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591. Regional Monetary Arrangements in ASEAN+3 as Insurance through Reserve Accumulation and Swaps

Author:
O.G. Dayaratna-Banda and John Whalley
Publication Date:
04-2007
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
East Asia is witnessing the emergence of an informal monetary system which focuses on self-insurance through own reserve accumulation and co-insurance through swaps. The former is concentrated in a small number of large countries (China, Japan, and Korea), while the latter involves informal monetary cooperation among monetary authorities in a large number of countries. The origins of this system lie in the Asian financial crises, and reflect concerns both to avoid repetition of similar events and any spread of further crises through contagion effects. This paper first characterizes and documents this emerging system describing how it works and what its objectives are, and then discusses its performance, its incompleteness, and assesses the system's ability to move towards deeper integration without adopting a single monetary authority as well as the impediments it faces. What is clear is that this type of system among individual countries is incomplete and falls well short of complete monetary integration, but at present it performs well even if it experiences a number of deficiencies. Most countries seem better off with partial reserve pooling, while incremental gains from higher degrees of pooling in the region tend to be small.
Topic:
Development, Economics, and Regional Cooperation
Political Geography:
Japan, China, Asia, and Korea

592. Measurement and Inference in International Reserve Diversification

Author:
Anna Wong
Publication Date:
07-2007
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper analyzes international reserve diversification by examining changes in quantity shares of currencies held in foreign exchange reserves. It discusses alternative methodologies for constructing quantity shares and applies the preferred methodology to three sets of data on the currency composition of foreign exchange reserves: quarterly aggregate International Monetary Fund's Composition of Foreign Exchange Reserves (IMF COFER) data, quarterly IMF COFER data for industrial- and developing-country groups, and annual data for 23 individual countries that disclose the currency composition of their foreign exchange reserve holdings. What can one infer from available data about the diversification of foreign exchange reserves since 1999? The analysis suggests four conclusions: (1) The behavior of the quantity shares of the US dollar and the euro in total reserves is consistent with net stabilizing intervention; their quantity shares tend to rise when these currencies are declining and vice versa. (2) The principal driver of this stabilizing diversification over the period 1999Q1–2005Q4 is Japan. (3) The industrial countries as a group but excluding Japan do not indicate stabilizing diversification. (4) The nonindustrial countries as a group display stabilizing diversification over short periods of only a few quarters. In summary, the aggregate data conceal much diversity in the practices of individual countries.
Topic:
Economics, Foreign Exchange, and International Trade and Finance
Political Geography:
United States, Japan, and Asia

593. From Industrial Policy to Innovative Policy: Japan's Pursuit of Competitive Advantage

Author:
Marcus Noland
Publication Date:
05-2007
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Japan faces significant challenges in encouraging innovation and entrepreneurship. Attempts to formally model past industrial policy interventions uniformly uncover little, if any, positive impact on productivity, growth, or welfare. The evidence indicates that most resource flows went to large, politically influential “backward” sectors, suggesting that political economy considerations may be central to the apparent ineffectiveness of Japanese industrial policy.
Topic:
Development, Foreign Exchange, and Industrial Policy
Political Geography:
Japan and Asia

594. Offshoring, Outsourcing, and Production Relocation-Labor—Market Effects in the OECD Countries and Developing Asia

Author:
Jacob Funk Kirkegaard
Publication Date:
04-2007
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This working paper evaluates the validity of available data on and the extent of the impact of offshoring on service-sector labor markets in the United States, EU-15, and Japan. A three-tier data validity hierarchy is identified. The impact of offshoring on employment in the three regions is found to be limited. Correspondingly, developing Asia is unlikely to experience large employment gains as a destination region. The paper highlights the case of the Indian IT industry, where the majority of job creation has been in local Indian companies rather than foreign multinationals. Domestic entrepreneurs have played a crucial role in the growth of the Indian IT-related service industry. However, increased tradability of services and associated skill bias in favor of higher skilled workers could have an uneven employment impact on developing Asia. Some high-skilled groups are benefiting and will continue to benefit dramatically from new employment opportunities and rising wage levels. Meanwhile, the same skill bias may eliminate many employment opportunities for unskilled or low-skilled groups in the region. Developing Asian countries therefore face a double educational challenge in the coming years: the need to simultaneously improve both primary and higher education.
Topic:
International Relations, Development, Economics, and Industrial Policy
Political Geography:
United States, Japan, and Asia

595. Global Rebalancing

Author:
John H. Makin
Publication Date:
10-2007
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The global economic and financial picture is changing rapidly. A review of some of the key elements is in order, as the U.S. economy has slowed rapidly and the Federal Reserve has responded aggressively with rate cuts, while the Bank of England's tough policies pushed one of the United Kingdom's largest mortgage lenders, Northern Rock, to the brink of collapse as a bank run on that suddenly beleaguered institution ensued. Meanwhile, Japan, still the world's second-largest economy—though perhaps the least dynamic of the major ones—slipped into negative growth at a 1.2 percent annual rate in the second quarter after having initially reported growth over 2 percent. The rate-boost-obsessed Bank of Japan finally decided to stop raising rates, and, to add to the complexity of the picture, Japan's relatively new prime minister Shinzo Abe resigned, unable to provide the leadership sorely needed in a nation lacking economic and political direction.
Topic:
Economics, International Trade and Finance, and Markets
Political Geography:
United States, Japan, United Kingdom, and England

596. Inside North Korea: A Joint U.S.-Chinese Dialogue

Author:
Bonnie Glaser and Chietigj Bajpaee
Publication Date:
01-2007
Content Type:
Policy Brief
Institution:
United States Institute of Peace
Abstract:
To better understand perspectives in the United States and China on internal developments in North Korea, the U.S. Institute of Peace and the Center for Strategic and International Studies, in partnership with the China Institutes of Contemporary International Relations, convened a daylong conference on December 5, 2006. The conference took place on the eve of the resumption of the Six-Party Talks in Beijing, which subsequently ended without tangible progress. The participants discussed North Korea's economy, the role of external actors on North Korea's decision-making, and Chinese and U.S. visions for the future of the Korean Peninsula. The seminar also included a simulation based on a scenario of an explosion at Yongbyon that creates a radioactive plume that moves across the Sea of Japan.
Topic:
Conflict Resolution and International Relations
Political Geography:
United States, Japan, China, Asia, and North Korea

597. When Innovators and Not Implementers: The Political Economies of VoIP in Japan and the United States

Author:
Kenji Erik Kushida and Masayuki Ogata
Publication Date:
10-2007
Content Type:
Working Paper
Institution:
Berkeley Roundtable on the International Economy
Abstract:
The spread of Two puzzles immediately present themselves when one examines the spread of "Voice over IP" (VoIP, or IP telephony), a technology that sends voice signals as data, which can travel across the Internet.The first is that, despite the technology's widely hailed potential to undermine the core businesses of incumbent telephone operators by circumventing their traditional telephone networks, incumbent operators do not seem to be in imminent danger. When VoIP made headlines in the late 1990s and early 2000s as a dramatically cheaper alternative to conventional telephones, many predicted that new VoIP service providers would seriously threaten, if not cause the sudden demise of, incumbents. Yet, instead of telephone-replacement VoIP services, it was Skype, the online-based service more reliant on one party calling from a computer, which grew rapidly to take center stage. Why did VoIP as a substitute for conventional telephony, despite being hailed as a potentially "disruptive" technology, not have a catastrophic and relatively immediate disruptive effect on incumbent carriers' business models?
Topic:
Political Economy and Science and Technology
Political Geography:
United States, Japan, and Asia

598. North Korea: Negotiations Work

Author:
Leon V. Sigal
Publication Date:
02-2007
Content Type:
Working Paper
Institution:
MIT Center for International Studies
Abstract:
In a laudable about-face, President Bush has decided at last to accept North Korea's longstanding offer to suspend production of plutonium by shutting down and sealing its reactor and reprocess- ing plant at Yongbyon, halting construction of a larger reactor and not restarting a newly refurbished fuel fabrication plant. In so doing, he is rejecting the counsel of American hardliners who have kept the United States from making and living up to earlier agreements while managing to convince much of America that it is North Korea that has been the one at fault. By negotiating in earnest, Bush has achieved an important goal for U.S. and Asian security.
Topic:
Diplomacy, Nuclear Weapons, Military Strategy, and Denuclearization
Political Geography:
United States, Japan, China, Asia, South Korea, and North Korea

599. Income Inequality, Poverty and Social Spending in Japan

Author:
Randall S. Jones
Publication Date:
06-2007
Content Type:
Working Paper
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
Income inequality and relative poverty among the working-age population in Japan have risen to levels above the OECD average. This trend is partially explained by labour market dualism, with an increasing proportion of non-regular workers who are paid significantly less than regular workers, as well as by other factors, including the ageing of the workforce. Social spending as a share of GDP has been expanding in the context of population ageing, although it remains below the OECD average and the proportion received by low-income households is small. Consequently, the impact of social spending on inequality and poverty is weak compared to other OECD countries and inadequate to offset the deterioration in market income. The scope for increasing social spending is constrained by the fiscal situation. Instead, reversing the upward trend in inequality and poverty requires reforms to reduce labour market dualism and better target social spending on low-income households, particularly single parents.
Topic:
Poverty, Income Inequality, Social Services, and Housing
Political Geography:
Japan and Asia

600. What can European leaders learn from Koizumi?

Author:
Ángel Ubide
Publication Date:
03-2006
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
Following a long period of stagnation, Japan is growing again. The key to this success story is Koizumi's relentless focus on structural reform, with two objectives: breaking the structural trap of political constituencies defending old and unproductive economic sectors; and adopting a two-pronged macromicro approach to make reform unavoidable. This paper argues that Europe should follow a similar strategy whereby financial market integration, and not the EU bureaucracy and grandiose political declarations, should become the main driving force of national economic reforms, pressuring liberalisation in goods and services markets and making labour market reforms unavoidable.
Topic:
Development, Government, and Politics
Political Geography:
Japan and Europe