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121. The Missing Links between Foreign Investment and Development: Lessons from Costa Rica and Mexico

Author:
Kevin Gallagher and Eva Paus
Publication Date:
02-2006
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
A developing country will derive long-lasting development benefits from FDI only, if there is the right coincidence between its location-specific assets and TNCs\' global interests, and the right match between the country\'s national linkage capability and TNCs\' strategic interest in domestic sourcing. We argue that Costa Rica and Mexico have been very successful in attracting high-tech FDI due to the cumulative results of past development policies, proximity to the U.S., and trade arrangements. However, a combination of pervasive market failures, government inaction, and changes in TNC strategies explains why the two countries have not been able to reap lasting benefits from high-tech FDI. We conclude that pro-active government policies have to be an integral part of any FDI-linked development strategy. Pro-action is needed to attract FDI, to promote indigenous linkage capability, and to enhance key location-specific assets on an on-going basis in the context of a coordinated policy framework.
Topic:
Economics and Markets
Political Geography:
Central America, North America, and Mexico

122. Budgets to Make America Safer

Author:
Cindy Williams
Publication Date:
06-2006
Content Type:
Policy Brief
Institution:
MIT Center for International Studies
Abstract:
Since September 2001, federal budgets for national security have climbed more than 50 percent in real terms. Unfortunately, much of the added money reflects “business as usual” rather than programs aimed at making the nation safer from today's threats. Compared with past decades, national security spending makes up a relatively small share of the U.S. economy. Nevertheless, with the federal debt growing rapidly and as large numbers of baby boomers approach retirement age, many observers expect future federal budgets to be tight. Thus it is critically important to ensure that national security funds go to projects that make the nation more secure. This article examines broad changes in national security budgets since September 2001. It first reviews the three categories of federal spending for national security. It then examines how budgets in those categories have changed since September 2001. It ends with a look at alternatives that seem more relevant in an era of international mass-casualty terrorism.
Topic:
Security, Economics, and Politics
Political Geography:
America and North America

123. The Asian Economic Revolution and Canadian Trade Policy

Author:
John Whalley
Publication Date:
08-2006
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
This paper discusses the broad orientation of Canada's trade policy relative to two major historical phases of development based on a secure national market behind the National Policy from 1879 until the 1930s, and progressive integration with the United States (US) through Bilateral Agreements (1930s), the Auto Pact (1965), the Canada-US Free Trade Agreement (1987) and the North American Free Trade Agreement (NAFTA) (1994). Currently, Canada exports approximately 85% to the US, but imports from China account for 8% and are growing at over 20% a year. Sharply unbalanced (surplus) trade with the US is counterbalanced by unbalanced deficit trade with China. A scenario of elevated growth in Asia (principally China, India, and the Association of Southeast Asian Nations or ASEAN) poses challenges of relative disintegration from North America and growing global integration centered on Asia. Seemingly a series of implications follow; including positioning Canada within the emerging network of regional agreements in Asia, more resourcebased and Western Canada focused trade and infrastructure development, and responding to capital market integration with Asia. Broader issues include the potential adjustments facing Central Canada as Asian imports of manufactures displace both imported manufactures from the US and domestic production are raised.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, China, Canada, Asia, and North America

124. China and the Depreciating U.S. Dollar

Author:
Richard C. K. Burdekin
Publication Date:
01-2006
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
Over the past five years, U.S. exports to China have been dwarfed by imports from that country, with the resulting trade deficit igniting a bout of China bashing reminiscent of the Japan bashing of the 1980s. A major culprit in the trade imbalance, according to many U.S. analysts and policymakers, is China's currency: the renminbi, they say, is too cheap relative to the dollar. Some are calling for high tariffs on Chinese goods or for further exchange-rate adjustment that would revalue the renminbi significantly upward, making Chinese goods less competitive. But with just 10.4 percent of total U.S. trade attributed to China in the first half of 2005, it is unrealistic that any renminbi exchange-rate adjustment could rein in the burgeoning U.S. trade deficit. And if the adjustment were drastic the United States could be the big loser: driving China out of the market for U.S. treasuries would most likely have calamitous consequences, not only for the dollar but for U.S. credit markets and for the U.S. economy in general.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, Asia, and North America

125. The National Gasification Strategy: Gasification of Coal and Biomass as a Domestic Supply Option

Author:
William G. Rosenberg, Dwight C. Alpern, and Michael R. Walker
Publication Date:
01-2005
Content Type:
Working Paper
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
Natural gas provides 24 percent of the energy used by U.S. homes and businesses and is a vital feedstock for chemical, fertilizer, and other industries. Since 1999, natural gas prices in the U.S. have more than doubled, adding about $70 billion annually to U.S. natural gas customers and causing widespread adverse economic impacts, including high home heating bills, escalating commercial energy costs (affecting hospitals, schools, office buildings, and shopping centers ), substantial job losses in chemicals, fertilizer, and manufacturing industries, and financial distress in the electric power sector.
Topic:
Economics, Energy Policy, and Industrial Policy
Political Geography:
North America

126. Building a North American Community

Publication Date:
05-2005
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
The security and well-being of its citizens stand at the very pinnacle of any government's responsibilities. At the beginning of the twenty-first century, the futures of Canada, Mexico, and the United States are shared as never before. As a result, all three countries face a historic challenge: Do they continue on the path of cooperation in promoting more secure and more prosperous North American societies or do they pursue divergent and ultimately less secure and less prosperous courses? To ask the question is to answer it; and yet, if important decisions are not pursued and implemented, the three countries may well find themselves on divergent paths. Such a development would be a tragic mistake, one that can be readily avoided if they stay the course and pursue a series of deliberate and cooperative steps that will enhance both the security and prosperity of their citizens.
Topic:
Foreign Policy, Economics, and Regional Cooperation
Political Geography:
United States, Canada, North America, and Mexico

127. Timely Demise for Free Trade Area of the Americas

Author:
Laura Carlsen
Publication Date:
11-2005
Content Type:
Policy Brief
Institution:
Foreign Policy In Focus
Abstract:
The stage was set for a showdown. When the Bush cabinet announced intentions to revive the moribund Free Trade Area of the Americas at the Fourth Summit of the Americas in Mar del Plata, the countries of the Southern Common Market closed ranks to prevent it. What followed was a diplomatic melee that reflects not so much divisions within Latin America, as a growing resistance to the current free trade model throughout the developing world.
Topic:
Economics and International Trade and Finance
Political Geography:
South America, Latin America, and North America

128. The Hidden Cost of Homeland Defense

Author:
Benjamin Friedman
Publication Date:
11-2005
Content Type:
Policy Brief
Institution:
MIT Center for International Studies
Abstract:
Conventional wisdom says that none of us are safe from terrorism. The truth is that almost all of us are. The conventional belief is that in response to terrorism, the federal government has spent massive sums on homeland security. The fact is that the increased federal spending on homeland security since September 11 pales in comparison to increases in the U.S. defense budget. But homeland security has costs beyond spending, costs that conventional thinking rarely considers. U.S. homeland security policy conjures up a flawless enemy that could strike at any moment, in any place. That policy institutionalizes the fears terrorists created and harms liberal values.
Topic:
Security, Economics, and Terrorism
Political Geography:
United States and North America

129. Getting to “No”: Defending Against Demands in NAFTA Energy Negotiations

Author:
Antonio Ortiz Mena L.N.
Publication Date:
06-2005
Content Type:
Working Paper
Institution:
Centro de Investigación y Docencia Económicas
Abstract:
How can a developing country defend itself against unwanted demands in international economic negotiations, especially when the demandeur is a stronger state? Such defense can be a necessary component of any strategy, not only a distributive one but also a mixed strategy aimed at a wider agreement that benefits both sides. Sometimes what looks like an unwelcome demand turns out, after exploration and exchanges of concessions, to be an acceptable element in a beneficial package deal. But some demands are unwelcome in the stronger sense that one's government places an infinite reservation value on that particular issue. The government would prefer no agreement. In the case of a deal breaker, the delegation can walk away from the entire negotiation, but this could have large costs in opportunities foregone and even possible penalties imposed. What are the alternatives short of walking away? Mexico's negotiators faced such situation in the North American Free Trade Agreement (NAFTA) negotiations with the United States and Canada (1990-1992), specifically in the energy sector. In general the three states sought a mutual-gains agreement, and in general each employed a mixed strategy. In energy, however, Washington made demands--regarding investment and supply commitments--which Mexico found unacceptable. At the end of the day the Mexican team managed to attain its main offensive negotiation aims in NAFTA (significantly improved market access, faster tariff reductions in the U.S. and Canada than in Mexico, and an effective dispute settlement mechanism), as well as the main defensive ones in energy. How did they do it? Structural conditions, such as being a neighbor of the U.S., gives Mexico certain leverage in negotiations, for the U.S. will typically take into account non-economic considerations when negotiating over economic issues. Nonetheless, many lessons derived from Mexico's negotiation strategy in energy negotiations during NAFTA can be applied across a range of cases.
Topic:
Development, Economics, Energy Policy, and Government
Political Geography:
United States, Washington, Canada, North America, and Mexico

130. Unemployment, Macroeconomic Policy and Labor Market Flexibility: Argentina and Mexico in the 1990s

Author:
Roberto Frenkel and Jaime Ros
Publication Date:
02-2004
Content Type:
Working Paper
Institution:
Kellogg Institute for International Studies
Abstract:
This paper compares the divergent unemployment experiences in Argentina and Mexico in the 1990s, examining in detail the remarkable contrasts in the adjustment of the labor market in these two countries that occur despite equally striking similarities in the evolution of a number of macroeconomic variables and external economic shocks. The paper focuses on the role of macroeconomic policies and the type of industrial restructuring in these developments and considers to what extent the divergent unemployment experiences can be explained by differences in the institutional characteristics of the labor market.
Topic:
Economics and Industrial Policy
Political Geography:
Argentina, South America, North America, and Mexico