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361. El TLCAN y la Inversióon Extranjera Directa: El Nuevo Escenario

Author:
Arturo Borja
Publication Date:
01-2000
Content Type:
Working Paper
Institution:
Centro de Investigación y Docencia Económicas
Abstract:
This working paper looks at the changes that have taken place in North America in foreign direct investment (FDI) after NAFTA. The first part analyses the regime defined in the treaty. The main four principles of this regime are: "national treatment", the prohibition of performance requirements for investors, a more liberal norm for foreign ownership of firms, institutional procedures for the solution of disputes. The rule of origin is identified as the most important measure for non-North American investors. The second part offers an empirical evaluation of changes in FDI flows during the first five years of NAFTA. It compares that period with the five years previous to the implementation of the agreement. The findings show a significant increase in FDI going to Mexico, Canada and the United States. At the same time, there have been changes in the distribution of these flows within the region. More FDI is going now to the United States than to Mexico, and investments between Canada and the U.S. are growing at a higher rate than those between Mexico and the U.S. The paper also identifies different patterns between Mexico and Canada. The increases in Canadian investments suggests that Canadian multinationals are adapting their strategies to the new conditions created by NAFTA.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States, Canada, North America, and Mexico

362. International Explanations for Stock Market Opening

Author:
Susan Minushkin
Publication Date:
01-2000
Content Type:
Working Paper
Institution:
Centro de Investigación y Docencia Económicas
Abstract:
Most studies on financial market liberalization focus on wealthy countries, emphasizing international, economic or domestic political factors as explanations for financial liberalization or have specified the conditions under which one factor dominates in causal significance. They have not tested whether their arguments are applicable to the middle-income countries that comprise the 'emerging markets.' Focusing on these countries, this paper seeks to isolate and test a series of propositions derived from international approaches. The main contribution of this article is to provide some first-cut testing of the existing hypotheses, as a guide for other researchers in terms of the timing, pace and style of financial opening in middle-income countries.
Topic:
International Relations, Economics, Emerging Markets, and International Trade and Finance

363. EMU and the Developing Countries

Author:
Benjamin J. Cohen
Publication Date:
03-2000
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The purpose of this paper is to explore economic and political implications of Europe's Economic and Monetary Union (EMU) for developing countries. In strictly economics terms, influences will be communicated through both trade and financial channels. Economies in the developing world will be affected by changes in European growth rates as well as by EMU's impact on transaction costs and enterprise competitiveness within Europe; they will also be impacted by changes in the structure and efficiency of Europe's capital markets. Modifications may be anticipated in borrowing and investment practices at the private level as well as in reserve and debt-management policies at the official level. In political terms, developing countries will be most directly influences by the anticipated rivalry between Europe's new single currency, the euro, and the dollar, which will compel developing countries to reconsider their own national currency strategies. Three conclusions stand out. First, except for selected groups of countries with particularly close ties to the EU, most economic linkages appear marginal at best. It is much easier to enumerate possible channels of transmission than to find many that appear quantitatively significant. Second, among economic effects of EMU, financial channels seem to matter more than trade channels. And third, across the full range of possible linkages, the most lasting influences for developing countries may well turn out, notably, to be political rather than either trade or financial. Significant changes are likely in exchange-rates regimes in many parts of the developing world.
Topic:
Emerging Markets, Government, and International Political Economy
Political Geography:
Europe

364. Will the Euro Trigger More Monetary Unions in Africa?

Author:
Patrick Honohan and Philip R. Lane
Publication Date:
03-2000
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
We analyse the prospects for greater monetary integration in Africa, in the wake of EMU. We argue that the structural characteristics of African economies are quite different to the EMU members but that much can be gained from monetary cooperation, as an external agency of restraint and in promoting stability in the financial sector. EMU has only a marginal impact on the net benefits of monetary cooperation but the euro would be a natural anchor for any African monetary unions. Indeed, the most likely route to new monetary cooperation in Africa is via a common peg to the euro.
Topic:
Emerging Markets and International Political Economy
Political Geography:
Africa and Europe

365. Globalization, Marginalization and Development

Author:
S. Mansoob Murshed
Publication Date:
02-2000
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper surveys issues related to globalization, and the obstacles to the successful integration of vulnerable economies. For many developing countries, the positive benefits of the increased globalization that has been taking place since around 1980 remain distant and elusive. The economies of many countries in the developing world remain extremely vulnerable to domestic and external shocks. They have, effectively, become marginalized from the world system. To a great extent, the obstacles to the successful participation of vulnerable developing economies in the international system are rooted in the causes of their underdevelopment and poor economic performance. Nevertheless, the new rules of the game and the international economic environment prevalent since about 1980 following accelerated globalization, leaves them vulnerable in novel ways. Developing in the arrangements for conducting multilateral trade and technology transfer have left nations in the South more vulnerable than in the past. The ability to conduct independent macroeconomic policy is severely constrained. Nations are more reliant on volatile international capital markets, for finance and investment; many developing countries are completely eschewed by international private capital markets. The problem of poverty in many developing countries seems to have been exacerbated following globalization. When we consider the obstacles to the meaningful participation of vulnerable developing economies in the international system, many are domestic in origin, but external factors beyond the control of these countries play an important part as well. Among the former are poorly designed policies to promote growth on the supply-side, macroeconomic mismanagement on the aggregate demand side and institutional failure. In the latter category protectionist tendencies in the North are the most important factor. Many of these appear in the guise of concerns for environmental and labour standards. Globalization does, however, offer new possibilities to developing countries; particularly because shifts in the international division of labour, as well as technological innovations, could favour the South.
Topic:
Development, Emerging Markets, Globalization, International Political Economy, and Third World

366. Information Technology and Economic Growth: A Cross-Country Analysis

Author:
Matti Pohjola
Publication Date:
01-2000
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper explores the impacts of information technology investment on economic growth in a cross-section of 39 countries in the period 1980-95 by applying an explicit model of economic growth, the augmented version of the neoclassical (Solow) growth model. The results based on the full sample of 39 countries indicate that physical capital is a key factor in economic growth in both developed and developing countries. Its influence is even bigger than what is implied by the income share of capital in national income accounts. But neither human capital nor information technology seems to have a significant impact on GDP growth. However, investment in information technology has a strong influence on economic growth in the smaller sample of 23 developed (OECD) countries. Its impact is almost as large as that of the rest of the capital stock. But since the share of IT investment in GDP, although growing, is still much lower than the share of non-IT investment, the net social return to IT capital is much larger than the return to non-IT capital: 60-80 per cent versus 4 per cent, respectively. The estimated return is very high; about twice the return to equipment investment and 10-12 times the return to R obtained in similar models as the one applied here.
Topic:
Economics, Emerging Markets, and Science and Technology

367. Gas For Oil Markets

Author:
Koji Morita
Publication Date:
02-2000
Content Type:
Policy Brief
Institution:
Chatham House
Abstract:
Public projections by the International Energy Agency, the US Energy Information Administration and the European Commission suggest that, with present policies, world consumption of gas will roughly double by 2020, taking about 5% of the primary energy market from other fuels. About half this gain will be at the expense of more carbon-intensive fossil fuels, mainly coal, but the other half will replace carbon-free nuclear energy. The net effect on the growth of greenhouse gas emissions will therefore be small. For comparison, gas consumption increased in the past 20 years by almost 80%, at the expense of other fossil fuels. Half the increased gas demand is projected for developing countries, compared with 45% of the increase over the past 20 years and their present share of about a quarter of total world gas consumption.
Topic:
Economics, Emerging Markets, Energy Policy, and Environment
Political Geography:
United States and Europe

368. Changing Oil

Author:
Norman Selley
Publication Date:
01-2000
Content Type:
Policy Brief
Institution:
Chatham House
Abstract:
Black gold, as oil is sometimes called, has a double image. On the negative side crude oil is typically seen only when accidents occur – when it spills from ships, pollutes beaches or kills wildlife. The positive is taken for granted. Users rely on oil's refined products to power transport and heat or cool homes invisibly, as required. The twentieth century progressed hand in hand with increased usage of oil, in times of both war and peace, and can justifiably be described as the Oil Era.
Topic:
Emerging Markets, Energy Policy, Environment, Science and Technology, and Third World

369. The Crisis in Asia: An Empirical Assessment

Author:
Warwick McKibbin
Publication Date:
12-1999
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
The economies of South East Asia and Korea have been shaken by a financial and economic crisis that has enveloped the region since mid 1997. There are competing explanations for the cause of the crisis however most commentators would agree that a major shock that impacted on the countries has been a dramatic increase in the perceived risks of investing in these economies. This paper explores the impact of a re-evaluation of the risk in the Asian economies focussing on the differential real consequences of a temporary versus more permanent rise in risk. It contributes to our understanding of the possible consequences of the Asia crisis by applying a global simulation model that captures both the flow of goods as well as international capital flows between countries. The real impacts on the Asian economies of a rise in risk perceptions in the model are large and consistent with observed adjustment. However the spillovers to the rest of the world are relatively small because the loss in export demand that accompanies the crisis in Asia is offset by a fall in long term interest rates as capital flows out of Asia into the non-Asian OECD economies. Thus strong domestic demand in economies such as the US induced by the general equilibrium effects of the reallocation of financial capital can more than offset the consequences of lower export growth. The analysis also highlights the impacts on global trade balances reflecting the movements of global capital and points to both potential problems and lesson for policymakers over the coming years.
Topic:
Economics, Emerging Markets, and Globalization
Political Geography:
China, Israel, East Asia, and Asia

370. The Global Economic Impacts of Trade and Financial Reform in China

Author:
Warwick McKibbin and KK Tang
Publication Date:
12-1999
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Despite the setbacks from the recent Asian currency crisis, the ascendancy of Asia as an economic centre of world economic activity is likely to continue into the 21st century. A key issue that will shape the role of Asia, and indeed the shape of the world economy in the 21st century, is the economic development of China. To date China has successfully weathered the currency storm in Asia and continues on a program of economic reform. If anything, the problems of Japan and Korea provide powerful lessons for other countries undergoing rapid economic growth and structural change. These lessons include the importance of a well developed financial sector with lending and investment decisions based on market signals rather than government directives. Whether China can further integrate smoothly into global markets and sustain the fast growth of the last few decades will be a crucial development in the world economy. In this paper, we explore the impacts of continued Chinese economic reform with a focus on the role of international financial flows both in the adjustment within China as well as in the transmission of Chinese reforms to the rest of the world.
Topic:
Economics, Emerging Markets, and Globalization
Political Geography:
China, Israel, East Asia, and Asia