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41. The G-20 and International Financial Institution Governance

Author:
Edwin M. Truman
Publication Date:
09-2010
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper addresses the agenda for the Group of Twenty (G-20) leaders' meeting in Seoul, Korea in November 2010. This is an opportunity and challenge for Asian leaders in particular. Their test will be, first, to demonstrate that they can responsibly advance economic recovery. They must also deliver on institutional reform, in particular of the International Monetary Fund (IMF). I advocate a substantial expansion of the IMF's role as lender of last resort that is integrated with the surveillance role of the IMF in the form of comprehensive prequalification for IMF assistance and policy advice and a substantial increase in the IMF's financial resources. I also propose an approach to meaningful reform of the distribution of IMF quotas along with limiting European seats on the IMF executive board.
Topic:
Economics, Emerging Markets, Global Recession, Financial Crisis, and Governance
Political Geography:
China, Israel, Asia, and Korea

42. Trade Disputes Between China and the United States: Growing Pains so Far, Worse Ahead?

Author:
Gary Clyde Hufbauer and Jared C. Woollacott
Publication Date:
12-2010
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This study covers the history of Sino-US trade relations with a particular focus on the past decade, during which time each has been a member of the World Trade Organization (WTO). Providing a brief history of 19th and 20th century economic relations, this paper examines in detail the trade disputes that have arisen between China and the United States over the past decade, giving dollar estimates for the trade flows at issue. Each country has partaken in their share of protectionist measures, however, US measures have been characteristically defensive, protecting declining industries, while Chinese measures have been characteristically offensive, promoting nascent industries. We also cover administrative and legislation actions within each country that have yet to be the subject of formal complaint at the WTO. This includes an original and comprehensive quantitative summary of US Section 337 intellectual property rights cases. While we view the frictions in Sino-US trade a logical consequence of the rapid increase in flows between the two countries, we caution that each country work within the WTO framework and respect any adverse decisions it delivers so that a protracted protectionist conflict does not emerge. We see the current currency battle as one potential catalyst for such conflict if US and Chinese policymakers fail to manage it judiciously.
Topic:
Economics, International Trade and Finance, Markets, and Bilateral Relations
Political Geography:
United States and China

43. Pacific Asia and the Asia Pacific: The Choices for APEC

Author:
C. Fred Bergsten
Publication Date:
07-2009
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The Asia Pacific Economic Cooperation (APEC) forum comprises 21 developed and developing economies that surround the Pacific Rim. The organization was created in 1989 and holds annual Leaders' Meetings that bring together its heads of government. In this policy brief, I assess the record of the APEC over the 20 years of its existence and discuss the world environment in which APEC is likely to be operating in the next 20 years, with a particular focus on the major change in global institutional arrangements implied by the replacement of the Group of Seven/Eight (G-7/8) by the Group of Twenty (G-20) as the chief steering committee for the world economy and, within that group and other international economic organizations, the increasingly central role of an informal and de facto Group of Two (G-2) between China and the United States.
Topic:
International Relations, International Trade and Finance, Regional Cooperation, and Treaties and Agreements
Political Geography:
United States, China, Asia, and Australia/Pacific

44. China's Changing Outbound Foreign Direct Investment Profile: Drivers and Policy Implications

Author:
Daniel H. Rosen and Thilo Hanemann
Publication Date:
06-2009
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
In 1967 Jean-Jacques Servan-Schreiber published Le defi americain, a call to beware of American multinationals buying up the world. In the 1980s and 1990s it was Japan's turn, spawning books like Clyde Prestowitz's 1993 Trading Places: How We Are Giving Our Future to Japan. Today it is China's outbound foreign direct investment (OFDI) that elicits the most anxiety China's OFDI has reached commercially and geoeconomically significant levels and begun to challenge international investment norms and affect international relations.
Topic:
International Relations, Economics, International Trade and Finance, and Foreign Direct Investment
Political Geography:
China, America, and Asia

45. Understanding Special Drawing Rights

Author:
John Williamson
Publication Date:
06-2009
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
A once-familiar but long-neglected acronym has reappeared in newspapers in recent weeks. We have read that the G-20 meeting in London endorsed a proposal that the International Monetary Fund (IMF) should create $250 billion in Special Drawing Rights (SDRs). We have been told that one problem with this proposal is that most of the SDR allocation would accrue to countries that are unlikely to use them, and some readers may have seen proposed ways around this difficulty. We have read that the governor of the People's Bank of China, Zhou Xiaochuan, has proposed that the SDR should gradually displace the dollar at the center of the international monetary system and that surplus countries should be able to convert their dollar holdings into SDR-denominated assets. No one can doubt that the SDR is back.
Topic:
Economics, International Cooperation, International Political Economy, International Trade and Finance, and Monetary Policy
Political Geography:
United States and China

46. Criss-Crossing Globalization: Uphill Flows of Skill-Intensive Goods and Foreign Direct Investment

Author:
Arvind Subramanian and Aaditya Mattoo
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Th is paper documents an unusual and possibly significant phenomenon: the export of skills embodied in goods, services, or capital from poorer to richer countries. We fi rst present a set of stylized facts. Using a measure that combines the sophistication of a country's exports with the average income level of destination countries, we show that the performance of a number of developing countries, notably China, Mexico, and South Africa, matches that of much more advanced countries, such as Japan, Spain, and the United States. Creating a new combined dataset on foreign direct investment (FDI) (covering greenfi eld investments as well as mergers and acquisitions) we show that fl ows of FDI to Organization for Economic Cooperation and Development (OECD) countries from developing countries like Brazil, India, Malaysia, and South Africa as a share of their GDP are as large as fl ows from countries like Japan, Korea, and the United States. Th en, taking the work of Hausmann et al. (2007) as a point of departure, we suggest that it is not just the composition of exports but their destination that matters. In both cross-sectional and panel regressions, with a range of controls, we fi nd that a measure of uphill fl ows of sophisticated goods is signifi cantly associated with better growth performance. Th ese results suggest the need for a deeper analysis of whether development benefi ts might derive not from deifying comparative advantage but from defying it.
Topic:
Economics, Globalization, and Foreign Direct Investment
Political Geography:
China, South Africa, and Mexico

47. Sanctioning North Korea: The Political Economy of Denuclearization and Proliferation

Author:
Stephan Haggard and Marcus Noland
Publication Date:
07-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
As a small country dependent on foreign trade and investment, North Korea should be highly vulnerable to external economic pressure. In June 2009, following North Korea's second nuclear test, the UN Security Council passed Resolution 1874, broadening existing economic sanctions and tightening their enforcement. However, an unintended consequence of the nuclear crisis has been to push North Korea into closer economic relations with China and other trading partners that show little interest in cooperating with international efforts to pressure North Korea, let alone in supporting sanctions. North Korea appears to have rearranged its external economic relations to reduce any impact that traditional sanctions could have.
Topic:
Economics, International Trade and Finance, and Sanctions
Political Geography:
China, North Korea, and United Nations

48. Reconciling Climate Change and Trade Policy

Author:
Arvind Subramanian, Aaditya Mattoo, Dominique van der Mensbrugghe, and Jianwu He
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
There is growing clamor in industrial countries for additional border taxes on imports from countries with lower carbon prices. While this paper confirms the findings of other research that unilateral emissions cuts by industrial countries will have minimal carbon leakage effects, output and exports of energy-intensive manufactures are projected to decline, potentially creating pressure for trade action. A key factor affecting the impact of any border taxes is whether they are based on the carbon content of imports or the carbon content of domestic production. The paper's quantitative estimates suggest that the former action when applied to all merchandise imports would address competitiveness and environmental concerns in high income countries but with serious consequences for trading partners. Border tax adjustment based on the carbon content in domestic production would broadly address the competitiveness concerns of producers in high income countries and less seriously damage developing country trade.
Topic:
Climate Change, Economics, Energy Policy, Environment, and International Trade and Finance
Political Geography:
China

49. Financial Repression in China

Author:
Nicholas R. Lardy
Publication Date:
09-2008
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
China\'s banking sector has been largely transformed over the past decade. Several of the largest banks have been restructured, recapitalized, and listed. Governance has improved, notably through the appointment of independent members to boards of directors. A vigorous new regulatory and supervisory agency, the China Banking Regulatory Commission (CBRC), has introduced new accounting standards, a revised risk weighting system for measuring capital, more rigorous loan loss criteria, heightened provisioning requirements, and other significant changes. Foreign banks have entered the market, both through their own branches and subsidiaries and through strategic investments in domestic banks, bringing better banking practices and much needed additional competition.
Topic:
Economics and Government
Political Geography:
China and Asia

50. A Security and Peace Mechanism for Northeast Asia: The Economic Dimension

Author:
Stephan Haggard and Marcus Noland
Publication Date:
04-2008
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
A continuing leitmotif of the Six Party Talks—among the United States, China, Japan, Russia, South Korea, and North Korea—is the prospect that a resolution of the nuclear question could set the stage for more institutionalized and enduring multilateral cooperation in Northeast Asia. The Joint Statement of September 19, 2005, which outlined the principles governing subsequent negotiations, referenced new “ways and means for promoting security cooperation in northeast Asia,” and the February 13, 2007 Joint Statement created a Working Group on a Northeast Asia Peace and Security Mechanism (NEAPSM).
Topic:
Conflict Resolution, Conflict Prevention, International Cooperation, and Regional Cooperation
Political Geography:
China, Asia, South Korea, and North Korea