The Earnings Effects of Multilateral Trade Liberalization: Implications for Poverty

Most researchers examining poverty and multilateral trade liberalizationhave had to examine average, or per capita effects, suggestingthat if per capita real income rises, poverty will fall. Thisinference can be misleading. Combining results from a new internationalcross-section consumption analysis with earnings data from householdsurveys, this article analyzes the implications of multilateraltrade liberalization for poverty in Indonesia. It finds thatthe aggregate reduction in Indonesia's national poverty headcountfollowing global trade liberalization masks a more complex setof impacts across groups. In the short run the poverty headcountrises slightly for self-employed agricultural households, asagricultural profits fail to keep up with increases in consumerprices. In the long run the poverty headcount falls for allearnings strata, as increased demand for unskilled workers liftsincomes for the formerly self-employed, some of whom move intothe wage labor market. A decomposition of the poverty changesin Indonesia associated with different countries' trade policiesfinds that reform in other countries leads to a reduction inpoverty in Indonesia but that liberalization of Indonesia'strade policies leads to an increase. The method used here canbe readily extended to any of the other 13 countries in thesample.     

The growth of China and India: implications and policy reform options for Malaysia

This study explores the trade‐related impacts of rapid growth of China and India on the Malaysian economy and evaluates policy options to better position Malaysia to take advantage of these changes. Higher growth in China and India is likely to raise Malaysia's national income and to expand Malaysia's natural resource and agricultural exports, while putting downward pressure on exports from some manufacturing and service sectors. Increases in the quality and variety of exports from China and India are likely to increase substantially the overall gains to Malaysia. The expansion of the natural resource sectors and the contraction of manufacturing and services reflect a Dutch‐disease effect that will raise the importance of policies to facilitate adaptation to the changing world economy and improve competitiveness. Most‐favoured‐nation (MFN) liberalisation would increase welfare, and, by increasing competitiveness, raise output and exports of key industries. Preferential liberalisation with India and completely free trade with China would provide greater market access gains than MFN reform, but neither would be as effective in increasing income as MFN liberalisation, and free trade agreements would lead to greater competitive pressure on many of Malaysia's industries than MFN liberalisation. Increased investments in education and infrastructure could boost manufacturing and services sectors in Malaysia, while improving trade logistics would benefit sectors with high transport costs, including the agricultural and resource‐based industries.     

To Choose (Not) to Eat Healthy: Social Norms,Self‐affirmation,and Food Choice

With the rise of obesity in America, especially within the African‐American community, it is essential to identify strategies to encourage healthier food choices. Limited research has examined what, apart from socioeconomic indicators and targeted marketing, affects African Americans’ food choice. The current research explores how a self‐focus or racial group‐focus, in the absence of explicit eating‐norm primes, social influence, and identity threats, affects food choices and this varies by race. A group‐focus leads African Americans (Caucasians) to demonstrate unhealthy (healthy) food choices. On the contrary, a self‐focus leads African Americans to demonstrate healthier preferences while there is no change in Caucasians’ food preferences. Additionally, the current research shows how self‐affirmation, in the absence of threat, can be an effective mechanism for behavior change, for both African Americans and Caucasians. Affirming valued self‐attributes, after a group‐focus, leads to healthier food choices for individuals of both races. These findings are important as they may help identify ways to increase healthier nutrition choices in general and specifically for African Americans. Potential marketing strategies are discussed.     

Status Has Its Privileges: The Psychological Benefit of Status‐Reinforcing Behaviors

Many firms use loyalty programs to stratify their customers into status tiers and reward those with high status with special privileges. This research documents how consumers with high status willingly incur a cost to utilize the exclusive privileges, termed “status‐reinforcing behaviors,” that accompany their high status because doing so reinforces their high‐status identity. They do so in the absence of threats to their high status or self‐worth and also in the absence of an opportunity to conspicuously signal their high status to others through face‐to‐face interactions. This suggests that the behavior is undertaken neither for compensatory nor conspicuous reasons. Across two studies, results indicate that consumers who hold high status in a loyalty program engage in “status‐reinforcing behaviors,” even when doing so offers no material or conspicuous signaling benefit and in fact causes them to incur some costs. Engaging in status‐reinforcing behaviors yields a distinct psychological outcome—elevated feelings of prestige. Results indicate that when high status is made salient, individuals demonstrate a greater propensity to engage in status‐reinforcing behaviors. However, individuals who have a reinforced sense of status (i.e., already validated their high‐status position) are less likely to engage in status‐reinforcing behaviors, which suggests that utilizing status privileges does serve as a reinforcing behavior, even in the absence of a status threat.     

Why Isn't the Doha Development Agenda more Poverty Friendly?

Critics of the Doha Development Agenda rightly point to the lack of aggressive reform in wealthy countries for its role in dampening developing country gains. The authors find that the absence of tariff cuts on staple food products in developing countries also critically limits poverty reduction in those countries. Based on their analysis of the impacts of multilateral trade policy reforms in a sample of 15 developing countries, they find there is some evidence of poverty increases amongst the poor who work in agriculture when they lose protection for their earnings. However, these effects are minimized when agricultural tariffs are cut in all developing countries, and when the impact of lower food prices on low income consumers is taken into account in their 15 country sample.     

Economic Effects of the Syrian War and the Spread of the Islamic State on the Levant

This paper uses a global computable general equilibrium framework with new detail on six Levant countries – the Arab Republic of Egypt, Iraq, Jordan, Lebanon, the Syrian Arab Republic and Turkey – to quantify the direct and indirect economic effects of the Syrian war and the advance of the Islamic State on the Levant. Syria and Iraq bear the brunt of the direct economic costs, while the other Levant countries lose in per capita but not in aggregate terms as the inflows of refugees increase the size of their populations. The war has undermined progress towards deeper regional trade integration, thus adding to varying degrees to the direct costs sustained by the Levant economies and, in the cases of Syria and Iraq, doubling their welfare losses. All Levant countries are foregoing opportunities to expand intra‐Levant trade and the associated gains in economic efficiency. The average welfare effects are not indicative of the distributional effects of war within countries.     

Implications of higher global food prices for poverty in low‐income countries1

In many poor countries, the recent increases in prices of staple foods have raised the real incomes of those selling food, many of whom are relatively poor, while hurting net food consumers, many of whom are also relatively poor. The impacts on poverty will certainly be very diverse, but the average impact on poverty depends upon the balance between these two effects, and can only be determined by looking at real‐world data. Results using household data for 10 observations on nine low‐income countries show that the short‐run impacts of higher staple food prices on poverty differ considerably by commodity and by country, but that poverty increases are much more frequent, and larger, than poverty reductions. The recent large increases in food prices appear likely to raise overall poverty in low‐income countries substantially.