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

Author:
Arvind Subramanian and Aaditya Mattoo
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Th is paper documents an unusual and possibly significant phenomenon: the export of skills embodied in goods, services, or capital from poorer to richer countries. We fi rst present a set of stylized facts. Using a measure that combines the sophistication of a country's exports with the average income level of destination countries, we show that the performance of a number of developing countries, notably China, Mexico, and South Africa, matches that of much more advanced countries, such as Japan, Spain, and the United States. Creating a new combined dataset on foreign direct investment (FDI) (covering greenfi eld investments as well as mergers and acquisitions) we show that fl ows of FDI to Organization for Economic Cooperation and Development (OECD) countries from developing countries like Brazil, India, Malaysia, and South Africa as a share of their GDP are as large as fl ows from countries like Japan, Korea, and the United States. Th en, taking the work of Hausmann et al. (2007) as a point of departure, we suggest that it is not just the composition of exports but their destination that matters. In both cross-sectional and panel regressions, with a range of controls, we fi nd that a measure of uphill fl ows of sophisticated goods is signifi cantly associated with better growth performance. Th ese results suggest the need for a deeper analysis of whether development benefi ts might derive not from deifying comparative advantage but from defying it.
Topic:
Economics, Globalization, and Foreign Direct Investment
Political Geography:
China, South Africa, and Mexico

382. 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

383. Remaking the CCP's Ideology: Determinants, Progress, and Limits under Hu Jintao

Author:
Heike Holbig
Publication Date:
12-2009
Content Type:
Journal Article
Institution:
German Institute of Global and Area Studies
Abstract:
Two decades after the predicted “end of ideology”, we are observing a re-emphasis on party ideology under Hu Jintao. The paper looks into the reasons for and the factors shaping the re-formulation of the Chinese Communist Party's (CCP) ideology since 2002 and assesses the progress and limits of this process. Based on the analysis of recent elite debates, it is argued that the re making of ideology has been the consequence of perceived challenges to the legitimacy of CCP rule. Contrary to many Western commentators, who see China's successful economic performance as the most important if not the only source of regime legitimacy, Chinese party theorists and scholars have come to regard Deng Xiaoping's formula of performance-based legitimacy as increasingly precarious. In order to tackle the perceived “performance dilemma” of party rule, the adaptation and innovation of party ideology is regarded as a crucial measure to relegitimize CCP rule.
Topic:
Economics
Political Geography:
China

384. China's Climate- and Energy-security Dilemma: Shaping a New Path of Economic Growth

Author:
Karl Hallding, Guoyi Han, and Marie Olsson
Publication Date:
12-2009
Content Type:
Journal Article
Institution:
German Institute of Global and Area Studies
Abstract:
China is undergoing modernization at a scale and speed the world has never witnessed. As climate change increasingly dominates the global agenda, China faces the challenge of shaping a new growth path in a climate-constrained world. The paper argues that China's current climate and energy policy is, at best, a “repackaging” of existing energy and environmental strategies with co-benefits for the mitigation of climate change. Nevertheless, even though policies are not climate-change driven, the quick (rhetorical) endorsement of low-carbon development and the strong momentum of green technologies indicate that political ambitions are in favour of finding a more sustainable development pathway. A new growth path would, how-ever, require a fundamental shift, with development and energy strategies being set within climate security constraints. The eventual success of this new path remains uncertain.
Topic:
Security, Climate Change, Economics, and Environment
Political Geography:
China

385. Climate Change in China – The Development of China's Climate Policy and Its Integration into a New International Post-Kyoto Climate Regime

Author:
Andreas Oberheitmann and Eva Sternfeld
Publication Date:
12-2009
Content Type:
Journal Article
Institution:
German Institute of Global and Area Studies
Abstract:
According to the IPCC's Fourth Assessment Report, global emissions of carbon dioxide have to be reduced by about 80 per cent by 2050 in order to stabilise the increase in global temperature at 2 to 2.4°C by 2100 compared with its pre-industrial level. An increase of only 2°C would bring about “acceptable” negative impacts on the eco-systems and the world economy. Without a reduction in CO2 emissions in China, however, it will be hard to achieve this goal. Currently, China is already responsible for about 50 per cent of the worldwide increase in CO2 emissions recorded over the past ten years. On the other hand, it is the industrialised countries that are mainly responsible for the greenhouse-gas emissions of earlier years. Taking the challenges of China's economic growth, its impact on future CO2 emissions and the development of China's climate policy into account, this article develops a new post-Kyoto regime based on cumulative per-capita emission rights.
Topic:
Economics and Environment
Political Geography:
China

386. China's Economic Policy in the Time of the Global Financial Crisis: Which Way Out?

Author:
Margot Schüller and Yun Schüllerr-Zhou
Publication Date:
12-2009
Content Type:
Journal Article
Institution:
German Institute of Global and Area Studies
Abstract:
This contribution analyses the impact of the global financial crisis on the Chinese economy and the policies implemented by the Chinese government to cope with it. We argue, first, that China has not been able to decouple its economic performance from that of the U.S. and other developed countries. Second, although economic growth in the second quarter of 2009 showed that the stimulus package is working, the current development does not seem to be sustainable. In order to avoid another round of overheating, the government needs to adjust its stimulus policy. Third, the current crisis offers opportunities to conduct necessary structural adjustments in favour of more market-based and innovative industries, more investment by private companies and a stronger role of private consumption in economic growth. Fourth, with the external demand from the OECD countries declining, Chinese export companies need to further diversify their international markets and re-orient their production and sales strategies to some extent towards the domestic market.
Topic:
Economics, Government, and Financial Crisis
Political Geography:
United States and China

387. Sharing the Pain: The Global Struggle Over Savings

Author:
Michael Pettis
Publication Date:
11-2009
Content Type:
Policy Brief
Institution:
Carnegie Endowment for International Peace
Abstract:
In September, the Obama administration imposed tariffs on Chinese tires. In October, the U.S. Department of Commerce announced it would launch an investigation into imports of seamless steel pipes from China. That same month, the U.S. Chamber of Commerce and the U.S.–China Business Council, two groups that in the past have defended Chinese policies, testified to the Office of the U.S. Trade Representative that Chinese contracting rules, technical standards, and licensing requirements were protectionist.
Topic:
Economics, Globalization, Foreign Direct Investment, and Financial Crisis
Political Geography:
China, Middle East, and Asia

388. Crossing Borders, Changing Landscapes: Land-Use Dynamics in the Golden Triangle

Author:
Jefferson Fox
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Over the last half-century, public policy has affected land-use practices across the borders linking China, Thailand, and Laos. Political and economic reforms have facilitated labor mobility and a shift in agricultural practices away from staple grains and toward a diverse array of cash crops, rubber being one of the foremost. China has promoted the conversion of forests to rubber agroforestry in southern Yunnan—profitable for farmers, but a concern in terms of biodiversity and long-term viability. In Thailand, the response is at the other end of the spectrum as the government's concerns about land-use practices and watershed management have led to policies that dramatically constrain land-use practices and limit tenure rights. In Laos the future is not yet clear. Government policies provide weak support for both private land ownership and protected areas. In a global environment where national policy has such a dramatic effect on land use and land cover, the factors behind land-use change merit close examination.
Topic:
Agriculture and Economics
Political Geography:
China, Asia, Thailand, Southeast Asia, and Laos

389. Can Global De-Carbonization Inhibit Developing-Country Industrialization?

Author:
Arvind Subramanian, Aaditya Mattoo, Dominique van der Mensbrugghe, and Jianwu He
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Most economic analyses of climate change have focused on the aggregate impact on countries of mitigation actions. We depart first in disaggregating the impact by sector, focusing particularly on manufacturing output and exports because of the potential growth consequences. Second, we decompose the impact of an agreement on emissions reductions into three components: the change in the price of carbon due to each country's emission cuts per se; the further change in this price due to emissions tradability; and the changes due to any international transfers (private and public). Manufacturing output and exports in low carbon intensity countries such as Brazil are not adversely affected. In contrast, in high carbon intensity countries, such as China and India, even a modest agreement depresses manufacturing output by 6-7 percent and manufacturing exports by 9-11 percent. The increase in the carbon price induced by emissions tradability hurts manufacturing output most while the Dutch disease effects of transfers hurt exports most. If the growth costs of these structural changes are judged to be substantial, the current policy consensus, which favors emissions tradability (on efficiency grounds) supplemented with financial transfers (on equity grounds), needs re-consideration.
Topic:
Climate Change, Development, and Economics
Political Geography:
China, India, and Brazil

390. The Great Regression? Financial Crisis in an Age of Global Interdependence

Author:
Vadim Kononenko, Raimo Väyrynen, Toby Archer, Kristian Kurki (ed.), and Matti Nojonen
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs
Abstract:
The financial crisis and the ensuing global economic downturn have been the focal point of news coverage and policy analysis for over a year now, and speculation has been rife about how things will pan out. At one extreme are those who shrug the situation off as a significant yet transient dent in economic development, with marginal repercussions on the global system. At the other end are those touting the crisis as the first step in an epoch-making transition in the global power balance, where rapidly expanding economies like China, Brazil and India will make gains on the hitherto dominant developed nations, shifting the distribution of power in the world. Whatever the eventual outcome, there is no denying that the crisis's impact on international relations will be significant.
Topic:
Economics, Globalization, Power Politics, and Financial Crisis
Political Geography:
China, India, and Brazil