nep-int New Economics Papers
on International Trade
Issue of 2006‒11‒18
29 papers chosen by
Martin Berka
Massey University

  1. A Solution to Two Paradoxes of International Capital Flows By Jiandong Ju; Shang-Jin Wei
  2. Do Endowments Matter for Vertical Intra-Industry Trade with Emergent Countries? Empirical Evidence for Spain By J. Milgram-Baleix; Ana I. Moro-Egido
  3. The Role of Distance in Determining International Transport Costs: Evidence from Philippine Import Data By Kuwamori, Hiroshi
  4. Euros and Zeros: The Common Currency Effect on Trade in New Goods By Richard E. Baldwin; Virginia Di Nino
  5. Growth before and after trade liberalization By Salinas, Gonzalo; Aksoy, Ataman
  6. Do External Interventions Work? The Case of Trade Reform Conditions in IMF Supported Programs By Shang-Jin Wei; Zhiwei Zhang
  7. Beyond trade : the impact of preferential trade agreements on foreign direct investment inflows By Medvedev, Denis
  8. Trade Policy Lobbying in the European Union: Who Captures Whom? By Woll, Cornelia
  9. Relativity in Trade Theory: Towards a Solution to the Mystery of Missing Trade By Eric O'N. Fisher; Sharon L. May
  10. Trade and Business Cycle Correlations in Asia-Pacific By Kumakura, Masanaga
  11. Distributional effects of WTO agricultural reforms in rich and poor countries By Hertel, Thomas W.; Keeney, Roman; Ivanic, Maros; Winters, L. Alan
  12. Protection for Sale Under Monopolistic Competition: An Empirical Investigation By Pao-Li Chang; Myoung-jae Lee
  13. Trade, Conflicts, and Political Integration: the Regional Interplays By Vincent Vicard
  14. North-South Trade and Industry-Specific Pollutants By Michida, Etsuyo; Nishikimi, Koji
  15. Trade Spillovers of Fiscal Policy in the European Union: A Panel Analysis By Roel Beetsma; Massimo Giuliodori; Franc Klaassen
  16. Measuring the Welfare Effects of Trade Policy Alternatives: The EU`s Eastern Enlargement By Shirley Cassing
  17. Optimum tariffs and patent length in a model of North–South technology transfer By Sharmila Vishwasrao; Srabana Gupta; Hassan Benchekroun
  18. Winner-Take-All Contention of Innovation under Globalization: A Simulation Analysis and East Asia's Empirics By Ishido, Hikari; Okamoto, Yusuke
  19. Accounting for Pairwise Heterogeneity in Bilateral Trade Flows: A Stochastic Varying Coefficient Gravity Model By Vangelis Tzouvelekas
  20. Trade Credits under Imperfect Enforcement: A Theory with a Test on Chinese Experience By Yanagawa, Noriyuki; Ito, Seiro; Watanabe, Mariko
  21. Some Further Evidence on Exchange-Rate Volatility and Exports By George Hondroyiannis; P.A.V.B. Swamy; George S. Tavlas; Michael Ulan
  22. Inequality and the US Import Demand Function By Margarita Katsimi; Thomas Moutos
  23. EU Accession Effects on Export Performance: The Case of Greece By Minoas Koukouritakis
  24. Comparative Advantage, the Rank-size Rule, and Zipf's Law By Jeroen Hinloopen; Charles van Marrewijk
  25. Interindustrial Structure in the Asia-Pacific Region: Growth and Integration, by Using 2000 AIO Table By Bo, Meng; Sato, Hajime; Nakamura, Jun; Okamoto, Nobuhiro; Kuwamori, Hiroshi; Inomata, Satoshi; å­Ÿ, 渤; ä½è—¤, 創; 中æ‘, ç´”; 岡本, 信広; 桑森, å•“; 猪俣, 哲å²
  26. Expansion of Asparagus Production and Exports in Peru By Shimizu, Tatsuya
  27. Balance-of-Payment-Constrained Growth: The Case of China, 1979-2002 By Yongbok Jeon
  28. The Impact of United States Sanctions on the Myanmar Garment Industry By Kudo, Toshihiro
  29. Myanmar's Economic Relations with China: Can China Support the Myanmar Economy? By Kudo, Toshihiro

  1. By: Jiandong Ju; Shang-Jin Wei
    Abstract: International capital flows from rich to poor countries can be regarded as either too small (the Lucas paradox in a one-sector model) or too large (when compared with the logic of factor price equalization in a two-sector model). To resolve the paradoxes, we introduce a non-neo-classical model which features financial contracts and firm heterogeneity. In our model, free trade in goods does not imply equal returns to capital across countries. In addition, rich patterns of gross capital flows emerge as a function of financial and property rights institutions. A poor country with an inefficient financial system may simultaneously experience an outflow of financial capital but an inflow of FDI, resulting in a small net flow. In comparison, a country with a low capital-to-labor ratio but a high risk of expropriation may experience outflow of financial capital without compensating inflow of FDI.
    JEL: F0 F2 F3 F36
    Date: 2006–11
  2. By: J. Milgram-Baleix (Universidad de Granada); Ana I. Moro-Egido (Universidad de Granada)
    Abstract: In this paper, we study the nature of Spanish intra-industry trade and find that intra-industry trade with CEEC, Asian and Mediterranean countries has increased considerably since the middle of the Nineties. The second aim of the paper is to study if the comparative advantage argument also explains the vertical intra-industry trade between countries with different income levels. To this end we build physical, technological and human capital stocks for a large sample of countries. Results obtained with the panel techniques support the idea of a neo Ricardian explanation of vertical intra-industry trade rather than the neo-Hecksher-Ohlin explanation for intra-industry trade with emergent countries. Furthermore, our results suggest that the variables considered, mostly country-specific better explain vertical intra-industry trade than horizontal intra-industry trade. Results obtained with the Heckman method support the idea that intra-industry trade is more likely to occur with emergent countries with higher income per capita and with OECD countries that have a more similar level of income to that of Spain. Differences in endowments play an important role to determine the volume of intra-industry trade rather than the probability of intra-industry trade to occur. An additional contribution of this paper is to demonstrate that panel approach allows for more robust conclusions than OLS estimations when explaining intra-industry trade. The Heckman procedure to account for the zero flows also represents a major improvement respect to the standard approach
    Keywords: Intra-industry trade; Comparative Advantage, Spain, Vertical Differentiation, Panel data, Truncated models.
    JEL: F11 F12 F14 C23 C24
    Date: 2006
  3. By: Kuwamori, Hiroshi
    Keywords: Transport costs, Distance, International trade, Imports, Philippines, ゚
    JEL: F14 L91
    Date: 2006–04
  4. By: Richard E. Baldwin; Virginia Di Nino
    Abstract: This paper tests whether trade in new goods is partially responsible for the pro-trade effects of the euro and provides a measure of the size of the effect. It works with a very large data set (about 16 million observations) covering twenty countries at the most disaggregated level of trade data that is publicly available. Using predictions from a heterogeneous-firms trade model in a multi-country environment to structure our empirical model, we find that the euro had a positive impact on trade overall. Our findings provide supportive but not conclusive evidence for the new-goods hypothesis. We also determined the pro-trade effect of euro-usage on non-Euroland nations trading with euro-users. We confirmed the absence of trade diversion for non-Eurozone EU members with sizeable overall increase comparable to that of members.
    JEL: F12 F31 F4 F41
    Date: 2006–11
  5. By: Salinas, Gonzalo; Aksoy, Ataman
    Abstract: The empirical study of the impact of trade liberalization has not convinced the skeptics about the economic gains after trade reforms. Some have even argued that trade reforms have led to economic collapse and to deindustrialization. Using a sample that excludes countries that were subject to major exogenous disruptions, the authors note that post-reform economic growth was 1.2 percentage points higher than before the reforms. This is remarkable considering that pre-reform periods were characterized by highly expansionary state policies and large external borrowing, and the crisis years that preceded trade liberalization in the comparisons are eliminated. Through multivariate fixed effects estimations the authors calculate that annual per capita GDP growth rates increased by up to 2.6 percentage points after the trade reforms, compared to a counterfactual that takes into consideration the evolution of several growth determinants. Moreover, trade liberalization has been followed by an acceleration of growth in investment, exports of goods and services, and manufacturing exports, and as opposed to common belief, outward orientation did not lead to significant deindustrialization and actually seems to have increased export diversification. Growth acceleration occurred irrespective of income per capita level and was quite significant in Sub-Saharan Africa. As expected, small countries benefited most from the reforms.
    Keywords: Economic Theory & Research,Free Trade,Pro-Poor Growth and Inequality,Trade Law,Trade Policy
    Date: 2006–11–01
  6. By: Shang-Jin Wei; Zhiwei Zhang
    Abstract: Trade reform conditions are common in IMF supported programs. Of the 99 countries that had IMF programs during 1993-2003, 77 had conditions on trade reforms in their programs. Since the WTO has not been found especially effective in promoting trade openness for most developing countries, it is of great interest to see if the IMF has been more effective as it combines carrots and sticks not available to the WTO. Yet, the effectiveness of trade conditions in IMF programs has not been systematically studied. Using a unique dataset, this paper provides such an assessment. It finds that trade conditions are associated with an increase in trade openness on average, but the effect comes mostly from countries that, by some measure, have a high degree of "willingness to reform."
    JEL: F10 F13 F33
    Date: 2006–11
  7. By: Medvedev, Denis
    Abstract: The author investigates the effects of preferential trade agreements (PTAs) on the net foreign direct investment (FDI) inflows of member countries using a comprehensive database of PTAs in a panel setting. He finds that PTA membership is associated with a positive change in net FDI inflows, and the FDI gains are increasing in the market size of the PTA partners and their proximity to the host country. The author identifies several different channels through which preferential trade liberalization may affect FDI, and confirms that both threshold effects (signing the agreement) and market size effects (joining a larger and faster-growing common market) are important determinants of net FDI inflows, although the latter seem to dominate. The estimated relationship is largely driven by North-South PTAs, and is most pronounced in the late 1990s and early 2000s, the period when the majority of " deep integration " PTAs had been advanced.
    Keywords: Free Trade,Trade and Regional Integration,Trade Law,Foreign Direct Investment,Economic Theory & Research
    Date: 2006–11–01
  8. By: Woll, Cornelia
    Keywords: lobbying; interest representation; European Commission; political economy; trade policy; international trade; protectionism; liberalization; agriculture policy; telecommunication policy
    Date: 2006–10–11
  9. By: Eric O'N. Fisher; Sharon L. May
    Abstract: Using OECD input output matrices consistently, we offer a tentative solution to the mystery of missing trade. First, we confirm the usual rejection of factor price equalization and identical technologies. Second, we develop a new technique to compute the factor content of trade when countries’ technologies are different. Measuring factor content conventionally, we find a putative paucity of trade in these data. When factor content is measured correctly, theory predicts the direction and volume of trade more accurately. Thus measuring the factor content of trade according to the country of origin may vindicate the Heckscher-Ohlin-Vanek paradigm.
    JEL: C67 D50 F10
    Date: 2006
  10. By: Kumakura, Masanaga
    Abstract: Recent empirical studies challenge the traditional theory of optimum currency areas by arguing that a monetary union enhances trade and business cycle co-movements among its member countries sufficiently as to obviate the need for national monetary policy. This paper examines the empirical relationship between trade and business cycle correlations among thirteen Asia-Pacific countries, paying particular attention to the structural characteristics of their economies and other issues not explored fully in the literature. According to our result, although trade is relevant to the business cycles of individual countries, the main determinant of their international correlations is not the geographical structure of their trade but what they produce and export --more specifically the extent to which their output and exports are concentrated on electronic products.
    Keywords: Business cycles, Optimum currency area, Trade, Electronics, Trade problem, Monetary policy, Asia, Oceania
    JEL: F15 F33 F40
    Date: 2006–10
  11. By: Hertel, Thomas W.; Keeney, Roman; Ivanic, Maros; Winters, L. Alan
    Abstract: Rich countries ' agricultural trade policies are the battleground on which the future of the WTO ' s troubled Doha Round will be determined. Subject to widespread criticism, they nonetheless appear to be almost immune to serious reform, and one of their most common defenses is that they protect poor farmers. The authors ' findings reject this claim. The analysis uses detailed data on farm incomes to show that major commodity programs are highly regressive in the United States, and that the only serious losses under trade reform are among large, wealthy farmers in a few heavily protected subsectors. In contrast, analysis using household data from 15 developing countries indicates that reforming rich countries ' agricultural trade policies would lift large numbers of developing country farm households out of poverty. In the majority of cases these gains are not outweighed by the poverty-increasing effects of higher food prices among other households. Agricultural reforms that appear feasible, even under an ambitious Doha Round, achieve only a fraction of the benefits for developing countries that full liberalization promises, but protect U.S. large farms from most of the rigors of adjustment. Finally, the analysis indicates that maximal trade-led poverty reductions occur when developing countries participate more fully in agricultural trade liberalization.
    Keywords: Rural Poverty Reduction,Economic Theory & Research,Population Policies,Pro-Poor Growth and Inequality
    Date: 2006–11–01
  12. By: Pao-Li Chang (School of Economics and Social Sciences, Singapore Management University); Myoung-jae Lee (Korea University, Seoul, Korea)
    Abstract: This paper proposes a general empirical framework to estimate the protection-for-sale model, where the protection regime shifts according to a sector's market structure (perfectly or monop-olistically competitive). We base the protection structure on Grossman and Helpman (1994) for the subset of perfectly competitive sectors and on Chang (2005) for the subset of monop- olistically competitive sectors. The two protection regimes are simultaneously estimated with joint constraints. The results of the J-test consistently reject the homogeneous (perfect compe- tition) protection-for-sale model often adopted in previous literature and suggest a direction of improvement toward the proposed heterogeneous protection structure model.
    Keywords: endogenous trade policy; campaign contribution; monopolistic competition; intrain- dustry trade; import penetration
    JEL: F12 F13
    Date: 2006–08
  13. By: Vincent Vicard
    Abstract: This paper investigates the determinants of the different forms taken by regional integration in different parts of the world. This raises the issue of the relationship between economic and political integration. The theoretical model shows that, in an insecure world, the interplays between security and economic forces shape the decision to form a regional trading agreement (RTA) and its institutional design. Empirical results confirm that regionalism should be understood as a regulation mechanism: countries experiencing more interstate disputes are more likely to create a deep RTA, such as custom union or common market, whereas international insecurity deters the formation of preferential and free trade agreements.
    Keywords: conflict, trade, regionalism, political integration
    JEL: D74 F02 F15 H56
    Date: 2006
  14. By: Michida, Etsuyo; Nishikimi, Koji
    Abstract: In this paper, we examine the Pollution Haven Hypothesis (PHH) for the case inwhich every industry emits an industry-specific pollutant. When pollution intensities for individual pollutants are measured in terms of elasticity, there appears a clear trade pattern of the PHH. Developing countries export pollution-intensive goods while developed countries export less pollution-intensive goods. However, pollutants that are harmful to consumers may increase in either country as a result of trade liberalization. This suggests that in empirical studies, simple inclusion of harmfulness of pollutants in construction of a pollution intensity measure may mislead the result. We also find that consumers in different countries may exhibit different rankings of detestable pollutants, even though they have identical utility functions. Thus when international policy recommendations are made regarding how to set priorities among pollutants to be regulated, the experience of one country may not simply be applied to other countries.
    Keywords: Environment, Pollution Haven Hypothesis, Industry-specific pollutant, North-South trade, Incomplete specialization, Pollution, Environmental problems, Industry, International trade, North-South problem, G World,others
    JEL: F18 O13 Q56
    Date: 2006–10
  15. By: Roel Beetsma; Massimo Giuliodori; Franc Klaassen
    Abstract: We explore the international spillovers from fiscal policy shocks via trade in Europe. A fiscal expansion stimulates domestic activity, which leads to more foreign exports and, hence, higher foreign output. To quantify this, we combine a panel VAR model in government spending, net taxes and GDP with a panel trade model. On average, a public spending increase equal to 1% of GDP implies 2.3% more foreign exports over the first two years. The corresponding figure for an equal-size net tax reduction is 0.6%. Both estimates are statistically significant. As far as the effect on foreign activity is concerned, a 1% of GDP spending increase (net tax reduction) in Germany on average raises GDP of trading partners by 0.23% (0.06%) over the first two years. These figures are likely to form lower bounds for the actual effects and suggest that it may be worthwhile to further investigate the benefits from coordinated fiscal expansions (contractions) in response to European-wide cyclical downturns (upswings).
    Keywords: trade policy
    Date: 2005–10–26
  16. By: Shirley Cassing
    Abstract: . . .
    Date: 2006–10
  17. By: Sharmila Vishwasrao (Department of Economics, College of Business, Florida Atlantic University); Srabana Gupta (The Penn State University, Erie); Hassan Benchekroun (Department of Economics, McGill University, Montreal, Canada)
    Abstract: We study a developing country's choice of optimum tariffs and patent length in a theoretical model of trade and technology transfer. A Northern firm chooses whether to export or produce a new good in a Southern country. In the absence of patent protection, a high tariff is required to induce FDI. This reduces Southern welfare when the good is imported. The Southern government can combine a positive patent length with tariffs to reduce this loss and induce FDI. Thus Southern countries may have an incentive to protect patents, although never to the same extent as Northern countries.
    Keywords: Trade policy, Intellectual property rights, Foreign direct investment
    JEL: O34 F13 F23
    Date: 2004–10
  18. By: Ishido, Hikari; Okamoto, Yusuke
    Abstract: This paper sets out to examine how innovation enhances export competitiveness: The proposition that export volume becomes enhanced as more productivity-enhancing innovation is captured by the exporting economy is the focus of this study. From a Schumpeterian perspective, innovation can be characterized by continuous creation and subsequent diffusion of newer technologies on the basis of the exporters' existing capital stock. Then we highlight the theoretical possibility that concentration of innovative activities in a small group of “winner†economies would lead to larger shares of “winner†economies' exports of innovation-active commodities than those commodities for which technology involved is already mature. The world's export data corroborates this theoretical prediction overall, and a focus upon East Asia has revealed the region's increasing resort to technology-intensive commodity sectors, which has presumably been enabled through attracting technology-bearing inward foreign direct investment. Considering the overall gains from innovation, acceleration of full “cycle†of innovation and imitation might be a desirable option.
    Keywords: Concentration and diffusion of innovation, Industrialization, Technological innovations, Globalization, International trade, International competition, Exports, East Asia, Southeast Asia
    JEL: F12 L25 O31 O33
    Date: 2006–03
  19. By: Vangelis Tzouvelekas (Department of Economics, University of Crete, Greece)
    Abstract: This paper suggests an alternative way for estimating the gravity equation that takes into consideration country-pair heterogeneity in bilateral trade flows. Specifically, a stochastic varying coefficient gravity model based on Hildreth and Houck’s (1968) random coefficient regression is proposed, that eliminates heterogeneity bias inherent in standard econometric methods. The results indicate that the standard gravity estimates can differ substantially from what is obtained when heterogeneity is accounted for.
    Keywords: bilateral trade, gravity equation, stochastic varying coefficient gravity model.
    Date: 2005
  20. By: Yanagawa, Noriyuki; Ito, Seiro; Watanabe, Mariko
    Abstract: It is widely recognized that trade credit is an important financial mechanism, particularly in developing economies and transition economies where institutions are weak. This paper documents theoretical analysis and empirical accounts on what facilitates an effective supply of trade credit based on original surveys conducted in P.R. of China. Our theory predicts that trade volume and trade credit are increasing function of cash held by the buyer and enforcement technology of the seller. Furthermore, if the state sector’s enforcement technology is high, it has positive external effect to expand the volumes of trade credit and trades in the whole economy. From the data, we found that government made active commitment in enforcement of trade credit contract and the government owned firms are main supplier and receivers of trade credit, which suggest that enforcement by government and state sector were effective against presumptions in the previous literatures.
    Keywords: Law and finance, Economic growth, Incomplete contract, Enforcement, Trade policy, Credit, China
    JEL: G2 K0 O5 P31 Q5
    Date: 2006–06
  21. By: George Hondroyiannis (Bank of Greece, Economic Research Department and Harokopio University); P.A.V.B. Swamy (US Bureau of Labour Statistics); George S. Tavlas (Bank of Greece, Economic Research Department); Michael Ulan (Department of State)
    Abstract: The relationship between exchange-rate volatility and aggregate export volumes for 12 industrial economies is examined using a model that includes real export earnings of oil-producing economies as a determinant of industrial-country export volumes. A supposition underlying the model is that, given their levels of economic development, oil-exporters’ income elasticities of demand for industrial-country exports might differ from those of industrial countries. Five estimation techniques, including a generalized method of moments (GMM) and random coefficient (RC) estimation, are employed on panel data covering the estimation period 1977:1-2003:4 using three measures of volatility. In contrast to recent studies employing panel data, we do not find a single instance in which volatility has a negative and significant impact on trade.
    Keywords: Exchange-rate volatility; Trade; Random-coefficient estimation; Generalized method of moments; Panel
    JEL: C23 F3 F31
    Date: 2005–10
  22. By: Margarita Katsimi; Thomas Moutos
    Abstract: In this paper we build a model of trade in vertically differentiated products and find that income inequality can affect the demand for imports even in the presence of homothetic preferences. The empirical importance of changes in inequality on the demand for imports is then assessed by examining US data for the 1948-1996 period. Using the Johansen (1988) procedure we find that there is no evidence of a long run relationship of a standard imports equation (one including imports, income, and relative prices). However, once we include a measure of inequality in our VAR specification we find not only evidence for the existence of a cointegrating equation in imports, income, relative prices and inequality, but that the evolution of inequality has a large and positive influence on the demand for imports in the US. Moreover we find that our results are robust to alternative methods of estimating cointegration equations.
    Keywords: inequality, US import demand, vertically differentiated products, cointegration
    JEL: F13 H23 O24
    Date: 2006
  23. By: Minoas Koukouritakis (Department of Economics, University of Crete, Greece)
    Abstract: This paper estimates the effects on the Greek export performance that caused by the EU accession. A simultaneous equations model of export demand and export supply has been used in order to avoid the simultaneity problem. Comparative static analysis and the residuals approach have been implemented. The results indicate that the EU accession and the consequent abolition of the export subsidies had a negative effect on the country’s export performance, instead of improving it. The main reason for this effect is that the export subsidies, during the time period that were valid, were just improved the exporters’ revenues and not used for creating new comparative advantages for the Greek products.
    Keywords: EU Accession, Export subsidies, Simultaneous equations, Comparative static
    JEL: C30 F13 F15
    Date: 2005
  24. By: Jeroen Hinloopen (Universiteit van Amsterdam); Charles van Marrewijk (Erasmus Universiteit Rotterdam)
    Abstract: Using a comprehensive international trade data set we investigate empirical regularities (known as Zipf’s Law or the rank-size rule) for the distribution of the interaction between countries as measured by revealed comparative advantage. Using the recently developed estimator by Gabaix and Ibragimov (2006) we find strong evidence in favor of the rank-size rule along the time, country, and sector dimension for three different levels of data aggregation. The estimated power exponents that characterize the distribution of revealed comparative advantage are stable over time but differ between countries and sectors. These differences are related empirically to country and sector characteristics, including population size, GDP, and factor intensities.
    Keywords: Revealed comparative advantage; Balassa index; rank-size rule; Zipf’s Law; power law; Pareto distribution
    JEL: C13 C33 F1 L1 O5 R12
    Date: 2006–11–06
  25. By: Bo, Meng; Sato, Hajime; Nakamura, Jun; Okamoto, Nobuhiro; Kuwamori, Hiroshi; Inomata, Satoshi; å­Ÿ, 渤; ä½è—¤, 創; 中æ‘, ç´”; 岡本, 信広; 桑森, å•“; 猪俣, 哲å²
    Abstract: Over the past 20 years Asian countries have achieved a certain degree of economic growth and at the same time deepened spatial interdependence. In January 2006, IDE completed the 2000 Asian International Input-Output Table, which covers eight major East Asian countries/regions as well as Japan and the United States. Given the dynamic changes in the economies of East Asia, this paper attempts to summarize the characteristics and their patterns of change in industrial structures and trade structures of the countries/regions in the Asia-Pacific region from the three viewpoints of time, space, and industry, by using the AIO table for 1985, 1990, 1995, and 2000.
    Keywords: Industrial structure, Input-output tables, East Asian economy, Regional integration, International economic integration, Asia, Indonesia, Malaysia, Philippines, Singapore, Thailand, China, Taiwan, South Korea, Japan, United States
    JEL: C67 D57 F40
    Date: 2006–03
  26. By: Shimizu, Tatsuya
    Keywords: Agriculture, Exports, Asparagus, Peru, Vegetables
    JEL: F13 L70 N56 Q13
    Date: 2006–08
  27. By: Yongbok Jeon
    Abstract: The aim of this study is to empirically test the validity of Thirlwall’s Law in China during the reform period of 1979-2002. For the income elasticity of import demand, an aggregate import demand function for the Chinese economy is estimated using ARDL-UECM model and the bounds test. This study finds (1) that for 1979-2002, the Chinese economy has grown on average as fast as Thirlwall’s Law predicts, the average actual growth rate and predicted growth rate were, respectively, 9.25 and 8.55, which are statistically identical; (2) that the growth of GDP and of exports are cointegrated. Both (1) and (2) provide strong support for Thirlwall’s Law in China during the reform period after 1978. The supportive result of Thirlwall’s Law implies the relevance of demand-side approach to economic growth in China.
    Keywords: Chinese economy, balance-of-payment constrained growth, aggregate import function, trade multiplier, bounds test for cointegration
    JEL: F14 F43 O53
    Date: 2006–06
  28. By: Kudo, Toshihiro
    Abstract: The United States imposed trade sanctions against the military regime in Myanmar in July 2003. The import ban damaged the garment industry in particular. This industry exported nearly half of its products to the United States, and more than eighty percent of United States imports from Myanmar had been clothes. The garment industry was probably the main target of the sanctions. Nevertheless, the impact on the garment industry and its workers has not been accurately evaluated or closely examined. The purpose of this paper is to evaluate the impact of the sanctions and to further understand the present situation. This is done using several sources of information, including the author's field and questionnaire surveys. This paper also describes the process of selection and polarization underway in the garment industry, an industry that now has more severe competition fueled by the sanctions. Through such a process, the impact was inflicted disproportionately on small and medium-sized domestic firms and their workers.
    Keywords: Myanmar (Burma), United States, Sanction, Garment industry, Apparel industry, Economic sanctions
    JEL: F19 L60 O14
    Date: 2006–10
  29. By: Kudo, Toshihiro
    Abstract: Against the background of closer diplomatic, political and security ties between Myanmar and China since 1988, their economic relations have also grown stronger throughout the 1990s and up to 2005. China is now a major supplier of consumer and capital goods to Myanmar, in particular through border trade. China also provides a large amount of economic cooperation in the areas of infrastructure, energy and state-owned economic enterprises. Nevertheless, Myanmar’s trade with China has failed to have a substantial impact on its broad-based economic and industrial development. China’s economic cooperation apparently supports the present regime, but its effects on the whole economy will be limited with an unfavorable macroeconomic environment and distorted incentives structure. As a conclusion, strengthened economic ties with China will be instrumental in regime survival, but will not be a powerful force affecting the process of economic development in Myanmar.
    Keywords: Myanmar (Burma), China, trade, border trade, economic cooperation, energy, oil and gas, International economic relations, International trade, International cooperation
    JEL: F14 P28 Q41
    Date: 2006–07

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