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4182. Stopping Guinea's Slide
- Publication Date:
- 06-2005
- Content Type:
- Working Paper
- Institution:
- International Crisis Group
- Abstract:
- Guinea risks becoming West Africa's next failed state. Its economy is faltering, the government has nearly ceased to provide services, and in 2004, there were isolated uprisings in at least eight towns and cities in all regions of the country. Getting it wrong in Guinea now could have disastrous consequences. Getting it right will require a greater engagement by both the Guinean population and the diplomatic and donor communities, including a focus much more on reforming institutions than on the immediate personnel issues involved in the succession to the ailing and dictatorial president, Lansana Conté.
- Topic:
- Conflict Prevention, Development, and Economics
- Political Geography:
- Africa, West Africa, and Guinea
4183. Buying air warfare destroyers: a strategic decision
- Author:
- Hugh White
- Publication Date:
- 06-2005
- Content Type:
- Working Paper
- Institution:
- Lowy Institute for International Policy
- Abstract:
- The Air Warfare Destroyer [AWD] project is Australia's biggest proposed defence acquisition in decades. Cabinet has already chosen a company to build the ships. But before minsters go further and sign contracts, they should stop and ask two big questions which have not so far been properly considered. First, would AWDs do enough for Australia's defence to justify their cost, and what would we need to sacrifice to afford them? Second, are we buying them the right way? There are good reasons to think that the answer to both questions is no. The AWD's main purpose is to provide air defence for ADF amphibious operations in medium- to high-level conflicts. But such operations would not be a high priority for Australia. The forces we could deploy are small, and the risks they would face, even with AWDs, are daunting. And if it was necessary, amphibious operations could be better protected for air attack by proactive counter-air campaigns or fighter escorts. For coalition operations, AWDs would only add another option to a wide range of highly capable contributions we can already make, including submarines, maritime patrol aircraft, AEW and fighters. And AWDs would be marginal to any future development of ballistic missile defences for Australia. So AWDs would provide few important new military options. But their high price imposes big opportunity costs in the already-squeezed defence investment program. Unless Defence funding rises sharply, we can afford them only by cutting other major capabilities. The most likely trade-off is the JSF project; cutting that would have serious strategic costs. So ministers should not commit to buying the AWDs before they have reviewed the Defence Capability Plan as a whole to see the full implications for the ADF's overall capability. If ministers nonetheless decide to buy AWDs, they should look very carefully at how the project is being developed and managed. As they did with Navy's troubled Collins submarines and Seasprite helicopters, Defence is setting unique Australian requirements that will unnecessarily add to the cost and risk of the project. And they are experimenting with a new acquisition strategy that provides less competition and leaves more of the risk of the project in Defence's hands. A simpler and more competitive acquisition strategy would provide better value for money. The simplest and cheapest of all would be to buy overseas. There is no compelling strategic reason to buy AWDs, and even less to build them in Australia.
- Topic:
- Arms Control and Proliferation, Economics, and Government
- Political Geography:
- Australia and Australia/Pacific
4184. Living with Global Imbalances: A Contrarian View
- Author:
- Richard N. Cooper
- Publication Date:
- 11-2005
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Three propositions have become conventional wisdom in Washington and elsewhere. Americans save too little. As a consequence, the US current account deficit is unsustainably large. A necessary step to bring the global economy into sustainable balance is a significant appreciation of the Chinese currency, which in practice has been fixed to the dollar for over a decade.
- Topic:
- International Relations, Development, Economics, and Globalization
4185. After Argentina
- Author:
- Anna Gelpern
- Publication Date:
- 09-2005
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Argentina has finally restructured its foreign debt. Its credit rating is up, and its debt is back in the index. The new bonds are trading roughly in line with Brazil and Uruguay's, just above 400 basis points over treasuries for instruments of comparable duration. Argentina is raising new money from foreign investors. Earlier in the summer of 2005, it reopened a domestic dollar issue to accommodate excess foreign demand. Argentina and the International Monetary Fund (IMF) are on again. They might even sign a new disbursing program after the fall 2005 congressional elections. Like a bad dream, the 2001 default is fading into the night after three years of brisk growth and impressive fiscal management—even as the usual nabobs natter on about structural reform and unhappy bondholders.
- Topic:
- International Relations, Debt, and Economics
- Political Geography:
- South America
4186. A Currency Basket for East Asia, Not Just China
- Author:
- John Williamson
- Publication Date:
- 08-2005
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- China recently announced that it is adopting a basket of currencies as the peg for its exchange rate instead of the US dollar. This announcement raises questions of how such a system works, whether other East Asian countries would be advised to follow China in adopting a basket numeraire, and whether it would be advantageous to these countries if they were all to adopt the same basket. This brief answers these questions.
- Topic:
- Economics, International Cooperation, and International Trade and Finance
- Political Geography:
- United States, Israel, East Asia, and Asia
4187. Predicting Trade Expansion under FTAs and Multilateral Agreements
- Author:
- Dean A. DeRosa and John P. Gilbert
- Publication Date:
- 10-2005
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- This paper examines the historical record of eight recent free trade agreements (FTAs). It also investigates the predictive power of two popular quantitative world trade models—the single-equation gravity model and the multiequation computable general equilibrium (CGE) model—as applied to three major trade liberalization agreements adopted during the 1990s: Mercosur, NAFTA, and the Uruguay Round Agreement, using the Rose gravity model and the GTAP general equilibrium model. Both models are found accurate in some instances, but intervening influences in the wake of trade liberalization episodes confound the challenge of drawing a strong conclusion in favor of one modeling approach over the other. Between the "naïve" gravity model and "naïve" CGE model predictions, we find that the former tends to overpredict intrabloc trade expansion (especially over horizons of five years and less) while the latter tends to underpredict. CGE models remain favored for ex post analysis of welfare impacts and the direct and indirect linkages between policy reforms and the numerous other economic variables of concern to policymakers and the public at large.
- Topic:
- Development, Economics, International Trade and Finance, and Treaties and Agreements
4188. Prospects for Regional Free Trade in Asia
- Author:
- Gary Clyde Hufbauer and Yee Wong
- Publication Date:
- 10-2005
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Frustrated with lackluster momentum in the WTO Doha Round and the Asia Pacific Economic Cooperation (APEC) forum, and mindful of free trade agreement (FTA) networks centered on the United States and Europe, Asian countries have joined the FTA game. By 2005, Asian countries (excluding China) had ratified 14 bilateral and regional FTAs and had negotiated but not implemented another seven. Asian nations are also actively negotiating some 23 bilateral and regional FTAs, many with non-Asian partners, including Australia, Canada, Chile, the European Union, India, and Qatar. China has been particularly active since 2000. It has completed three bilateral FTAs—Thailand in 2003 and Hong Kong and Macao in 2004—and is initiating another 17 bilateral and regional FTAs. However, a regional Asian economic bloc led by China seems distant, even though China accounts for about 30 percent of regional GDP. As in Europe and the Western Hemisphere, many Asian countries are pursuing FTAs with countries outside the region. On present evidence, the FTA process embraced with some enthusiasm in Asia, Europe, and the Western Hemisphere more closely resembles fingers reaching idiosycratically around the globe rather than politico-economic blocs centered respectively on Beijing, Brussels, and Washington.
- Topic:
- Economics, International Trade and Finance, and Regional Cooperation
- Political Geography:
- United States, China, Europe, Washington, Canada, India, Beijing, Asia, Australia, Qatar, Chile, Hong Kong, Brussels, and Macao
4189. The US Trade Deficit: A Disaggregated Perspective
- Author:
- Catherine L. Mann and Katharina Plück
- Publication Date:
- 09-2005
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- The paper prepares new estimates for the elasticity of US trade flows using bilateral, commodity-detailed trade data for 31 countries, using measures of expenditure and trade prices matched to commodity groups, and including a commodity-and-country specific proxy for global supply-cum-variety. Using the United Nations Commodity Trade Statistics Database (UN Comtrade) we construct bilateral trade flows for 31 countries in four categories of goods based on the Bureau of Economic Analysis's "end-use" classification system--autos, industrial supplies and materials-excluding energy, consumer goods, and capital goods. We find that using expenditure matched to commodity category yields more plausible values for the demand elasticities than does using GDP as the measure of demand that drives trade flows. Controlling for country and commodity fixed effects, we find that industrial and developing countries have demand elasticities that are statistically significant and that generally differ between development groups and across product categories. Relative prices for the industrial countries have plausible parameter values, are statistically significant and differ across product groups, but the relative prices for developing countries are poorly estimated. We find that variety is an important variable for the behavior of capital goods trade. Because the commodity composition of trade and of trading partners has changed dramatically, particularly for imports, we find that the demand elasticity for imports is not constant. Comparing the in-sample performance of the disaggregated model against a benchmark that uses aggregated data and GDP as the expenditure variable, our disaggregated model predicts exports better in-sample but does not predict imports as well as the benchmark model.
- Topic:
- Development, Economics, and International Trade and Finance
- Political Geography:
- United States
4190. Importers, Exporters, and Multinationals: A Portrait of Firms in the U.S. that Trade Goods
- Author:
- J. Bradford Jensen, Peter K. Schott, and Andrew B. Bernard
- Publication Date:
- 09-2005
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- This paper provides an integrated view of globally engaged US firms by exploring a newly developed dataset that links US international trade transactions to longitudinal data on US enterprises. These data permit examination of a number of new dimensions of firm activity, including how many products firms trade, how many countries firms trade with, the characteristics of those countries, the concentration of trade across firms, whether firms transact at arm's length or with related parties, and whether firms import as well as export. Firms that trade goods play an important role in the United States, employing more than a third of the US workforce. We find that the most globally engaged US firms, i.e. those that both export to and import from related parties, dominate US trade flows and employment at trading firms. We also find that firms that begin trading between 1993 and 2000 experience especially rapid employment growth and are a major force in overall job creation.
- Topic:
- Economics, Globalization, and International Trade and Finance
- Political Geography:
- United States