On the International Linkages between Trade and Merger Policies*

In a three‐country model, this paper investigates linkages between merger incentives of exporting firms and the trade policy of an importing country. When exporting firms come from only one country, the tariff response of the importing country reverses the welfare effects of a merger in the exporting country. If there exist two exporting countries, a merger creates two types of conflicting international externalities. First, a merger in one exporting country increases profits of all firms. Secondly, non‐merged firms lose if the importing country is free to raise its tariff in response to a merger of foreign exporters.     

Trade Liberalisation of Intermediate Inputs

This paper considers the effects of tariff cuts in the intermediate inputs market. Traditional trade theories predict that upstream industries would contract and downstream industries would expand. In contrast, new trade theories show that trade liberalisation of the intermediate inputs market may expand both upstream and downstream industries.     

APEC's Trade Liberalisation and the WTO

The APEC process for trade liberalisation differs from that of the WTO multilateral and regional processes. This article outlines and assesses the APEC process and considers how it might facilitate the WTO process.     

Global Trade Liberalisation: Coordination and Coherence

Globalisation is a major issue in international debate. The demonstrations in Seattle in 1999 showed that there is a high level of public concern over the growth of world trade and the institutions, such as the International Monetary Fund, the World Bank and the World Trade Organisation (WTO), that have key roles in global trade and development. Much of the concern relates to developing countries and their place in the international economy. This article is an edited version of a paper presented by His Excellency Dr Supachai Panitchpakdi as the 2000 David Finch Lecture at the University of Melbourne on 5 July 2000. Dr Supachai is a key player in the development of the international economy and is the next Director General of the WTO. In his article, Dr Supachai addresses many of the concerns relating to globalisation and developing countries. He discusses the key issues facing the WTO and world trade in general, focusing on the need for both coordination and coherence in the development of international economic relations. In particular, he highlights the need for an inclusive approach to international trade liberalisation.     

Does Trade Liberalisation Promote Economic Development?

The last twenty years have seen an extraordinary number of trade liberalisation episodes in developing countries. Some have been voluntary, most have been policy conditioned under the aegis of the Bretton Woods agencies. This paper begins by setting out the background to these trade reform programmes and details their ingredients. It then goes on to review the evidence extant on liberalisation and growth and reports new evidence. The latter suggests that liberalisation does tend to enhance growth, albeit with a lag. The paper concludes with an analysis of the lessons learned from experience with liberalisation in terms of credibility, timing and sequencing.     

Merger Profitability and Trade Policy

We study the profitability incentives for merger and the endogenous industry structure in a strategic trade policy environment. Merger changes the strategic trade policy equlilibrium. We show that merger can be profitable and welfare enhancing, even though it would not be profitable in a laissez‐faire economy. A key element is a change in the governments’ incentives to give subsidies to their local firms. National merger induces more strategic trade policy, whereas international merger does not.     

Trade and Financial Liberalisation and Endogenous Growth in Bangladesh

This paper empirically explores the joint impact of financial and trade liberalisation on economic growth in Bangladesh using various time series techniques, endogenous growth theory and annual data from 1975–95. Our empirical results are in accordance with the predictions of endogenous growth theory that both financial and trade liberalisation, along with investment in human capital enhance economic growth, suggesting the case for liberalisation of both the financial and trade sectors and suggesting that government initiatives in education policy may expedite economic growth. Results are robust across methodologies. [E52, F43, O11, O53]     

Trade Liberalisation, Closer Economic Relations and Intra-Industry Specialisation

Abstract
Much of the growth in trade among the industrialised countries, and more recently among countries in the Asia-Pacific region, has taken the form of intra-industry trade (HT). Australia has historically had one of the lowest shares of IIT among OECD countries. This article examines how Australia's IIT has changed in the 1980s in response to the process of trade liberalisation and completion of the Closer Economic Relations (CER) pact with New Zealand. HT indexes are estimated for Australia's multilateral and trans-Tasman trade for 1981 and 1991 for 132 industries using data at the 3 and 4-digit level of the Standard International Trade Classification (SITC). The results point to a sharp increase in the share of IIT for both multilateral and trans-Tasman trade. Industries that have undergone the largest reductions in protection levels have increased their shares of IIT quite considerably. Increased intra-industry specialisation suggests that the short-run adjustment costs associated with trade liberalisation are likely to be lower. If IIT continues to grow in response to the ongoing process of internationalisation of the Australian economy, then Australia's prospects for expanding its share of world trade are good.     

Agglomeration and Economic Development: Import Substitution vs. Trade Liberalisation

This paper analyses a model of economic development in which international differences in industrial structure and income are caused by the agglomeration of industry in a subset of countries. Economic development may not be a gradual process of convergence by all countries, but instead involve countries moving sequentially from the group of poor countries to the group of rich countries. The role of trade policy in promoting industrialisation is studied. While both import substitution and unilateral trade liberalisation may be 'successful' in attracting industry, they attract different sectors and welfare levels are higher under trade liberalisation.     

中国当前的加工贸易与加工贸易政策(上篇)

本文概述了目前我国加工贸易的状况和政府给予加工贸易的优惠政策，分析了加工贸易政策的利与弊，得出了加工贸易政策目前已经弊大于利的结论，提出了取消给予加工贸易的优惠政策的主张     

Trade Policies and Industrialisation*

In this paper, the three-commodity model of Gruen and Corden is used to examine the effects of import restriction policies designed to promote industrial development. It is shown that under circumstances which might reasonably be expected to exist in developing economies such policies will likely appear successful in the short run, but may fail in the long run, if the import-competing sector's expansion is largely achieved by the diversion of resources from an infant manufacturing sector producing exportables. An export subsidy is the more appropriate policy under these circumstances.     

Trade Liberalisation and the Trade‐Off Between Growth and the Balance of Payments in Latin America

The broad purpose of trade liberalisation is to raise the rate of growth of countries on a sustainable basis, consistent with the achievement of other macroeconomic objectives. In this article we consider whether trade liberalisation in 17 countries of Latin America has improved the trade‐off between gross domestic product (GDP) growth and the trade balance, allowing the countries to grow faster without sacrificing foreign exchange. We find that in the aftermath of liberalisation, the majority of countries did grow faster, but at the expense of a deteriorating trade balance. Testing formally for the impact of trade liberalisation in a full model of trade balance determination, we find that only in Chile and Venezuela has the trade‐off unequivocally improved. In other countries there has been a significant deterioration or no change. Nine out of the 17 countries have grown faster post‐liberalisation than pre‐liberalisation but, except for Chile and Venezuela, at the expense of a wider trade or current account deficit.     

Technology Transfer and Merger Activities with Trade and Tariffs

In order to better understand the effects of globalization on merger incentives this paper considers a set of commonly observed mergers whereby a restructured target (with improved managerial or technical capability) continues to supply the market. In contrast to the market‐concentrating merger literature it finds that trade barriers tend to encourage mergers, including potentially welfare‐reducing, tariff‐jumping mergers. Multilateral trade liberalization, however, encourages welfare‐improving mergers. Hence, and despite the skepticism of regulatory authorities towards the existence of cost synergies as a consequence of mergers, this paper suggests that in order to assess the impact of trade liberalization under the WTO on merger incentives, and consequently on prices, quantities, and welfare, accurate information on ex ante cost differences and the transferability of managerial and technical techniques is required.     

Employment Risk and Optimal Trade Policies

This paper considers trade policies and welfare in a Harris–Todaro model with risk-averse workers. Workers are assumed to have identical and homothetic preferences, but their incomes differ, depending on whether and where they are employed. When workers are equally valued, maximizing social utility is equivalent to maximizing the utility of a rural worker. An optimal policy consists of a production subsidy on the exportable and an import tariff. This model explains the widespread use of import tariffs on manufactured goods along with production subsidies on the export sectors in many LDCs.
JEL Classification Numbers: F13, D8.     

International Cross-Ownership and Strategic Trade Policies

The paper analyzes a model of strategic trade policies in the presence of international cross-ownership of firms that are heterogenous both in terms of costs and in terms of extent of foreign ownership. The equilibrium pattern of taxes and subsidies is characterized for any arbitrary cross-ownership profile, and any number of heterogenous firms. The equilibrium subsidy (or tax) given to any firm is shown to depend, in a separable manner, on the firm's characteristics and on the covariance of the distribution of cost and foreign ownership across firms. A neutrality theorem is proved concerning the Nash equilibrium of the game between governments: in equilibrium, the pattern of trade, the value of each firm, and world welfare are independent of the ownership pattern.     

Modelling Labour Market Adjustment to Trade Liberalisation in an Industrialising Economy

This paper investigates labour market responses to trade liberalisation in an industrialising country. Short and long run responses of employment and wages are examined using a specific factor trade model, which underpins the empirical work. Employment and wage equations are estimated using dynamic panel techniques for importable and exportable sectors in Mauritius and for a period covering both the pre- and post-liberalisation regimes. The empirical testing finds some support for the theoretical predictions of differential responses between sectors. Incre ases in female participation, however, appear to have dampened the adjustment burdens of liberalisation on importables     

The 1990 Trade Liberalisation Policy of Turkey: An Applied General Equilibrium Assessment

I use a static multi-sector, multi-labour, multi-household Applied General Equilibrium (AGE) model for Turkey to show that the trade policy implemented by Turkish policy-makers in the 1990s is not trade diverting. Aggregate welfare rises by 0.6% of the consumer income. Most importantly, since agriculture and traditional the rural income), while urban groups are worse off (-0.5% of the urban income). It is also shown that overall income inequality declines by 1.1-1.7%, and that its main source is the inter-income inequality between urban and rural areas, which decreases by 8.9- 14.7%. [D58, F14, F17]