization By Beierle, Thomas
  11. Environmental Goods: Where Do the Dynamic Trade Opportunities for Developing Countries Lie? By Robert Hamwey
  12. Preferential Trade Arrangements and the Pattern of Production and Trade when Inputs are Differentiated By Joseph Francois
  13. 05-01 "The Shrinking Gains from Trade: A Critical Assessment of Doha Round Projections" By Frank Ackerman
  14. The Impact of Mode 4 Liberalization on Bilateral Trade Flows By Jansen, Marion; Piermartini, Roberta
  15. Market Structure in Services and Market Access in Goods By Joseph Francois; Ian Wooton
  16. International Trade and Knowledge Spillovers: The Case of Indonesian Manufacturing By Jacob, J.; Szirmai, A.
  17. A Developing Country View on Liberalization of Tariff and Trade Barriers By Patricio Meller
  18. Preferential trading in South Asia By Pitigala, Nihal; Panagariya, Arvind; Baysan, Tercan
  19. Preference Erosion and Multilateral Trade Liberalization By Joseph Francois; B. Hoekman; M. Manchin
  20. The Free Trade Agreement between Chile and the EU: Its Potential Impact on Chile´s Export Industry By Felicitas Nowak-Lehmann D.; Dierk Herzer; Sebastian Vollmer
  21. Regulatory heterogeneity as obstacle for international services trade By Henk Kox; Arjan Lejour
  22. South-South Trade Agreements, Location of Production and Inequality in Latin America By Alessia Lo Turco
  23. Tariff Liberalization, Wood Trade Flows, and Global Forests By Sedjo, Roger; Simpson, R. David
  24. The Economic Consequences of the Doha Round for Ireland By Alan Matthews; Keith Walsh
  25. Global and EU Agricultural Trade Reform: What is in it for Tanzania, Uganda and Sub-Saharan Africia? By Thomas Giblin; Alan Matthews
  26. Liberalisation of Trade in Environmentally Preferable Products By Monika Tothova
  27. Unprotected Resources and Voracious World Markets By Shogren, Jason; Margolis, Michael
  28. Trade Policy at the Cross-Roads By Bill Carmichael
  29. Household Inequality, Welfare, and the Setting of Trade Policy By Joseph Francois; Hugo Rojas-Romagosa
  30. Environmental Goods: A Comparison of the APEC and OECD Lists By Ronald Steenblik
  31. Trade liberalization in Latin America: The case of Chile By Ronald Fischer
  32. The Costs of Restrictive Trade Policies in the Presence of Factor Tax Distortions By Parry, Ian
  33. Liberalisation of Trade in Renewable-Energy Products and Associated Goods: Charcoal, Solar Photovoltaic Systems, and Wind Pumps and Turbines By Ronald Steenblik
  34. The International Equity Holdings of Euro Area Investors By Philip Lane; Gian Maria Milesi-Ferretti
  35. Do standards matter for export success ? By Wilson, John S.; Otsuki, Tsunehiro; Chen, Maggie Xiaoyang
  36. The Social Impact of Globalization in the Developing Countries By Eddy Lee; Marco Vivarelli
  37. Trade in services : How does it work ? By Isabelle Rabaud
  38. Environmental Goods and Services A Synthesis of Country Studies By Maxime Kennett; Ronald Steenblik
  39. Lobbying and agricultural trade policy in the United States By Hoekman, Bernard; Gawande, Kishore
  40. Sugar Prices, Labour Income and Poverty in Brazil By Krivonos, Ekaterina; Olarreaga, Marcelo
  41. Does trade credit substitute for bank credit? By Guido De Blasio
  42. Combining Rate-Based and Cap-and-Trade Emissions Policies By Fischer, Carolyn
  43. Sugar in the Caribbean : adjusting to eroding preferences By Mitchell, Donald
  44. Specialization, Outsourcing and Wages By Jakob Roland Munch; Jan Rose Skaksen
  45. Environmental and Trade Policies: Some Methodological Lessons By Smith, V. Kerry; Espinosa, Andres
  46. Linking Productivity to Trade in the Structural Estimation of Production within UK Manufacturing Industries By Marian Rizov; Patrick Paul Walsh
  47. The Impact of Liberalizing Labor Mobility in the Pacific Region By Walmsley, Terrie; Ahmed, Syud, Amer; Parsons, Christopher
  48. 05-06 "Policy Space for Development in the WTO and Beyond: The Case of Intellectual Property Rights" By Ken Shadlen
  49. EU Agricultural Policy: What Developing Countries Need to Know By Alan Matthews; Jean-Christophe Bureau
  50. The EU-Mercosur Association Process. An Analysis of Bilateral Trade By Alessia LO TURCO
  51. Output-Based Allocations of Emissions Permits: Efficiency and Distributional Effects in a General Equilibrium Setting with Taxes and Trade By Fischer, Carolyn; Fox, Alan
  52. Endogenous growth in open economies: a surveys By Alberto Franco Pozzolo
  53. Globalization and Developing Countries - A Shrinking Tax Base? By Joshua Aizenman; Yothin Jinjarak
  54. The Japan–Australia Partnership in the Era of the East Asian Community: Can they Advance Together? By Takashi Terada
  55. Competing for a Duopoly: International Trade and Tax Competition By Ferrett, Ben; Wooton, Ian

  1. By: Dani Rodrik
    Abstract: Much more than comparative advantage and free markets have been at play in shaping China's export success. Government policies have helped nurture domestic capabilities in consumer electronics and other advanced areas that would most likely not have developed in their absence. As a result, China has ended up with an export basket that is significantly more sophisticated than what would be normally expected for a country at its income level. This has been an important determinant of China's rapid growth. What matters for China's future growth is not the volume of exports, but whether China will continue to latch on to higher-income products over time.
    JEL: F1 O4
    Date: 2006–01
  2. By: Mary Amiti; Shang-Jin Wei
    Abstract: The practice of sourcing service inputs from overseas suppliers has been growing in response to new technologies that have made it possible to trade in some business and computing services that were previously considered non-tradable. This paper estimates the effects of offshoring on productivity in US manufacturing industries between 1992 and 2000, using instrumental variables estimation to address the potential endogeneity and errors in measurement of offshoring. It finds that service offshoring has a significant positive effect on productivity in the US, accounting for around 11 percent of productivity growth during this period. Offshoring material inputs also has a positive effect on productivity, but the magnitude is smaller accounting for approximately 5 percent of productivity growth.
    JEL: F1 F2
    Date: 2006–01
  3. By: Michael Landesmann (Department of Economics, Johannes Kepler University Linz, Austria); Robert Stehrer (Vienna Institute for International Economic Studies)
    Abstract: This paper explores the features of a dynamic multisectoral model which focuses on the relationship between income distribution, growth and international specialization. The model is explored both for the steady-state properties and the transitory dynamics of integrated economies. Income inequality affects the patterns of growth and international specialization as the model uses non-linear Engel curves and hence different income groups are characterized by different expenditure patterns. At the same time income distribution is also reflected in the relative wage rates of skilled to unskilled workers, i.e. the skill premium, and hence the wage structure affects comparative costs of industries which have different skill intensities. The model is applied to a situation which analyses qualitatively different economic development strategies of catching-up economies (a 'Latin American' scenario and a 'South East Asian' scenario).
    Keywords: income distribution; growth; international economic integration; catching-up; international specialization
    JEL: F15 F16 F43 O15 O41
    Date: 2005–12
  4. By: Manuel Oechslin; Reto Foellmi
    Abstract: We explore the role of the ownership structure of capital in an economy that suffers from barriers to entry and an imperfect financial system. In such an environment, an unequal distribution of capital provides an explanation for trade flows and trade gains even when countries do not differ in relative factor endowments or available technologies. Moreover, an uneven asset distribution is associated with a large import-competing sector and only a small number of export-oriented entrepreneurs. Along these lines, we suggest that an unequal asset distribution may be key to understand why still many less developed countries protect their firms from foreign competition.
    Keywords: inequality, trade policy, economic development
    JEL: O11 F13 O16
    Date: 2006–01
  5. By: Markusen, James R.
    Abstract: Trade theory consists of a portfolio of models. What elements might be useful in modeling the offshoring of white-collar services, or do these issues call for an entirely fresh approach? I try to identifying some of the important aspects of this phenomenon and then argue that modeling could focus on (a) vertical fragmentation of production, (b) expansion of trade at the extensive margin, (c) fragments that differ in factor intensities and countries that differ in endowments, and (d) knowledge or capital stocks of countries or firms that are complementary to skilled labour, and create missing inputs for countries otherwise well suited to skill-intensive fragments. I argue that we can make good progress by selecting a number of 'modules' from existing theory. I use these to formulate a series of simple 'template' models which capture many of the characteristics of offshoring, and then use those models to identify the effects of technological or institutional changes which allow offshoring of white-collar services to occur.
    Keywords: offshoring; outsourcing; white-collar services
    JEL: F2
    Date: 2005–12
  6. By: Nathan Nunn (University of British Columbia)
    Abstract: When relationship-specific investments are necessary for production, under-investment occurs if contracts cannot be enforced. The efficiency loss from under-investment will differ across industries depending on the importance of relationship-specific investments in the production process. As a consequence, a country's contracting environment may be an important determinant of comparative advantage. To test for this, I construct measures of the efficiency of contract enforcement across countries and the importance of relationship-specific investments across industries. I find that countries with better contract enforcement specialize in industries that rely heavily on relationshipspecific investments. This is true even after controlling for traditional determinants of comparative advantage such as endowments of capital and skilled labor.
    Keywords: International trade; Comparative advantage; Relationship- specific investments; Contract enforcement.
    JEL: O P
    Date: 2005–12–29
  7. By: Lucio Castro (Maxwell Stamp PLC); Daniel Saslavsky (Inter American Development Bank)
    Abstract: This paper estimates the potential effects of a free trade agreement (FTA) between China and Mercosur on poverty, income distribution, welfare and employment. The case of Argentina, in particular, is investigated. To this end, partial equilibrium techniques are combined with micro econometric methodologies employing data from household surveys to examine the likely effects of an FTA with China on poverty and income distribution. We find that the FTA would result in a small reduction in poverty as well as an improvement in the income distribution. Highly disaggregated data at the industry level is used for the first time to estimate labor demand-output and wage elasticities in order to estimate the effects of an agreement with China on sectoral and aggregate employment rates. According to this, trade with the PRC did not have a significant effect on industrial employment, even in a period of swift trade liberalization like the nineties.
    Keywords: China, Import Competition, Trade and Labor Market Interactions, Employment, Income Distribution, Poverty
    JEL: F14 F15 F16 F17 L60
    Date: 2005–12–28
  8. By: Keith Walsh; Martina Brockmeier; Alan Matthews
    Abstract: This paper employs the GTAP computable general equilibrium model and dataset to analyse the implications of domestic support reductions in the context of agricultural trade liberalisation. Three specific issues are addressed: overhang in domestic support, the accurate distinction of the boxes in the GTAP dataset and the treatment of market price support in the amber box. An extensive domestic support database is used to calculate the change in applied domestic support rates from a specified cut in bound rates, and to identify the impact on the different domestic support boxes and the required reductions in each support category. The GTAP model is extended to incorporate an explicit representation of the market price support element of the AMS. The results from these extensions of the standard database and model support the view that the impact of an agreement to reduce domestic support will be limited and lower than conventionally estimated. Results of simulations combining domestic support cuts with market access and export competition disciplines show that the effect of import tariff reductions dominate the gains from domestic support cuts once full account is taken of the issues addressed in this paper.
    Keywords: WTO agricultural negotiations, domestic support, agricultural protection, Aggregate Measure of Support
    JEL: C68 F13 Q17 Q18
    Date: 2005–12–15
  9. By: Luca De Benedictis (University of Macerata, Italy); Marco Gallegati (DEA, Università Politecnica delle Marche, Italy)
    Abstract: The aim of this paper is to provide evidence on the nature of the relationship between the terms of trade and the trade balance for US on a scale-by-scale basis using wavelet analysis. Thus, after decomposing the two variables into their time-scale components using to the maximum overlap discrete wavelet transform (MODWT) we analyze the time scale relationships between the terms of trade and the trade balance through the wavelet correlation analysis, and nonparametric regression models(GAMs). Wavelet correlation analysis indicates that, if the association between the trade balance and the terms of trade depends mainly on the elasticity of substitution between foreign and domestic goods, the Armington elasticities may be di¤erent across scales, and in particular, tend to get larger as the time horizon of the agents increases. Moreover, the long-run relationship between the trade balance and the terms of trade from the nonparametric …tted functions seems to provide support to the existence of the Harberger-Laursen-Metzler e¤ect .
    Keywords: trade variables, wavelet correlation analysis, generalized additive models
    JEL: C12 C22 E30 F10
    Date: 2005–12–27
  10. By: Beierle, Thomas
    Abstract: This paper examines current agricultural trade negotiations at the World Trade Organization, with particular attention to the relationship between liberalization and developing countries’ economic growth and food security. Agriculture remains one of the most highly protected arenas of international trade. The cost of such protection falls particularly hard on developing countries, where agriculture typically accounts for a much higher share of economic output, exports, and employment than in developed countries. Although the 1994 Uruguay Round of trade talks succeeded in bringing agriculture into the rules-based trading system, it did little to actually reduce agricultural trade protection. This paper describes how three important actors in the agricultural trading system—the United States, the European Union, and developing countries—are positioning themselves in the current talks to deal with the unfinished business from the Uruguay Round.
    Keywords: trade, agriculture, World Trade Organization (WTO), General Agreement on Tariffs and Trade (GATT)
    JEL: F13
  11. By: Robert Hamwey (Cen2eco: Centre for Economic & Ecological Studies)
    Abstract: This study seeks to review some of the key issues surrounding ongoing WTO negotiations on trade liberalisation of environmental goods and to provide trade data and analyses to assess developing countries’ current and potential performance in environmental goods trade. Data indicate that developing countries have significant export strength and potential, not only in environmentally preferable products, but in many manufactured and chemical goods used in the provision of environmental services as well. For many developing countries, this latter class of goods includes some of their most dynamic exports, which can be significantly expanded by trade liberalisation, particularly through increased South-South trade. For other developing countries, trade liberalisation of environmentally preferable products may provide immediate gains needed to support rural economies and facilitate the integration of their small and medium sized enterprises into global supply chains. The study finds that to provide gains for all countries – each with a unique production and export profile – the scope and spectrum of environmental goods targeted for liberalisation must be wide and selective, allowing developing countries to select a limited ‘best- fit’ subset of goods for their tariff reduction commitments within an eventual WTO agreement.
    Keywords: trade liberalisation, environmental goods, developing countries, WTO, negotiations
    JEL: F1 F2
    Date: 2005–12–27
  12. By: Joseph Francois
    Abstract: This paper is concerned with rules of origin when intermediate goods are differentiated. An analytical model emphasizes trade patterns and the relative importance of trade in intermediates given trade preferences. Econometric evidence based on intra-OECD trade in motor vehicles and motor vehicle parts points to a systematic impact of trade costs and FTA membership, following from rules of origin and reduction in border measures, on the role of intermediates and their relative importance in production and trade. These results are consistent with a conceptual framework involving rules-base trade costs and two-way trade in differentiated intermediate goods and final goods.
    Keywords: rules of origin, trading costs, trade in intermediates, industry location
    JEL: F15 F13
    Date: 2005–12–15
  13. By: Frank Ackerman
    Abstract: Computable general equilibrium (CGE) models of world trade, often presented as demonstrating the benefits of trade liberalization, now make much more modest forecasts than they did just a few years ago. The estimated benefits are not only small in the aggregate, but also skewed toward developed countries; the expected contribution of trade liberalization to economic development and poverty alleviation is extremely limited. Related calculations, for the expected benefits of services liberalization, trade facilitation measures, and long-term productivity gains from trade liberalization, remain problematical and/or speculative. The empirical limitations of CGE forecasts rest on broader theoretical weaknesses: the models are largely locked within a static framework, and remarkably assume that trade policy causes no changes in total employment, up or down. Models built on more adequate theories, which have only begun to appear, would paint a very different picture of the effects of trade liberalization.
  14. By: Jansen, Marion; Piermartini, Roberta
    Abstract: This paper gives insights into the possible trade creating effects of service trade liberalization via Mode 4. In particular we expect that temporary movements of persons, like permanent movements, have the potential to reduce transaction costs for merchandise trade between home and host country. Exploiting data on H-1B beneficiaries from different origins in the United States and using a gravity model of trade, we find significantly positive effects of temporary movements of persons on bilateral merchandise trade. In addition to this, the paper provides insights into the determinants of temporary movements of persons.
    Keywords: bilateral trade flows; Mode 4; services liberalization; WTO
    JEL: C30 F13 F15 F29
    Date: 2005–12
  15. By: Joseph Francois; Ian Wooton
    Abstract: We examine interaction between goods trade and market power in domestic trade and distribution sectors. Theory suggests a linkage between service-sector competition and goods trade, one supported by econometrics involving imports of 22 OECD countries vis-à-vis 69 exporters. This points to linkages between market access conditions for goods and the structure of the service sector. Competition in services affects the volume of goods trade. Additionally, because of interaction between tariffs and competition, the market structure of the domestic service sector becomes increasingly important as tariffs are reduced. Also, empirically service competition apparently matters most for exporters in smaller, poorer countries.
    Keywords: market access, services trade, trade liberalization, competition policy, imperfect competition, GATS
    JEL: F12 F13 F23
    Date: 2005–12–15
  16. By: Jacob, J. (Ecis, Technische Universiteit Eindhoven); Szirmai, A. (Ecis, Technische Universiteit Eindhoven)
    Keywords: Indonesian, trade, spillovers
    Date: 2006
  17. By: Patricio Meller
    Abstract: The key issue of the Doha Development Agenda (DDA) is the following: What type of OMC rules would maximize the rate of development of developing countries? In this short note, we provide a short synthesis of developed countries disturbing trade barriers which affect negatively developing countries export growth. Also, we suggest some guidelines which would represent the ideal outcome of the Doha Trade Round from a developing country perspective.Creation-Date: 2003
  18. By: Pitigala, Nihal; Panagariya, Arvind; Baysan, Tercan
    Abstract: The authors examine the economic case for the South Asia Free Trade Area (SAFTA) Agreement signed on January 6, 2004 by India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, and the Maldives. They start with a detailed analysis of the preferential trading arrangements in South Asia to look at the region ' s experience to date and to draw lessons. Specifically, they examine the most effective free trade area in existence-the India-Sri Lanka Free Trade Area-and evaluate the developments under the South Asian Preferential Trade Area (SAPTA). The authors conclude that, considered in isolation, the economic case for SAFTA is weak. When compared with the rest of the world, the region is tiny both in terms of economic size as measured by GDP (and per capita incomes) and the share in world trade. It is argued that these facts make it unlikely that trade diversion would be dominant as a result of SAFTA. This point is reinforced by the presence of high levels of protection in the region and the tendency of the member countries to establish highly restrictive " sectoral exceptions and sensitive lists " and stringent " rules of origin. " The authors argue that the SAFTA makes sense only in the context of a much broader strategy of creating a larger preferential trade area in the region that specifically would encompass China and the member nations of the Association of South East Asian Nations. In turn, the case for the latter is strategic: the pursuit of regionalism in the Americas and Europe has created increasing discrimination against Asian exports to those regions, which must inevitably affect the region ' s terms of trade adversely. An Asian bloc could be a potential instrument of changing incentives for the trade blocs in the Americas and Europe and forcing multilateral freeing of trade. Assuming that the SAFTA Agreement is here to stay, the authors suggest steps to ensure that the Agreement can be made more effective in promoting intra-regional trade, while minimizing the likely trade-diversion costs and maximizing the potential benefits.
    Keywords: Free Trade,Trade Policy,Trade Law,Economic Theory & Research,Trade and Regional Integration
    Date: 2006–01–01
  19. By: Joseph Francois; B. Hoekman; M. Manchin
    Abstract: Because of concern that OECD tariff reductions will translate into worsening export performance for the least developed countries, trade preferences have proven a stumbling block to developing country support for multilateral liberalization. We examine the actual scope for preference erosion, including an econometric assessment of the actual utilization, and also the scope for erosion estimated by modeling full elimination of OECD tariffs and hence full MFN liberalization-based preference erosion. Preferences are underutilized due to administrative burden—estimated to be at least 4 percent on average—reducing the magnitude of erosion costs significantly. For those products where preferences are used (are of value), the primary negative impact follows from erosion of EU preferences. This suggests the erosion problem is primarily bilateral rather than a WTO-based concern.
    Keywords: preference erosion, GSP, WTO, Doha Round, trade and development
    JEL: F13
    Date: 2005–12–15
  20. By: Felicitas Nowak-Lehmann D. (Ibero-Amerika Institut für Wirtschaftsforschung der Universität Göttingen); Dierk Herzer (Ibero-Amerika Institut für Wirtschaftsforschung der Universität Göttingen); Sebastian Vollmer (Ibero-Amerika Institut für Wirtschaftsforschung der Universität Göttingen)
    Abstract: Bilateral Free Trade Agreements (FTAs) and unilateral trade liberalization have been two strategies used extensively by Chile to expand its exports and improve its competitive position in the world markets. It is the objective of this paper to analyze the role of trade agreements, price competitiveness, real income, per capita income differences and transport costs in Chilean export trade with the EU. To this end, Chile’s most important export sectors, namely fish, fruit, beverages, ores, copper, and wood and products thereof are investigated using panel data from Chile’s main trading partners in the EU over the period 1988-2002. The econometric model used is a refined augmented gravity model. It is found that the FTA between Chile and the EU, if fish, fruit and wine were included, would have a noticeable impact on Chilean export performance. Price competitiveness is important in most of the sectors under investigation. As expected, the relevance and impact of transport costs on exports do vary from sector to sector.
    Keywords: EU-Chile trade agreement, sectoral trade flows, gravity model, panel analysis
    JEL: F14 F17 C23
    Date: 2005–11–08
  21. By: Henk Kox; Arjan Lejour
    Abstract: International trade in services is hampered by non-tariff barriers that originate from national regulations. Not only the level of regulation in home or export country matters, but also the inter-country differences in regulation for service markets. Regulatory measures tend to affect fixed costs rather than variable costs. The fact that regulations often differ by market, means that the fixed costs of complying with regulations in an export market are in fact sunk market-entry costs. <P> We prove that policy heterogeneity between countries has a negative impact on bilateral service trade. We develop a new index of bilateral policy heterogeneity, and apply it in a gravity model for explaining service trade among EU countries. <P> The empirical results support our theoretical prediction: the degree of regulatory heterogeneity is inversely related to the level of bilateral service trade. Simulations for the EU show that if countries make more use of mutual recognition, bilateral trade in commercial services among EU countries could increase by 30 to 60 percent.
    Keywords: services trade; regulatory barriers; policy heterogeneity; EU; internal market EU
    JEL: L1 L5 L8 F12 F14
    Date: 2005–09
  22. By: Alessia Lo Turco (DEA-Universita` Politecnica delle Marche, Ancona)
    Abstract: This study aims at evaluating the relation between South-South trade agreements, location of production and inequality in Latin Amer- ican RTAs. Following Sanguinetti et al.(2004) and Midelfart-Knarvik et al.(2000), an empirical model will be estimated to check whether industry localization was affected by the agreement. An ending sec- tion will then evaluate the overall impact of trade agreements on ¾ -convergence, i.e. the standard deviation of income levels of countries belonging to the same agreement.
    JEL: F02 F15 O14 O54 C33
    Date: 2005–11–08
  23. By: Sedjo, Roger (Resources For the Future); Simpson, R. David
    Abstract: This paper examines the question of the likely effects on global forests of a further reduction in wood products tariffs including both solid wood products and pulp and paper, as has been proposed to the World Trade Organization (WTO) by the Asia Pacific Economic Community (APEC). The tariff reductions would be an extension of the tariff reductions associated with the Uruguay Round (Federal Register 1999). The questions include both how international trade is likely to change in response to further tariff reduction and also the implications for timber harvests and forests generally of such trade liberalization in the various forest regions. The paper finds that the evidence suggests further reductions in tariffs on forest products are likely to generate only very modest increases in worldwide trade and production, and the increased harvest pressures on forests due to tariff reduction should be quite modest. The major countries likely to experience export and production increases are found largely in the northern hemisphere and are likely to be able to facilitate additional harvests with minimal effects on the forests due to the modest nature of the impact, new forest practices laws, new forest set-asides, and movement toward improved practices designed to achieve multifaceted sustainable forestry. Furthermore, there is little reason to expect that tariff reductions will significantly increase harvests from tropical forests. Earlier tariff reductions appear to have had minimal impacts on tropical harvests or exports. Nevertheless, tropical forests will remain under deforestation pressure due to land conversion objectives, commonly to provide additional agricultural lands.
  24. By: Alan Matthews; Keith Walsh
    Abstract: This paper provides a quantitative study of the economic effects of a stylised simulation of trade liberalisation for Ireland using the GTAP model. The experiment incorporates the liberalisation of agricultural, manufacturing and services trade as well as measures to improve trade facilitation. The simulation is implemented against a baseline projection of the Irish and world economy over the next decade. Overall, Ireland's welfare will increase as a result of further trade liberalisation, with particularly strong gains from services liberalisation. The industrial liberalisation scenario also generates positive gains to Ireland, while agricultural liberalisation has a slightly negative effect on the overall economy.
    Keywords: Note: Ireland, trade liberalisation, WTO Doha Round
    JEL: C68 F13 F14
    Date: 2005–12–15
  25. By: Thomas Giblin; Alan Matthews
    Abstract: This paper uses the ATPSM partial equilibrium trade model (developed by UNCTAD and the FAO) to examine the impact of various agricultural trade liberalisation scenarios on the countries of Sub-Saharan Africa. The model is presented in some detail along with an assessment of some of its strengths and limitations. Two types of trade policy liberalisation scenario are simulated. The first is a set of benchmark total unilateral agricultural trade liberalisation scenarios - by the EU, other regions of the world, Sub-Saharan Africa and our two individual case study countries Tanzania and Uganda. These benchmark simulations give an idea of the potential welfare effects from trade reform. The second set of simulations covers different trade reform proposals that have been put forward in the context of the Doha Development Round. The paper focuses in particular on the Harbinson proposal. Results are reported for total welfare changes as well as more disaggregated welfare impacts on producers, consumers, and government revenue. Changes in export volume and value, and changes in quota rent from preferential trade agreements are also reported. The findings for Tanzania and Uganda are that the welfare effects of rich-country agricultural trade reform are small and typically modestly negative. This reflects both their trade balance in agricultural goods and the erosion in the value of some preferences in the case of Tanzania. Liberalisation by the countries themselves generates the biggest, albeit still small, total welfare gains but at the cost of lost government revenue and significant losses in welfare for net-agricultural producers in rural areas where most of the poor live. The paper is an important contribution in moving beyond the aggregate results for Sub-Saharan Africa that are typically presented in trade simulation papers on agricultural liberalisation, aggregates which include a significant diversity of contrasting individual country impacts.
    Keywords: agriculture, trade, modelling, sub-Saharan Africa
    Date: 2005–12–15
  26. By: Monika Tothova
    Abstract: It addresses the issue of environmentally preferable products (EPPs) in the context of the Doha Development Round and the Johannesburg Plan of Implementation. It reviews available definitions; describes existing compilations of products and identifies broad categories of EPPs; and offers case studies on three groups of products addressing benefits (and costs) of liberalisation for selected countries and products. Three groups of products, including their parts and complements, were identified for case studies owing to their potential trade, environmental and developmental benefits: sisal and other fibres of the genus Agave, bicycles and solid-fuel cooking stoves.
    Keywords: trade, developing countries, environmental goods, environmental services
    JEL: F14 F18 Q56
    Date: 2005–11–29
  27. By: Shogren, Jason; Margolis, Michael
    Abstract: The Theory of the Second Best implies that any country with less-than-ideal resources can lose from international trade. Recently it has been suggested this means the South (poor countries) are better off suppressing trade with the North, especially trade in natural resource products, since the North has better developed rights to protect its natural resources. Here we show that the suppression of such trade may also impede the development of property rights in the South, but that even taking this into account, trade liberalization need not improve Southern welfare. We find that within a cone of world prices on the boundary of which lies the South’s autarky price vector, welfare losses still occur even when local governments in the South make optimal choices to enclose the hinterlands. Corollary to the losses, the South can gain from tariffs or quotas and, within a proper subset of the cone of loss, can suffer when the prices of its exports rise.
    Keywords: International Trade; Property Rights; Natural Resources; Environment; Second Best; Institutional Change; Development
    JEL: F02 F10 F18 K11 O10 O19
  28. By: Bill Carmichael (Australia–Japan Research Centre)
    Abstract: It is now widely agreed that the World Trade Organization (WTO) is in trouble, struggling to deliver the national rewards available from liberalising through multilateral negotiations. Prime Minister Howard and President Bush have committed to help restore the ability of the WTO system to deliver those rewards. This paper examines the contribution of domestic transparency procedures, introduced by and operating within participating countries, in dealing with the domestic causes of the problem facing the multilateral system. It explains the relevance of the proposal, prepared for Prime Minister Howard, in meeting the commitment he has taken. The Hong Kong Ministerial Meeting in December 2005 provides an opportunity to advance such a proposal and, in doing so, enhance our own trade performance.
    Keywords: World Trade Organization, WTO, multilateral negotiations, transparency, trade
    JEL: E6 O19 F13 F14
    Date: 2005–11
  29. By: Joseph Francois; Hugo Rojas-Romagosa
    Abstract: We analyze general equilibrium relationships between trade policy and the household distribution of income, decomposing social welfare into real income level and variance components through Gini and Atkinson indexes. We embed these inequality-adjusted social welfare functions in a general equilibrium structure mapping from tariff protection to household inequality. This yields predictions regarding the linkages between trade protection, country characteristics and inequality in Heckscher-Ohlin and Ricardo-Viner frameworks. In addition, we can separate the efficiency and equity effects of tariffs on welfare. We then examine endogenous tariff formation when policy makers care about both equity and special interests.
    Keywords: trade policy, household distribution of income, Atkinson index, Gini index, political econom
    JEL: F13 O15 D31 D72
    Date: 2005–12–15
  30. By: Ronald Steenblik
    Abstract: This paper compares two lists of environmental goods that have been used in the WTO negotiations on liberalising trade in environmental goods and services. It describes the genesis of the lists, which were compiled in the late 1990s. The OECD list was developed as a basis for analysing trade and tariffs. The APEC list emerged from nominations by member economies of the Asia-Pacific Economic Co-operation forum, as part of an effort to attain early voluntary liberalisation of trade in particular sectors. The concluding section of the chapter identifies common elements in the two lists and explains important differences.
    Keywords: trade negotiations, environmental goods, pollution-control technology
    Date: 2005–11–29
  31. By: Ronald Fischer
    Abstract: This paper provides an overview and evaluation of trade policies in Chile, as well as the problems facing Chilean trade. It also evaluates the desirability of industrial policy and of a shift away from natural resource based exports.Creation-Date: 2004
  32. By: Parry, Ian (Resources For the Future)
    Abstract: This paper uses a numerical general equilibrium model to examine the quantitative importance of pre-existing factor tax distortions for the welfare effects of restrictive trade policies in economies with and without market power in trade. We analyze tariffs, non-auctioned import quotas (with rents accruing to domestic firms) and voluntary export restraints (with rents accruing to foreign firms). We find that allowing for interactions with pre-existing taxes can greatly magnify the overall costs of these policies - possibly by over several hundred percent! In the case of import tariffs, much of this additional cost can be offset if the tariff revenues are used to reduce other distortionary taxes. Indeed the cost discrepancy between revenue-neutral tariffs and import quotas is dramatic at modest levels of import reduction, but declines to zero as these policies become prohibitive. We find that the optimal tariff for a country with market power in trade is greatly reduced, and possibly to zero, unless tariff revenues finance cuts in other distorting taxes. The proportionate increase in costs due to pre-existing taxes is much smaller under voluntary export restraints than under import quotas when costs are measured by domestic welfare losses, but not when measured by world welfare losses.
  33. By: Ronald Steenblik
    Abstract: Numerous studies and events over the past several years have stressed the importance of eliminating barriers to trade in renewable forms of energy and the technologies used to exploit them, as part of a broader strategy to reduce dependence on more-polluting and less secure energy sources. This paper examines the implications of liberalising trade in renewable energy, focussing on several representative fuels and technologies (charcoal, solar photovoltaic systems and their complements, and wind turbines and wind pumps). Eliminating tariffs on renewable energy and associated goods — which are 15% or higher on an ad valorem basis in many developing countries — would reduce a burden on consumers of energy, particularly people living in rural areas of developing countries, as it is in such areas that many renewableenergy technologies are making, and are likely to make, their greatest contribution. Manufacturers located in OECD countries would benefit from increased trade in renewable-energy technologies and components, but so would a growing number of companies based in developing countries. The elimination of tariffs would also help to level the playing field between aid-financed goods, which often benefit from tariff waivers, and goods imported through normal market transactions, which often do not. For the maximum benefits of trade liberalisation in renewable-energy technologies to be realised, however, additional reforms may be required in importing countries’ domestic policies, especially those affecting the electricity sector in general, rural electrification in particular, and the environment.
    Keywords: trade, developing countries, environmental goods, environmental technologies, renewable energy
    Date: 2005–12–09
  34. By: Philip Lane; Gian Maria Milesi-Ferretti
    Abstract: We provide a systematic analysis of bilateral, source and host factors driving portfolio equity investment by euro-area countries, using newly-released data on international equity holdings at the end of 2001. We find that bilateral equity holdings are strongly linked to bilateral trade in goods and services and are also associated with proxies for informational proximity. We further document that there exists a significant “euro-area bias”, with euro-area countries investing in other euro-area countries over and above the amount predicted by underlying fundamentals.
    Keywords: International portfolio equity investment, international trade; gravity.
    JEL: F21 F34
    Date: 2005–12–15
  35. By: Wilson, John S.; Otsuki, Tsunehiro; Chen, Maggie Xiaoyang
    Abstract: Standards and technical regulations are an increasingly prominent part of the international trade policy debate. In particular, there has been considerable discussion of whether standards and regulations affect trade costs and export prospects for developing countries. In this paper the authors examine how meeting foreign standards affects firms ' export performance, reflected in export propensity and market diversification. The analysis draws on the World Bank Technical Barriers to Trade Survey database of 619 firms in 17 developing countries. The results indicate that technical regulations in industrial countries adversely affect firms ' propensity to export in developing countries. In particular, testing procedures and lengthy inspection procedures reduce exports by 9 percent and 3percent, respectively. Furthermore, in the model, the difference in standards across foreign countries causes diseconomy of scale for firms and affects decisions about whether to enter export markets. The empirical analysis presented here implies that standards impede exporters ' market entry, reducing the likelihood of exporting to more than three markets by 7 percent. In addition, the authors find that firms that outsource components are more challenged by compliance with multiple standards.
    Keywords: Markets and Market Access,Small Scale Enterprise,Microfinance,Economic Theory & Research,Public Sector Regulation
    Date: 2006–01–01
  36. By: Eddy Lee (ILO, Geneva); Marco Vivarelli (Catholic University of Piacenza, Max Planck Institute of Economics, Jena, CSGR, University of Warwick and IZA Bonn)
    Abstract: In this paper an ex-post measurable definition of globalization has been used, namely increasing trade openness and FDI. A general result is that the optimistic Heckscher- Ohlin/Stolper-Samuelson predictions do not apply, that is neither employment creation nor the decrease in within-country inequality are automatically assured by increasing trade and FDI. The other main findings of the paper are that: 1) the employment effect can be very diverse in different areas of the world, giving raise to concentration and marginalisation phenomena; 2) increasing trade and FDI do not emerge as the main culprits of increasing within-country income inequality in DCs, although some evidence emerges that import of capital goods may imply an increase in inequality via skill-biased technological change; 3)increasing trade seems to foster economic growth and absolute poverty alleviation, although some important counter-examples emerge.
    Keywords: trade, FDI, employment, poverty, within-country income inequality
    JEL: F02 O1
    Date: 2006–01
  37. By: Isabelle Rabaud (LEO - Laboratoire d'économie d'Orleans - - CNRS : FRE2783 - Université d'Orléans)
    Abstract: While services represent nearly 70 % of value added in all OECD countries, only a fifth of trade in goods and services is due to cross-border supply of services. Then internationalisation of services occurs by commercial presence of firms in host countries, its impact on white collar employment is limited and only unskilled workers incur falls in wage. As for temporary movement of people, Mode 4 is very difficult to measure either by trade or migration statistics. In the paper we show that the divergence between the preponderance of services in national activities and its weakness in international transactions is due to the importance of non tradeable industries, for which the degree is week and contrasts with activities implied in international competition.
    Keywords: Trade in services ; Comparative Advantage ; Temporary movement of persons
    Date: 2006–01–13
  38. By: Maxime Kennett; Ronald Steenblik
    Abstract: This study presents a synthesis of 17 country studies on environmental goods and services (EG&S) commissioned by the OECD, UNCTAD and the UNDP. The countries examined are Brazil, Chile, China, Cuba, the Czech Republic, the Dominican Republic, Guatemala, Honduras, Israel, Kenya, Korea, Mexico, Nicaragua, Pakistan, Panama, Thailand and Vietnam. Its aim is to identify determinants of demand for EG&S; to show common themes and experiences in the EG&S markets of different countries; and to draw attention to key trade, environment and development policy linkages. It also seeks to contribute to the exchange of expertise and experience in the area of trade and environment so that liberalisation of trade in EG&S can benefit all countries, developing and developed alike.
    Keywords: trade, developing countries, environmental goods, environmental services
    JEL: F14 F18 Q56
    Date: 2005–11–29
  39. By: Hoekman, Bernard; Gawande, Kishore
    Abstract: The authors study whether political campaign contributions influence agricultural protection in the United States in the manner suggested by the political economy model of Grossman and Helpman (1994). This is the first attempt to test this model using agricultural data. The authors test the model using a detailed cross-sectional data set of agricultural protection, subsidies, and political action committee (PAC) contributions in the late 1990s. The model is qualitatively affirmed by the data. They make a novel attempt to solve a puzzle about the model ' s quantitative implications, also found in recent studies. This solution makes the simple model consistent with the complicated decisionmaking process in real world government. The results imply the underpinnings of a political economy equilibrium that will be hard to dislodge.
    Keywords: Economic Theory & Research,Free Trade,Consumption,Markets and Market Access,Technology Industry
    Date: 2006–01–01
  40. By: Krivonos, Ekaterina; Olarreaga, Marcelo
    Abstract: This paper assesses the impact that a potential liberalization of sugar regimes in OECD countries could have on household labour income and poverty in Brazil. We first estimate the extent of price transmission from world markets to eleven Brazilian States to capture the fact that some local markets may be relatively more isolated from changes in world prices. We then simultaneously estimate the impact that changes in domestic sugar prices have on regional wages and employment depending on worker characteristics. Finally, we measure the impact on household income of a 10% increase in world sugar prices. Results suggest that workers in the sugar sector and in sugar producing regions experience larger wage increases. Employment opportunities are also larger in sugar producing regions. More interestingly, households at the top of the income distribution experience larger income gains due to higher wages, whereas households at the bottom of the distribution experience larger income gains due to movements out of unemployment.
    Keywords: brazil; sugar; trade; wages
    JEL: F16 Q17
    Date: 2005–12
  41. By: Guido De Blasio (Banca d'Italia)
    Abstract: The paper examines micro data on Italian manufacturing firms’ inventory behavior to test the Meltzer (1960) hypothesis according to which firms substitute trade credit for bank credit during periods of monetary tightening. It finds that their inventory investment is constrained by the availability of trade credit. As for the magnitude of the substitution effect, however, this study finds that it is not sizable. This is in line with the micro theories of trade credit and the evidence on actual firm practices, according to which credit terms display modest variations over time.
    Keywords: trade credit, monetary policy, manufacturing firms
    JEL: E51 E52 E65
    Date: 2004–06
  42. By: Fischer, Carolyn (Resources For the Future)
    Abstract: Rate-based emissions policies (like tradable performance standards) fix average emissions intensity, while cap-and-trade policies fix total emissions. This paper shows that unfettered trade between rate-based and cap-and-trade programs always raises combined emissions, except when product markets are related in particular ways. Gains from trade are fully passed on to consumers in the rate-based sector, resulting in more output and greater emissions allocations. We consider a range of policy options to offset the expansion, including unilateral ones when jurisdictional differences require. The cap-and-trade jurisdiction could impose an "exchange rate" to adjust for relative permit values, but marginal abatement cost equalization is sacrificed. Still, that jurisdiction may prefer adjusted trade over tightening their own cap, which transfers away rents. Although the rate-based sector would have to implement the switch to output-based allocation of a cap, its surplus would be higher than with adjusted trade, which is also preferred to no trade. The cap-and-trade sector would also be better off. Thus, a range of combinations of tighter allocations could improve situations in both sectors with trade, while holding emissions constant.
    Keywords: emissions trading, permit allocation, tradable performance standards, climate, greenhouse gases
    JEL: H23 H3 Q2 Q48
  43. By: Mitchell, Donald
    Abstract: Sugar exporters of the Caribbean depend on preferential sales of sugar to the European Union and United States at prices that are two to three times the world market price. Without these preferences, sugar export revenues would decline significantly. These preferences are likely to erode in the next several years as the sugar programs of both the European Union and the United States are under pressure to reform as part of already agreed international commitments, internal pressures, and the ongoing Doha Round of multilateral trade negotiations. The European Commission has already proposed reforms that would reduce internal sugar prices by 39 percent, directly affecting Caribbean sugar exporters. This presents a serious challenge to the sugar producers of the Caribbean who are mostly high-cost producers who will find it difficult to compete in the world market. St. Kitts & Nevis have recently announced plans to close their sugar industry and Trinidad & Tobago began a major restructuring program in 2003. Other sugar producers of the Caribbean will need to become more competitive by reducing costs and adding value to their sugar industries through cogeneration of energy and other activities. Those that cannot reduce costs sufficiently will need to diversify into other crops, such as fruits, vegetables, and meats, for the growing local demand, the tourist industry, or export. International assistance will be important to help countries with these adjustments and the European Union has already proposed an adjustment program.
    Keywords: Agribusiness & Markets,Crops & Crop Management Systems,Food & Beverage Industry,Agricultural Industry,Agricultural Trade
    Date: 2006–01–01
  44. By: Jakob Roland Munch (University of Copenhagen and CEBR); Jan Rose Skaksen (Copenhagen Business School, CEBR and IZA Bonn)
    Abstract: This paper studies the impact of outsourcing on individual wages. In contrast to the standard approach in the literature, we focus on domestic outsourcing as well as foreign outsourcing. By using a simple theoretical model, we argue that, if outsourcing is associated with specialization gains arising from an increase in the division of labor, domestic outsourcing tends to increase wages for both unskilled and skilled labor. We use a panel data set of workers in Danish manufacturing industries to show that domestic and foreign outsourcing affect wages as predicted by the theory.
    Keywords: outsourcing, comparative advantage, specialization, wages
    JEL: F16 J31 C23
    Date: 2005–12
  45. By: Smith, V. Kerry; Espinosa, Andres
    Abstract: This paper describes the results of using a new computable general equilibrium model for the European Union that incorporates local and transboundary externalities to evaluate the effects of trade policy reform. In contrast to all past theoretical and empirical research, this model includes the morbidity effects of three criteria air pollutants as nonseparable arguments of household preferences. The model is based on the Harrison-Rutherford Wooton model that identifies 11 regions, six aggregate commodities and three factor inputs. Three modifications were made to the model- (a) Stone Geary utility functions were used to characterize preferences for each consumer; (b) nine morbidity effects due to the three air pollutants were introduced as translating effects; and (c) pollution generation and dispersion models were introduced and calibrated to the model's base solution. General equilibrium welfare effects are evaluated with a balance of trade function. Overall, the evaluations of policy suggest that incorporating environmental effects as non-separable influences on preferences can have a marked impact on the evaluation of trade policy reforms.
  46. By: Marian Rizov; Patrick Paul Walsh
    Abstract: We estimate productivity dynamics within 4-digit manufacturing industries, using FAME data on UK Companies, from 1994 to 2003. We extend the algorithm in Olley and Pakes (1996) to allow for a selection bias driven by the Melitz (2003) effect (high productivity types selecting to exporting) to get more consistent and unbiased estimates of the parameters of the production function. We demonstrate a link between trade orientation and productivity within industries that is driven by selection, not by learning. Hence aggregate productivity is driven by market share reallocations amongst companies rather than from improvements in company level productivity.
    Keywords: Simultaneity, Selection (Exit and Trade) Biases, Productivity Dynamics, UK Manufacturing Companies, within 4-digit industries.
    JEL: F14 D24
    Date: 2005–12–15
  47. By: Walmsley, Terrie; Ahmed, Syud, Amer; Parsons, Christopher
    Abstract: Due to the lack of political consensus at the previous General Agreement on Trade on Services (GATS), negotiations on the temporary movement of natural persons (Mode 4) have stagnated. The growth in the economic literature surrounding this issue has also been lackluster; despite the large welfare gains that have been demonstrated to result from relatively small multilateral liberalizations on such transitory movements. This paper implements a CGE model of bilateral migration flows to quantify the benefits of liberalising GATS Mode 4 in the Pacific region. The results indicate that an increase in the labor forces of Australia and New Zealand from elsewhere within the Pacific region would raise welfare in both Australia and New Zealand. However the results show that while the Pacific Islands economies could gain substantially from the movement of unskilled workers, the loss of scarce skilled workers could lead to significant declines in the welfare of those remaining. Agreements regarding the movement of unskilled labor could therefore potentially constitute significant development policies which warrant further attention from policy makers.
    Date: 2005
  48. By: Ken Shadlen
    Abstract: Global governance in intellectual property (IP) has changed dramatically in the last two decades, and these changes have profound – and worrying – implications for late development. What was once principally an instrument of national policy is now increasingly subject to international disciplines, as the world moves ever-closer to harmonization in the area of IP management. But moving toward harmonization and achieving harmonization are different matters, and it is essential to keep in mind that the former and not the latter describes contemporary arrangements: the trend is toward a reduction in policy space, a feature that many scholars and activists point to with great concern (Gallagher, 2005), but the outcome remains one where countries retain space for autonomous IP management. This paper examines the relationship between IP and development, presenting a framework for assessing IP regimes both cross-nationally and over time. It is then shown how the trend toward harmonization places new and significant restrictions on developing countries’ opportunities for policy innovation in IP management. The implications of harmonization for a range of issues are then considered, including late industrialization, promotion of public health, and protection of biodiversity. The paper shows that the new regulations are most accentuated at the regional and bilateral level. Thus, for all of the concerns that academics and policy analysts have legitimately and rightly expressed over TRIPS, the biggest threat to using IP policy as tool for realizing development objectives comes not so much from the World Trade Organization (WTO) as from bilateral and regional Preferential Trade Agreements (PTAs) between developed and developing countries. I demonstrate this by examining various aspects of IP policy: over and over, we see that countries that are parties to such PTAs have significantly less autonomy in their management of IP. In the conclusion, a set of policy recommendations are put forth, at both regional and multilateral levels, for restoring countries’ ability to use IP as a tool for economic development. The policy challenges are twofold: developing countries must utilize and exploit the remaining opportunities under TRIPS to use IP management for national development purposes, and developing countries must be careful to avoid bargaining away their remaining rights under PTAs.
  49. By: Alan Matthews; Jean-Christophe Bureau
    Abstract: This paper provides a consolidated, up-to-date overview of the changes to the CAP and the factors making for further reform from the particular perspective of decision-makers in developing countries. It discusses the principles and mechanisms by which EU farmers are supported under the CAP, and the way in which these mechanisms have been changing since the first major reform of the CAP was adopted in 1992. The main pressures for further reform of the CAP are identified, emphasising the political economy of further reform to provide some sense to developing country policy-makers of how these pressures for reform might play out in the future. Taking a horizontal approach, the impact of reform on developing countries of the three main policy instruments – domestic support, border protection and export subsidies – are then discussed, followed by a focus on a few commodities of particular interest to developing countries. The conclusion develops a checklist of factors which developing country policymakers can use to help track the evolution of the debate on CAP reform and its impact on developing countries.
    Keywords: Common Agricultural Policy, Agricultural trade, WTO, developing countries.
    JEL: F13 Q17 Q18
    Date: 2005–12–15
  50. By: Alessia LO TURCO (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: This study presents the evolution and actual situation of EU-MERCOSUR association process. The focus here is on trade relations according to the different technology intensities of the exchanged goods. The analysis results are used to evaluate the strength and weaknesses of the first inter-continental integrated area and to gain some preliminary insights on MERCOSUR growth prospects within the agreement frame.;The final section, moreover, shows some future avenues for research.
    Date: 2005–01
  51. By: Fischer, Carolyn (Resources For the Future); Fox, Alan
    Abstract: Abstract The choice of mechanism for allocating tradable emissions permits has important efficiency and distributional effects when tax and trade distortions are considered. We present different rules for allocating carbon allowances within sectors (lump-sum grandfathering, output-based allocation [OBA], and auctioning) and among sectors (historical emissions and value-added shares). Using a partial equilibrium model, we explore how OBA mitigates price increases, limits incentives for conservation in favor of lowering energy intensity, and changes relative output prices among sectors. We then use a computable general equilibrium model from the Global Trade Analysis Project, modified to incorporate a labor/leisure choice, to compare overall mechanism performance. The output subsidies implicit in OBA mitigate tax interactions, which can lead to higher welfare than grandfathering. OBA with sectoral distributions based on value added generates effective subsidies similar to a broad-based tax reduction, performing nearly like auctioning with revenue recycling, which generates the highest welfare. OBA based on historical emissions supports the output of more polluting industries, which more effectively counteracts carbon leakage but is more costly in welfare terms. Industry production and trade impacts among sectors that are less energy intensive are also quite sensitive to allocation rules.
    Keywords: emissions trading, output-based allocation, tax interaction, carbon leakage
    JEL: Q2 Q43 H2 D61
  52. By: Alberto Franco Pozzolo (Universita' degli Studi del Molise and Ente Luigi Einaudi)
    Abstract: Endogenous growth has set a new paradigm for macroeconomic analysis. This paper overviews the most relevant theoretical contributions of this literature for the analysis of open economies, highlighting their implications both for the effects of crosscountry integration on output convergence and for the overall growth performance of the integrated economy, as compared to that of an identical group of autarchic countries. The literature is divided into three major classes, studying, respectively, the effects of factor mobility, the role of international trade, and the consequences of technology diffusion. The main conclusion is that knowledge spillovers can go a long way in explaining the differences in growth performances across countries, but additional research is needed to completely understand the mechanisms driving their international diffusion.
    Keywords: endogenous growth, open economies, international spillovers
    JEL: O4 F2
    Date: 2004–12
  53. By: Joshua Aizenman; Yothin Jinjarak
    Abstract: This paper evaluates the impact of globalization on the tax bases of countries at varying stages of development. We see globalization as a process that induces countries to embrace greater trade and financial integration, and macro stabilization. This in turn should shift their tax base from "easy to collect" taxes [tariff, seigniorage, etc.] towards "hard to collect" taxes [VAT, income tax, etc.]. We confirm this prediction -- the revenue/GDP ratio of the "easy to collect" taxes declined by about 20% in developing countries between the early 1980s and the late 1990s, while the revenue/GDP of the "hard to collect" taxes increased by 9%. The relatively small initial base of "hard to collect" taxes in developing countries implied a net 7% drop in total tax revenue/GDP. Applying panel regressions and controlling for structural factors, we find that trade openness and financial integration have a positive relationship with "hard to collect" taxes, and negative relationship with the "easy to collect" taxes. The effects of globalization in our panel regressions are even larger than the effects of the institutional and political variables combined. Fiscal revenue from financial repression has also decreased, further reinforcing these results. The high income and the middle income countries managed to more than compensate for the revenue decline of the "easy to collect" taxes, increasing the total tax/GDP. In contrast, the upper and low income developing countries experienced sizeable drop in the tax/GDP. We also identify fiscal convergence: the coefficient of variation of tax revenue/GDP measures across countries declined substantially during 1980s - 1990s. The cross country variation declined by about 50% for seigniorage, about 30% for tariff, and about 15% for the "hard to collect" taxes. These results are consistent with the notion that improving the performance of the "hard to collect" taxes is more challenging than reducing the use of "easy to collect" sources of revenue.
    JEL: F15 H21
    Date: 2006–01
  54. By: Takashi Terada (National University of Singapore)
    Abstract: This paper aims to examine the implications of the rise of East Asian regionalism for the Australia-Japan partnership. In particular, it investigates whether both nations can sustain their partnership, which evolved around Asia Pacific regionalism over the last few decades, by exploring the upsurge of Japan’s interest in East Asian regionalism and examining characteristics of Australia’s foreign policy under the Howard government, which lacked a regionalist approach in its first three terms but has shown a keener interest in furthering relations with East Asian countries and promoting East Asian regionalism since late 2004.
    Keywords: East Asia, Australia-Japan partnership, regionalist approach, trade liberalisation
    JEL: E6 O19 F13 F14
    Date: 2005–11
  55. By: Ferrett, Ben; Wooton, Ian
    Abstract: Oligopoly is empirically prevalent in the industries where MNEs operate and national governments compete with fiscal inducements for their FDI projects. Despite this, existing formal treatments of fiscal competition generally focus on the polar cases of perfect competition and monopoly. We consider the competition between two potential host governments to attract the investment of both firms in a duopolistic industry. Competition by identical countries for a monopoly firm's investment is known to result in a 'race to the bottom' where all rents are captured by the firm through subsidies. We demonstrate that with two firms, both are taxed in equilibrium, despite the explicit non-cooperation between governments. When countries differ in size, a single firm will be attracted to the larger market. We explore the conditions under which both firms in the duopoly co-locate and when each nation attracts a firm in equilibrium. Our results are consistent with the observed stability of effective corporate tax rates in the face of ongoing globalization, and our analysis readily generalizes to many specifications with oligopoly in the product markets.
    Keywords: foreign direct investment; market size asymmetries; oligopoly; tax competition
    JEL: F12 F23 H25 H73
    Date: 2005–12

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