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331. What's on the Table? The Doha Round as of August 2009

Author:
Matthew Adler, Gary Clyde Hufbauer, Jeffrey J. Schott, and Claire Brunel
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The Doha Round is the longest-running trade liberalization negotiation in the postwar era. Despite its longevity, the end is not yet in sight as parties disagree on the depth of liberalization necessary in agriculture and nonagricultural market access (NAMA). This rift is prolonging the Round's completion and hindering the discussion of other important issues on the negotiating agenda, particularly services. To shed light on the debate concerning the benefits from Doha, this paper first estimates, using three metrics, the potential gains from liberalization in agriculture and NAMA resulting from the specific “modalities” set forth in papers drafted by the chairs of the Doha negotiating groups. Next, the study estimates the benefits that could result from sector initiatives in chemicals, electronic/electrical goods, and environmental goods that go beyond the tariff cuts outlined in the negotiating modalities. Finally, prospective gains from liberalization of services barriers and improvements in trade facilitation are also analyzed. Overall, we estimate that the boost to global exports from concluding the Doha Round could range between $180 billion and $520 billion annually. Likewise, the potential GDP gains are significant, between $300 billion and $700 billion annually, and well balanced between developed and developing countries.
Topic:
Agriculture, Economics, and International Trade and Finance

332. Structural and Cyclical Trends in Net Employment over US Business Cycles, 1949-2009: Implications for the Next Recovery and Beyond

Author:
Jacob Funk Kirkegaard
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Th is paper expands on the methodology of Groshen and Potter (2003) for studying cyclical and structural changes in the US economy and analyzes the net structural and cyclical employment trends in the US economy during the last 10 trough-to-trough business cycles from 1949 to the present. It illustrates that the US manufacturing sector and an increasing number of services sectors, including parts of the fi nancial services sector, are experiencing structural employment declines. Structural employment gains in the US labor market are increasingly concentrated in the healthcare, education, food, and professional and technical services sectors and in the occupations related to these industries. Th e paper concludes that the improved operation of the US labor market during the 1990s has reversed itself in the 2000s, with negative long-term economic eff ects for the United States.
Topic:
Economics, International Trade and Finance, and Markets
Political Geography:
United States

333. 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

334. American Multinationals and American Economic Interests: New Dimensions to an Old Debate

Author:
Theodore H. Moran
Publication Date:
07-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The 2008 election rekindled debate about whether US multinationals shift technology across borders and relocate production in ways that might harm workers and communities at home. President Obama now pledges to end tax breaks for corporations that ship jobs overseas. The preoccupation about the behavior of American multinationals takes three forms: (1) that US-based multinational corporations may follow a strategy that leads them to abandon the home economy, leaving the workers and communities to cope on their own with few appealing alternatives after the multinationals have left; (2) worse, that US-based multinational corporations may not just abandon home sites but drain off capital, substitute production abroad for exports, and “hollow out” the domestic economy in a zero-sum process that damages those left behind; and (3) worst, that US-based multinational corporations may deploy a rent-gathering apparatus that switches from sharing supranormal profits and externalities with US workers and communities to extracting rents from the United States. Each of these concerns contains a hypothetical outcome that can be compared with contemporary evidence from the United States and other home countries.
Topic:
Economics, International Political Economy, International Trade and Finance, Markets, and Financial Crisis
Political Geography:
United States and America

335. The International Monetary Fund and Regulatory Challenges

Author:
Edwin M. Truman
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The International Monetary Fund (IMF) plays a substantial regulatory role in the international monetary and financial system. The IMF has been assigned a formal regulatory role in a limited number of areas such as obligations covering exchange rate policies. The Fund has a broader informal regulatory role derived from the voluntary consent of its members such as in surveillance over members' financial sector policies and international payments imbalances. The IMF's regulatory role is unlike that of its member governments within their own jurisdictions. The Fund's formal and informal regulation must be constantly nurtured and renewed via peer-review processes.
Topic:
Debt, Economics, International Organization, International Trade and Finance, International Monetary Fund, and Monetary Policy

336. 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

337. It Should Be a Breeze: Harnessing the Potential of Open Trade and Investment Flows in the Wind Energy Industry

Author:
Jacob Funk Kirkegaard, Thilo Hanemann, and Lutz Weischer
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This working paper maps out the structure and value chains of the wind industry, analyzes the wind industry's increasing global integration via cross-border trade and investment flows, and offers recommendations to policymakers for the design of investment and trade policies to help realize wind energy's potential. We find that demand for wind energy through long-term government support policies creates the basis for local supply of wind capital equipment and services and associated local job creation; policies that put a price on carbon will further help to make wind energy more competitive and increase the overall demand for turbines and equipment. Cross-border investment rather than trade is the dominant mode of the wind industry's global integration. Principal barriers to global integration are nontariff trade barriers and formal and informal barriers that distort firms' investment decisions. These include local content requirements, divergent national industrial standards and licensing demands, and in particular political expectations. Intellectual property accounts for only a very small part of cost in the wind industry, and wind technology is widely available for licensing. Intellectual property rights are correspondingly not a major impediment for market participation. Credible long-term commitments coupled with a reduction or elimination of existing barriers to cross-border trade and investment are necessary to harness the full potential of global integration in reducing wind industry prices and increase worldwide deployment of wind energy.
Topic:
Economics, Energy Policy, Environment, and Foreign Direct Investment

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

Author:
Aaditya Mattoo and Arvind Subramanian
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
We tend to think of sophisticated goods and foreign direct investments (FDI) as flowing from high-income countries to lower-income countries, but flows in the opposite direction are increasing in frequency and significance. In this working paper, CGD senior fellow Arvind Subramanian and co-author Aaditya Mattoo document this trend and explore its consequences on source countries. Considering not only the composition of exports but their destination as well, they find a positive relationship between the uphill flows of sophisticated goods and FDI and economic growth, suggesting perhaps that development benefits might derive not from deifying comparative advantage but from defying it.
Topic:
Globalization

339. Policy Liberalization and FDI Growth, 1982 to 2006

Author:
Matthew Adler and Gary Clyde Hufbauer
Publication Date:
08-2008
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Over the last three decades the global economy has expanded in a remarkable fashion. While nominal world GDP has increased four times, world bilateral trade flows have grown more than six-fold, and the stock of foreign direct investment (FDI) has grown by roughly 20 times since 1980. The sources of global trade and investment growth are well known—general economic expansion, policy liberalization, and better communications and technology—but the impact of each source is unclear. In this paper we attempt to uncover the contribution of policy liberalization to the rising ratios of US inward and outward FDI stocks to GDP over the last three decades.
Topic:
Economics, Globalization, International Political Economy, International Trade and Finance, Markets, and Political Economy
Political Geography:
United States

340. 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