Pandemic (COVID‐19) Policy,Regional Cooperation and the Emerging Global Production Network†

In this paper, we explore the possible policy responses to the COVID‐19 pandemic shock as well as the related economic (financial crisis) shocks on trade and global value chains (GVC) in East Asia. We find that regional policy coordination is critical to mitigate and isolate the pandemic shock. It is important to identify the pandemic events early to flatten the pandemic curve at the national and regional level. This supports a recent study by the World Bank (2020), which highlights the importance of early mitigation policies during the pandemic shock. The cost of the pandemic and economic shocks will increase significantly when several countries in the region experience the pandemic shock concurrently. In this case, flattening the regional pandemic curve becomes important. The results also indicate the need for greater coordination in East Asia to mitigate the pending economic shock in terms of unemployment, corporate bankruptcy and financial market fragility. The paper also highlights that the stability of the GVC network is critical during the pandemic in terms of hedging the risk of disruptions to the procurement of critical medical and health products as well as maintaining service linkages to manufacturing, such as the logistics sector. Regional policy coordination and the stability of GVC will be valuable in the post‐pandemic recovery of the region.     

Trade,technology, and the labour market: impacts on wage inequality within countries

This paper focuses on the widening wage inequality between skilled and unskilled workers within countries and discusses whether trade and technology have contributed to this trend. The paper develops an analytical framework for wage inequality that traces the determinants and their relative roles in wage inequality in different stages of the development of trade theory, especially those considering new evidence after 2011. We find that technology plays a key role in the rise of wage inequality in most countries, while trade plays an increasingly crucial and more complex role in recent years. Skill supply institutions, such as education systems supplying skilled labour or unions participating in wage‐setting processes, suppress the rise of wage inequality in some countries. The paper further outlines the mechanisms through which trade affects wage inequality, including offshoring, firm heterogeneity, labour market frictions and global value chains. We find that trade has indirect effects on technology, which further enlarges the wage inequality among skills. The paper also discusses the policy implications of the impacts of trade and technology on wage inequality.     

An empirical study on public capital spillovers from the USA to Canada

The effect of public capital on private sector productivity has received much attention in the literature. The impact of an adjacent country's public capital on domestic productivity has, however, not been previously examined. This paper attempts to fill this gap by examining the possibility of such spillovers from the USA to Canada. Due to close proximity of both countries, the hypothesis of the paper is that these spillovers are important. A production function model introduces US public capital as an exogenous variable and tests for its significance. The results indicate positive spillovers from the USA public capital to Canadian productivity.     

The impact of material and service outsourcing on employment in Thailand's manufacturing industries

With increasing emphasis on the importance of outsourcing, the ‘fear of job losses’ has been of significant interest, not only in the developed countries, but also in the developing countries. In this article, we empirically investigate the impacts of intermediate inputs (material) and services outsourcing on the relative demands for skilled and unskilled labour in Thailand's manufacturing sectors from 1999 to 2003. Based on the aggregation of establishment-level data at 4-digit industrial classification, we find that both intermediate inputs and service outsourcing are relatively skill-biased. Further, our results show that intermediate inputs outsourcing has negative impacts on the relative demands for skilled and unskilled workers, whereas service outsourcing shifts the demand towards skilled workers at the expense of unskilled workers.     

The determinants of training participation in Singapore

This article uses the Singapore Labour Force survey data to examine the determinants of workers’ participation in training programmes in Singapore. The results show that different socio-demographic and employment related characteristics affect the training participation of workers. Well-educated and better paid workers are much more likely to participate in training programmes than others. Age has a positive impact on training participation for younger workers (under 37 years), but a negative effect on older workers’ participation. The results also indicate that occupational affiliations have a significant impact on training participation. We also find that married workers seem to be less likely to participate in training programmes, but the difference between married and single is only significant at the 10% level. Finally, gender does not have any significant effect at any conventional level although the coefficient on the female dummy is positive, suggesting females might be slightly more likely to participate in training programmes.     

Productivity and Learning‐by‐exporting: A Firm‐level Analysis of Indian Manufacturing

In this paper, we examine whether firms become productive by learning through exporting. To this end, we estimate the production function using microdata of Indian manufacturing firms operating in the period 1991–2001. In contrast to studies on developed countries, our results provide evidence that Indian manufacturing firms are experiencing a rise in productivity through entering export markets and thus experience the learning effect. We also find that there is a productivity rise prior to exporting. Therefore, our results also support the self‐selection mechanism for exporting.     

Bilateral ‘WTO‐Plus’ Free Trade Agreements: The WTO Trade Policy Review of Singapore 2004

The World Trade Organisation's 2004 Trade Policy Review of Singapore (WTO‐TPR Singapore 2004) depicts the small and outward‐oriented economy as one of the most open countries to international trade and investment. The review highlights the benefits of the outward‐oriented strategy that has enabled the Singapore economy to weather recent external shocks such as the Asian financial crisis to the SARS and to the recent unfavourable conditions in the Middle East. In particular, the report commended Singapore's efforts on its liberalisation of the services sector and its economic benefits to consumers and global trade. However, the WTO‐TPR Singapore 2004 highlights several key areas of concerns: (a) the commitment to multilateral agreements with the rising number of bilateral free trade agreements signed by Singapore and (b) the lack of growth of total factor productivity, a key indicator for long‐run efficiency of the economy. The paper addresses the above key concerns raised in the WTO's TPR of Singapore in terms of its commitment to global trade in terms of WTO‐plus bilateral FTAs, which intends to support a multilateral trading system, and its overall industrial strategies to raise its competitiveness.     

FDI,Growth and the Asian Financial Crisis: The Experience of Selected Asian Countries

This paper studies the trends in foreign direct investment (FDI) flows into selected South‐East Asian and East Asian economies after the Asian crisis. Empirical evidence indicates that South‐East and East Asian economies are recovering from the Asian crisis with strong output growth driven largely by export growth. However, output growth in the post‐crisis period is also accompanied by rising unemployment rates, growing government deficits, and declining FDI inflows into the South‐East Asian region. The declining FDI inflows into South‐East Asia after the crisis is of concern, as our empirical results show that FDI is important for output growth in the region. Our results also suggest that there might have been structural changes in the regional economies that could have led to a downward shift in the output growth of Asian economies in the post‐crisis period. This raises the issue of the sustainability of their output growth in the post‐crisis period.     

Does Outsourcing Provision Lead to Wage Inequality? New Evidence from Thailand's Establishment‐level Data

The impacts of outsourcing provision—the arrangements whereby a firm carries out production stages for other firms—are examined on wage differentials between skilled and unskilled workers using Thailand's establishment‐level data. The estimates based on a translog production function indicate that outsourcing provision augments productivity of both skilled and unskilled labor and contributes positively to wage inequality. The model predicts that a 1% increase in outsourcing provision leads to a rise in wage differentials by nearly 2.5%. The robustness check further reveals that the impacts of services provision on wage inequality are more pronounced than those of materials provision. These results highlight the importance of outsourcing provision as a new explanation of the widening skilled–unskilled wage gap in developing countries which typically emerge as a hub of outsourcing provision.     

Financial development and economic growth in Australia: An empirical analysis

The paper empirically examines the dynamic relationship between financial development and economic growth in Australia in terms of bank-based and market-based financial structure. A time-series approach using the VAR Model is used to provide evidence for the dynamic relationship. The paper provides empirical evidence on the causal impact of the financial market on the economic growth of the Australian economy. The results suggest that financial intermediaries and financial markets have different impacts on economic growth given their diverse roles in the domestic economy. In particular there is evidence of causality from economic growth to the development of the financial intermediaries. On the other hand, development in the financial markets causes economic growth but there is no evidence of any causality from economic growth to financial markets. The sensitivity test using different interest rates does not change the results.I Jel classification: O16, G18, G28I We would like to thank Tilak Abeysinghe and Rajagurn Gunasekaran for their helpful comments on the first draft. Also, we would like to thank the Editor, Prof. Baldev Raj, and two anonymous referees for their helpful comments.First version received: October 2001/Final version received: October 2002