Bilateral tariff rates in international trade: finished goods versus intermediate goods

In this paper, we examined back-and-forth international transactions through tariff reduction by estimating modified gravity equations for finished goods and intermediate goods separately. Our main findings are as follows. Exports of finished machinery products are negatively associated with not only the importer’s tariff rates on finished machinery products but also the exporter’s tariff rates on machinery parts. Similarly, exports of machinery parts are negatively associated with not only the importer’s tariff rates on machinery parts but also the exporter’s tariff rates on finished machinery products. These results imply that tariff reduction in only one production process in an industry has the potential to drastically change the magnitude of trade in the whole industry.     

The impact of international agreements on domestic policy: An analysis of tariff policy in African countries

This paper estimates a fixed effects tariff model to study the impact of the tariff reform provisions of international agreements on domestic tariffs, using a sample of eight Sub-Saharan African countries. The structure of the model explaining domestic tariff changed from the preagreement period to the postagreement period. However, the results indicate that for the most part, efforts by governments to adhere to tariff agreements failed in all but a few countries. Even for the countries in which the agreements appeared to be successful, the significance of the results is relatively weak.     

The common external tariff of a customs union: Alternative approaches

The most prominent exception to the cardinal ‘most favoured nation’ principle of the General Agreement on Tariffs and Trade (GATT) of 1947 is in its Article XXIV relating to Customs Unions (CUs) and Free Trade Areas (FTAs). This article required, first, the general incidence of the duties and regulations of commerce imposed by members of the CU with respect to trade with non-members shall not on the whole be higher or more restrictive than those that were applicable prior to the formation of CU or FTA, and, second, that substantially all the trade among members be free. Neither requirement was very operational, because the phrases ‘general incidence’ and ‘substantially all’ being difficult legal concepts to apply. The agreement of 1994 establishing the World Trade Organization (WTO) has made ‘general incidence’ precise by defining it import-weighted average of height of barriers but without offering any rationale for the definition. Now that preferential trading arrangements such as FTAs are proliferating, reform of Article XXIV is of importance. This paper describes alternative approaches to the central question of common external tariffs of a CU. Taking off from the work of Kemp and Wan who showed the existence of a common external tariff of CU that keeps the welfare of non-members unchanged while revising that of the CU as compared to the situation prior to the formation of CU, it characterizes such a tariff structure for two leading benchmark examples as consumption-weighted average of pre-union tariffs and subsidies in the member countries.     

The economic impact of the Russian import ban: a CGE analysis

The aim of this paper is to assess the economic impact of the Russian embargo from 7 August 2014 on certain agricultural food products from the EU, the USA, Norway, Canada and Australia. The effects of this economic sanction are analysed in the framework of a computable general equilibrium (CGE) model with a particular focus on bilateral and total exports, production and welfare. The detailed, based on real trade data, calibration of the model allows for an exact identification of the sectoral shares and prohibitive tariffs aggregated to match the CGE model’s sectoral level of aggregation. In addition, the paper carries on a validation exercise to compare the model’s predictions with real trade data developments. The modelling simulation results show that the impact of the ban on total exports of the EU, the USA, Norway, Canada and Australia is limited. Nevertheless at a disaggregate level there are sectors – ‘vegetables and fruits’, ‘other meat’ and ‘dairy products’ – which experience two digit percentage change declines.     

The scale of Norwegian interwar unemployment in international perspective

Abstract

The author offers revised estimates of Norwegian interwar unemployment, and argues that total unemployment as a percentage of the labour force was considerably lower than the unemployment rate for trade unionists. The new figures, suggesting annual unemployment to hover between 5 and 10 percent for most of the interwar period, seem somewhat lower than the scale of Norwegian interwar unemployment according to the conventional view. However, they correspond well with similar calculations carried out for other countries. suggesting that unemployment as a percentage of the total labour force was about 1.5-3 times lower than that among insured workers.     

The choice between a tariff and a quota under uncertainty

Conclusions The results concerning the choice between a tariff and a quota under the assumption of perfect competition and three kinds of uncertainty are summarized in the table. An analysis of the uncertainty, under which a government using a tariff or a quota can determine the value of imports or the quantity domestically supplied (i.e. employment), gives neither the same result for the two instruments (equivalence) nor the same result for the three situations considered. Therefore the choice between a tariff and a quota in case of uncertainty depends on the purpose, and whether the initial uncertainty concerns domestic demand, foreign or domestic supply. This conclusion corresponds to the well-known phenomenon that in case of a disturbance to an open economy the choice between a change in the rate of exchange and a change in the demand policy depends both on the goal and on the kind of disturbance.     

The role of creative innovation in economic growth: Some international comparisons

For many countries, export-driven policies have thus far produced dramatic increases in real per capita income. At the same time, sustainable growth requires that technological innovation proceed at comparable rates if mutual gains from globalization are to be realized. In this paper, we derive a measure of innovation and test the extent to which institutional policy choices enhance or delay its diffusion. To do so we use a panel regression model, with data on a sample of 103 countries in different geographic regions for the 1980–2005 period. Our findings provide empirical evidence of the positive role of creative innovation in economic growth, and from which we derive several basic policy conclusions.     

Monetary autonomy in selected Asian economies: The role of international reserves

With the increased financial integration of Asian countries, monetary policy takes on the additional role of maintaining the stability of the financial system along with the traditional objectives of promoting growth and employment with price stability. Given the importance and relevance of monetary policy in Asian countries, we examine monetary autonomy and its interaction with financial integration, currency regimes and international reserves for the past two decades in the following Asian countries: Thailand, Korea, Indonesia, the Philippines, and India. The empirical analysis reveals two significant and interesting findings that have policy implications. First, Thailand, Korea and Indonesia, countries that have moved towards a floating currency regime, experienced simultaneous declines in the sensitivity of their interest rates (thereby increasing monetary autonomy), while India continues to increase the sensitivity of its interest rates with a pegged exchange rate and increased financial integration. Second, in all of the studied economies, the accumulation of international reserves has contributed, to some extent, to the retention of monetary autonomy in terms of preventing the sensitivity of the interest rates from rising. We speculate that the accumulation of reserves plays the role of an anchor for monetary autonomy in emerging market economies facing a “fear of floating”.     

The role of education in development: A socio‐political perspective

The question of education remains at the core of the development continuum. While education for the good life has been one of the most persistent concerns of men throughout history, in this presentation, it will be argued that education, for the most part, has taken a pedantic and overly managerial approach. It is the major thesis of this paper that education should presuppose a critical and confrontive posture which should continuously examine our political and administrative given in an attempt to explore possibilities for social change. It is a critical approach to re‐evaluate our relationship with the public and their substantive development needs.     

International transfer of knowledge: The role of international trade and geographic proximity

International Transfer of Knowledge: The Role of International Trade and Geographic Proximity. —The paper examines empirically the effect of international trade and geographic proximity on knowledge inflow to Sweden. Swedish patent data is used to trace knowledge flows. Both geographic proximity and international trade are in a first estimation found to affect knowledge flows. An extreme bounds analysis is conducted on the estimated coefficients. The coefficient for geographic proximity is sensitive to the choice of included variables but the coefficient for international trade is robust. The paper concludes therefore, that international trade facilitates the exchange of knowledge.     

The game-theoretic approach to international policy coordination: Assessing the role of targets

Zusammenfassung Der spieltheoretische Ansatz zur internationalen Koordination der Konjunkturpolitik: Die Rolle der Ziele. - In spieltheoretischen Modellen zur internationalen Koordination der Konjunkturpolitik wird die Rolle der von den Politikern verfolgten Ziele oft nur unzul?nglich berücksichtigt. Der vorliegende Artikel behebt den Mangel, indem er die Ziele der Politiker in die modelltheoretische Analyse explizit einbezieht. Der Spielraum für Wohlfahrtsverbesserungen durch Koordination erweist sich als direkt proportional zur Abweichung des angestrebten Wertes vom tats?chlichen Wert der Zielvariablen. Es zeigt sich, da? nach einem externen Schock die Anpassung der Ziele an die neue Situation eine Koordination der Konjunkturpolitik überflüssig macht. Darüber hinaus ergeben sich erhebliche Zweifel, ob das bisherige Vorgehen zur Quantifizierung m?glicher Wohlfahrtsgewinne durch Koordination logisch zul?ssig ist.

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Résumé L’approche jeu-théorique à la coordination internationale de la politique de conjoncture: Evaluation du r?le des buts. - Le r?le des buts poursuivis par les politiciens n’est considéré que insuffisamment dans les modèles jeu-théoriques de la coordination internationale de la politique de conjoncture. Cet article remédie ce problème en incluant expressément les buts des politiciens dans l’analyse modèle-théorique. La marge pour des améliorations de bien-être par la coordination est trouvée comme être directement proportioneile à la déviation de la valeur actuelle de la valeur aspirée du but. Les auteurs démontrent que l’ajustement des buts à la nouvelle situation après un choc externe rend superflu la coordination de la politique de conjoncture. De plus, il y a des doutes considérables si la procédure actuelle pour quantifier des gains de bien-être possibles par la coordination soit logiquement correcte.

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Resumen Aplicación de la teoría de juegos a la coordinación internacional de políticas económicas: el rol de las metas. - En los modelos de teoría de juegos aplicados a la coordinación internacional de la política económica las metas perseguidas por los políticos solo son tomadas en cuenta de manera inadecuada. En este trabajo se corrige esta desventaja, al incorporarse las metas de los políticos al análisis teórico. Las posibilidades de lograr niveles m’as altos de bienestar através de la coordinación resultan directamente proporcionales a la distancia entre el valor deseado y el valor realizado. Se demuestra que después de un shock externo la adecuación de las metas a la nueva situación hace redundante la coordinación de la política económica. Además résulta dudosa la coherencia del procedimiento tradicional para cuantificar ganancias de bienestar potenciales derivadas de la coordinación.

     

Distribution policy under trade liberalisation in Zimbabwe: a CGE analysis

A computable general equilibrium model is used to simulate theeconomy-wide and income distribution effects of transfer policiesto the poor. The model consists of seven income distributiongroups - communal farmers, resettlement farmers, unskilled workers,agricultural wage workers, skilled workers, industrial capitalistsand agricultural profit earners. The first four groups are treatedas a low income group and the last three as a high income group.Experiments to increase each of the low income groups' incomesby 5% using different sources of finance are simulated usingthe model. These are: an increase in government expenditurewithout budget balancing measures; an increase in governmenttransfers offset by a decrease in government spending elsewhere;and an increase in direct or indirect taxes. The results ofsuch experiments indicate that a policy of increasing directtaxes and increasing the government deficit in order to supportthe transfers are favourable in terms of increased incomes inthe short run. A policy of increasing indirect taxes and transferringthe revenue raised to the poor ranks last in terms of reducingincome inequalities. Finally, targeted transfers are generallybetter than universal transfers in terms of their benefits tolow income groups and in reducing income inequalities betweenthe low income and the high income groups.     

The welfare effects of the antebellum tariff: A general equilibrium analysis

In this paper a general equilibrium model of the United States in 1859 is developed and solved using the Scarf algorithm. Such a formulation allows the U. S. equilibrium to be computed for differing parameter specifications, so that the comparative static effects of policies involving even very complex interactions within the economy may be analyzed. In this case, the general equilibrium effects of the tariff in the United States are examined by comparing the actual, or initial, equilibrium with a hypothetical equilibrium in which the tariff has been eliminated. We find that the South was in fact injured by the tariff; the price of cotton and the return to slaveholding would have both risen significantly with its elimination. The principal beneficiary of the tariff was free labor. Removal of the tariff would have produced a decrease in the real wage and a slight fall in the return to capital. Overall, real income in the United States would have declined by 1.07 to 1.09% as a result of tariff elimination, or by between $44 and $45 million in current prices. Alternative parameter specifications may produce different results, ranging from the Metzler paradox in the case of very inelastic substitution in R.O.W. consumer demand to cases of increases in real income with tariff elimination in the cases of elastic substitution in either R.O.W. or U. S. consumer demand. A final caveat in judging the results should be inserted here. Factor endowments for 1859 are taken as fixed. The comparative static results here answer the question: What would have the 1859 United States been like if the tariff had been eliminated, allowing time for full adjustment? No dynamic effects are taken into account, such as adjustments in factor supplies. Consequently, the 1859 United States that had consistently followed a free trade policy would have looked quite different from the one that pursued a policy of protection and then eliminated the tariff, which we consider here.     

The role of international companies in the economy of South Africa

Summary It is impossible for corporations that locate in South Africa to follow unilateral policies of their own because they must enter into partnership with any of the parastals that we have already identified. Any foreign investor is required to sell some of his shares to one of the government corporations or its subsidiaries before he can start his business operations. These shares are not sold in the market, but under definite partnership agreements. This article is a condensed version of chapter 10 of the recently revised book, The Political Economy of South Africa: The Making of Poverty, published by University Press of America in Washington, D.C.     

The refsnes seminar: Economic theory and north–south negotiations

This paper attempts to assess existing economic theory and its use by policy-makers in North-South negotiations. Particular attention is directed at international trade in manufactures, primary commodity issues, and international monetary questions. Problems considered include: weak theory, the employment of overly crude models by policy-makers, paradigm clash, implicit bias, and inadequate knowledge of facts. An agenda for further research and possible action concludes the discussion. The paper is a personal summary of the discussions in a conference on the relevance of economic theory to NIEO negotiations.