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371. Regional and Multilateral Trade Liberalization: The Effects on Trade, Investment and Welfare

Author:
Warwick McKibbin
Publication Date:
12-1999
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
This paper explores the impact on economies of trade liberalization under alternative regional and multilateral arrangements: unilateral liberalization; liberalization as part of the ASEAN regional grouping; liberalization as part of the APEC regional grouping; or liberalization as part of a multilateral trade liberalization regime. The paper is based on a Dynamic Intertemporal General Equilibrium model (DIGEM) called the Asia-Pacific G-Cubed Model. It is shown that the long run gains from a country's own liberalization tend to be large relative to the gains from other countries liberalizing although this varies across countries. It is also shown that there is a significant difference between the effects on GDP (production location) and the effects on consumption per capita of the alternative liberalization approaches across countries. The timing of liberalization is also shown to matter. With open capital markets the gains from credibly announced trade liberalization are realized before the reforms are put in place because there is a rise in global investment which raises the global capital stock. In addition there is a reallocation of capital via financial market adjustment. This paper also demonstrates that for some economies, there can be short run adjustment costs to trade liberalization because resources cannot be instantly reallocated across sectors in an economy. These adjustment costs from own liberalization can be reduced if more countries also liberalize. The nature of the dynamic adjustment suggests that other macroeconomic policies may play an important role during the early period of phased-in trade liberalization.
Topic:
Economics, Emerging Markets, and Globalization
Political Geography:
China, Israel, East Asia, and Asia

372. Rapid Economic Growth in China: Implications for the World Economy

Author:
Warwick McKibbin and Yiping Huang
Publication Date:
12-1999
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Rapid growth of the Chinese economy in the past decade and its potential for strong growth into the foreseeable future have caused anxieties in the rest of the world. Some commentators see Chinese growth wholly in terms of competition for trade and investment opportunities with other developing economies and a major cause of structural adjustments in the advanced industrialized economies. In particular there have been warnings of severe consequences for international agricultural markets. In this paper we use a dynamic general equilibrium model called the G-CUBED model (developed by McKibbin and Wilcoxen) to explore possible future paths of the Chinese economy based on projections of population growth, sectoral productivity growth, energy efficiency and technical change in the Chinese economy. This model captures not only the composition of the direct trade impacts of developments in the Chinese economy but also the implications of the endogenous flows of financial capital on macroeconomic adjustment in the world economy. The study focuses on the period from 1990 to 2020. Rather than being a problem for the world economy, we find strong growth in China is beneficial for the world economy directly through raising world incomes.
Topic:
Economics, Emerging Markets, and Globalization
Political Geography:
China, Israel, East Asia, and Asia

373. The Transmission of Productivity and Investment Shocks in the Asia Pacific Region

Author:
Warwick McKibbin
Publication Date:
12-1999
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
An important aspect of macroeconomic interdependence in the Asia Pacific region is the adjustment of trade and current account balances in response to changes in saving and investment rates in individual economies. Greater trade flows, reliance on imported intermediate goods as well as more integrated capital markets imply that shifts in private or public saving and investment rates in an economy in the region can potentially have large impacts on other economies. This paper explores the quantitative nature of these linkages by focusing on a number of shocks within the context of a new dynamic multi-sector global model called the Asia-Pacific G-Cubed Model (AP-GCUBED). This model integrates sectoral adjustment with macroeconomic interdependence including explicit treatment of capital flows to explore the implications of a variety of productivity and investment shocks in the Asia Pacific Region. The first shock considered is a permanent decline in private investment in Japan. The second shock is a temporary rise in total factor productivity growth in China. The fall in Japanese investment is found to have a significant effect on trade flows and financial flows in the region whereas the rise in Chinese productivity has a quite different effect on the region.
Topic:
Economics, Emerging Markets, and Globalization
Political Geography:
China, Israel, East Asia, and Asia

374. Greenhouse Gas Emissions

Author:
Jeffrey A. Frankel
Publication Date:
06-1999
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
Growth targets for emissions of greenhouse gases (GHG) by developing countries should be part of the effort to mitigate global climate change. This policy brief advances an approach for determining appropriate targets. They should be neither so tight as to retard economic development nor so generous as to confer enormous windfall gains. But where in this range should these targets be set? A fair allocation for potential new participants would fit the present pattern of emissions reductions agreed among industrialized countries at Kyoto in December 1997. Richer countries, in effect, agreed to make bigger sacrifices (on average) than did poor ones. Given uncertainty about the future, however, fixing the precise quantitative emission target now would create great risks regarding the ultimate stringency of the target. It would raise concerns that a target could turn out either unexpectedly stringent—unintentionally constraining economic development—or unexpectedly lax—resulting in emissions greater than in the absence of an agreement. Indexing emission targets to a country's gross domestic product (GDP) growth would moderate the effects of uncertainty.
Topic:
International Relations, Emerging Markets, and Environment

375. Catch-Up; Why Poor Countries Are Becoming Richer, Democratic, Increasingly Peaceable, and Sometimes More Dangerous

Author:
Henry S. Rowen
Publication Date:
08-1999
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
It is easy to be confused about the world's prospect. On the one hand, since the collapse of the Soviet Union and its empire, many millions of people have been freed from economic and political shackles that had long kept them under authoritarian rule and in poverty—or at least far poorer than they should be. On the other hand, several parts of the world are beset by political turmoil and conflicts, rapid population increases, and falling incomes.
Topic:
Security, Democratization, Development, Emerging Markets, and Third World
Political Geography:
Soviet Union

376. Sustainable Use of Biodiversity — What We Can Learn from Ecotourism in Developing Countries

Author:
Petra Stephan
Publication Date:
11-1999
Content Type:
Working Paper
Institution:
Institute for Development and Peace
Abstract:
The General Assembly of the United Nations proclaimed the year 2002 as "The International Year of Ecotourism". Multilateral development institutions such as the World Bank, the Global Environmental Facility, governments in developing countries, the tourism industry as well as local non-governmental organizations all over the world count on ecotourism as a supposed panacea for development and biodiversity protection. With assumed annual growth rates from ten up to thirty percent, ecotourism is often praised as the most dynamic sector in the tourism industry. But some of the stakeholders in the tourism industry seem to use a very extended definition of ecotourism. It includes wildlife watching as well as adventure tourism. Tourism products that are advertised under the label "eco" often only have in common, that they take place in nature. A lot of these offers can be called "ecotourism-light". They only add visits to protected areas to regular package tours, for instance. The concept of "ecotourism" seems to share this fate with the concept of "sustainable development": everybody talks about it and everybody defines it in accordance with one's own interests.
Topic:
Emerging Markets, Environment, Globalization, and International Political Economy

377. Environmental Trends in Transition Economies

Publication Date:
10-1999
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
The collapse of communism in Central and Eastern Europe and the subsequent disintegration of the Soviet Union brought the region's serious environmental problems to the attention of the international community. Although the countries in this vast area of the world are remarkably diverse, central economic planning had created a common pattern of environmental problems. Notable among these problems were levels of industrial pollution that, in many places, threatened human health; widespread land and water degradation (particularly in the former Soviet Union); and the persistent neglect of nuclear safety and nuclear waste management.
Topic:
Economics, Emerging Markets, and Environment
Political Geography:
Eastern Europe and Soviet Union

378. The U.S. Perspective on Globalization

Author:
Stuart Eizenstat
Publication Date:
04-1999
Content Type:
Policy Brief
Institution:
Overseas Development Council
Abstract:
The Overseas Development Council was prescient in calling for an international dialogue on globalization last year. It is a particularly important time for a dialogue on the relationship between globalization and development, given new concerns raised by the global financial crisis.
Topic:
Development, Economics, Emerging Markets, Globalization, and International Trade and Finance
Political Geography:
United States

379. Modell Deutschland as an Interdenominational Compromise

Author:
Philip Manow
Publication Date:
05-1999
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
Usually, Germany's social market economy is understood to embody a compromise between a liberal market order and a corporatist welfare state. While this reading of the German case is certainly not entirely wrong, this paper argues that only if we account for the close intellectual correspondence between lutheran Protestantism and economic liberalism on the one hand and between Catholicism and welfare corporatism on the other, can we fully comprehend the nature of the German post-war compromise. In particular, this perspective allows to better explain the anti-liberal undercurrents of Germany's soziale Marktwirtschaft. It was especially the role which Protestant Ordoliberals ascribed to the state in upholding economic order and market discipline which accounts for the major difference between 'classic' and 'German-style' economic liberalism. Yet, the postwar economic order did not represent a deliberately struck compromise between the two major Christian denominations. Rather, Germany's social market economy was the result of the failure of German Protestant Ordoliberals to prevent the reconstruction of the catholic Bismarckian welfare state after the authoritarian solution, which Ordoliberals had endorsed so strongly up until 1936 and from which they had hoped there-inauguration of Protestant hegemony, had so utterly failed. Since the ordoliberal doctrine up to the present day lacks a clear understanding of the role of the corporatist welfare state within the German political economy, its insights into the functioning logic of German capitalism have remained limit. The paper also claims that accounting for the denominational roots of the postwar compromise allows us to better understand the relationship between consociationalism and corporatism in 'Modell Deutschland'.
Topic:
Economics, Emerging Markets, and Government
Political Geography:
Europe and Germany

380. Regulation of Social Services in the Least Developed Countries: What are the Issues at Stake?

Author:
Cecilia Ugaz
Publication Date:
12-1999
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The privatization trend affecting the state involvement in productive sectors is also challenging the role of the state in the provision of social services. And, as private participation in social sectors increases, a regulatory framework is needed to ensure that the market reaches socially efficient outcomes. The regulation of social services carries the problem of conceptualization. What is the aim of regulatory intervention in social sectors? And what is the market structure to which this regulatory constraint will be applied to? These are the questions we discuss in this paper, is devoted to analysing the role of regulation of social services in low-income countries within the so-called mixed economy of care, characterized by multiple providers: the state, the private sector, non-profit organizations.
Topic:
Emerging Markets, Government, and Third World