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101. Strengthening Trade Adjustment Assistance

Author:
Howard F. Rosen
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
In 1962, when the United States was running a trade surplus, imports were barely noticeable, and manufacturing employment was increasing, Congress made a commitment to assist American workers, firms, and communities hurt by international trade, by establishing the Trade Adjustment Assistance (TAA) program. This commitment was based on an appreciation that despite their large benefits, widely distributed throughout the economy, international trade and investment could also be associated with severe economic dislocations.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
United States

102. Distance Isn't Quite Dead: Recent Trade Patterns and Modes of Supply in Computer and Information Services in the United States and NAFTA Partners

Author:
Jacob Funk Kirkegaard
Publication Date:
10-2008
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper evaluates the statistical strengths and weaknesses of available data on US computer and information services trade and estimates the scope of delivery through GATS modes 1, 3, and 4. Trade values are estimated using a new methodology that adheres, to the greatest extent possible, to the definitions of modes of supply in the 2002 Manual on Statistics of International Trade in Services. This paper finds that US trade (particularly exports) in computer and information services are overwhelmingly and increasingly delivered through mode 3. The United States is found to have experienced declining overall revealed comparative advantage (RCA) in traditional mode 1 cross-border computer and information services trade from 1986 to 2006, while having a stable, positive RCA in mode-3 trade. A new methodology for tentatively estimating US imports of computer and information services in GATS mode 4 suggests that the IT services sector dominates US mode-4 imports, and that these are several times larger than US traditional mode-1, cross-border imports of computer and information services.
Topic:
Economics, International Trade and Finance, and Science and Technology
Political Geography:
United States

103. The Case for Exchange Rate Flexibility in Oil-Exporting Economies

Author:
Brad Setser
Publication Date:
11-2007
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Brad Setser is a fellow at the Greenberg Center for Geoeconomic Studies at the Council on Foreign Relations. He previously worked as a senior economist at RGEMonitor, an online financial information service. He served in the US Treasury Department from 1997 to 2001, where he concluded his tenure as the acting director of the Office of International Monetary and Financial Policy, and spent 2002 as a visiting scholar at the International Monetary Fund. He is the coauthor of Bailouts or Bail-ins? Responding to Financial Crises in Emerging Economies (Institute for International Economics, 2004) with Nouriel Roubini.
Topic:
Economics, Foreign Exchange, International Trade and Finance, and Oil
Political Geography:
United States

104. The Korea-US Free Trade Agreement: A Summary Assessment

Author:
Jeffrey J. Schott
Publication Date:
08-2007
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The Korea–United States Free Trade Agreement (KORUS FTA) is a historic accord that should enhance bilateral economic rela¬tions and reinforce our longstanding partnership on political and security matters. Like any negotiated deal, the KORUS FTA is not the optimal result for either country, but it provides substan¬tial benefits that make Korea and the United States considerably better off than they would be in the absence of the pact.
Topic:
Markets
Political Geography:
United States, Asia, and North Korea

105. China and Economic Integration in East Asia: Implications for the United States

Author:
C. Fred Bergsten
Publication Date:
03-2007
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
East Asia is clearly, if gradually and unevenly, moving toward regional economic integration. Market forces are leading the process, as firms construct production chains across the area that exploit the comparative advantage of its individual countries. Governments are now moving to build on those forces, and consolidate them, through a series of formal agreements to intensify their economic relationships and start creating an East Asian Community.
Topic:
Development and Economics
Political Geography:
United States, China, Israel, East Asia, and Asia

106. Congress, Treasury, and the Accountability of Exchange Rate Policy: How the 1988 Trade Act Should Be Reformed

Author:
Randall Henning
Publication Date:
09-2007
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The controversy within the United States over Chinese exchange rate policy has generated a series of legislative proposals to restrict the discretion of the Treasury Department in determining currency manipulation and to reform the department's accountability to Congress. This paper reviews Treasury's reports to Congress on exchange rate policy—introduced by the 1988 Trade Act—and Congress's treatment of them. It finds that the accountability process has often not worked well in practice: The reports provide only a partial basis for effective congressional oversight. For its part, Congress held hearings on less than half of the reports and overlooked some important substantive issues. Several recommendations can improve guidance to the Treasury, standards for assessment, and congressional oversight. These include (1) refining the criteria used to determine currency manipulation and writing them into law, (2) explicitly harnessing US decisions on manipulation to the International Monetary Fund's rules on exchange rates, (3) clarifying the general objectives of US exchange rate policy, (4) reaffirming the mandate to seek international macroeconomic and currency cooperation, (5) requiring Treasury to lead an executivewide policy review, and (6) institutionalizing multicommittee oversight of exchange rate policy by Congress. Legislators should strengthen reporting and oversight of broader exchange rate policy in addition to strengthening the provisions targeting manipulation.
Topic:
Economics, Foreign Exchange, and International Trade and Finance
Political Geography:
United States and China

107. 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

108. A (Lack of) Progress Report on China's Exchange Rate Policies

Author:
Morris Goldstein
Publication Date:
06-2007
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This working paper assesses the progress made in improving China's exchange rate policies over the past five years (that is, since 2002). I first discuss four indicators of progress on China's external imbalance and its exchange rate policies—namely, the change in (and level of) China's global current account position, movements in the real effective exchange rate of the renminbi (RMB), the role of market forces in the determination of the RMB, and China's compliance with its obligations on exchange rate policy as a member of the International Monetary Fund (IMF). I then discuss why the lack of progress in improving China's exchange rate policies matters for the economies of the China and the United States and for the international monetary and trading system. I also argue that several popular arguments and excuses for why more cannot be accomplished on removing the large undervaluation of the RMB are unpersuasive. Finally, I consider what can and should be done by China, the United States, and the IMF to accelerate progress over the next year or two.
Topic:
Development, Economics, and Foreign Exchange
Political Geography:
United States, China, and Asia

109. 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

110. China: Toward a Consumption-Driven Growth Path

Author:
Nicholas R. Lardy
Publication Date:
10-2006
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
In December 2004 China's top political leadership agreed to fundamentally alter the country's growth strategy. In place of investment and export-led development, they endorsed transitioning to a growth path that relied more on expanding domestic consumption. Since 2004, China's top leadership, most notably Premier Wen Jiaobao in his speech to the National People's Congress in the spring of 2006, has reiterated the goal of strengthening domestic consumption as a major source of economic growth. This policy brief examines the reasons underlying the leadership decision, the implications of this transition for the United States and the global economy, and the steps that have been taken to embark on the new growth path.
Topic:
International Relations, Development, and Economics
Political Geography:
United States, China, and Asia