Trade Liberalisation,Economic Development and Poverty Alleviation

In a distinguished career spanning more than four decades, Jagdish Bhagwati has made numerous contributions to both trade theory and trade policy analysis. The current paper focuses on Bhagwati's major contribution to the ongoing debate surrounding the influence of trade liberalisation upon economic development and its potential to alleviate poverty in the world's poorest economies. In order to highlight Bhagwati's contributions in these fields we focus on the arguments developed in two of his numerous landmark publications; first his seminal 1964 paper on the Pure Theory of International Trade and, second, his 2004 book entitled In Defense of Globalization. Although separated in time by some four decades we argue that these two publications, despite their very different characters, each demonstrate beyond doubt the significance of Bhagwati's work in improving our understanding of the true nature of international trade and its potential to address questions of global poverty.     

Foreign Direct Investment,Economic Performance and Trade Liberalisation

In a number of influential papers published by V. N. Balasubramanyam and collaborators during the decade of the 1990s, compelling arguments and supporting evidence was presented to indicate that export‐promoting trade and investment strategies attract more and more productive inflows of foreign capital than do import‐substituting strategies. This paper revisits these hypotheses in the context of more recent cross‐section data and reports evidence to suggest that the earlier findings are robust.     

Unemployment and Trade Liberalisation

In contrast to the focus of the public debate over trade liberalisation on job losses there is a widespread view among economists that unemployment and trade issues should be considered separately. This view cannot be justified theoretically, and ignores the growing number of general equilibrium trade models with unemployment. In a simple model with an exogenous wage floor, trade liberalisation can lead to either gains or losses depending on the production technology, severity of the factor market distortion, factor intensities of the industries and conditions in trading partners. Definite results can be derived about gains from liberalising trade with lower wage floors, about relative abundance of the unemployed factor dampening losses when trade is liberalised, and about gains when the good which uses the unemployed factor is exported. The theoretical models are then linked to the policy modelling literature, using the example of recent Australian controversies over liberalisation of trade in automobiles and textiles. It is argued that trade liberalisation would be better advanced by including endogenous employment in trade policy simulation exercises and by discussing employment effects rather than brushing them aside as temporary adjustment problems or regional difficulties.     

Trade Liberalisation and Economic Performance: Theory and Evidence for Developing Countries

The last five decades have witnessed a profound evolution of economic policy in developing countries, particularly in the case of trade strategies. Both internal, as well as external, factors have prompted the need for more outward‐oriented (or liberalised) trade policy regimes. The creation of the General Agreement on Tariffs and Trade (GATT) in 1947 and the World Trade Organisation (WTO) in 1995 have been important driving forces for free trade. Since then, the major quantitative barriers to trade, i.e. tariffs and non‐tariff barriers (quotas, licences and technical specifications, among other restrictions), have substantially been reduced or dismantled. Also, the progress towards more liberalised trade regimes, mainly in developing countries, has been manifested in the trade and development literature. Major studies suggest that the performance of more outward‐oriented economies is superior to that of those countries pursuing more inward‐looking trade practices (Greenaway and Nam, 1988; Dollar, 1992; Sachs and Warner, 1995; and Rodríguez and Rodrik, 2000). Recent developments in the international trade literature focus on the potential dynamic effects of trade liberalisation, i.e. simplification of tariff structures and elimination of non‐tariff barriers, in reducing the incentives to rent seeking and in accelerating the flow of technical knowledge from the world market. Moreover, there have been important advances regarding the study of trade liberalisation and its impact on exports, imports and the balance of payments, largely neglected in the literature, often driven by supply‐side considerations.     

Financial Liberalisation and Growth in China’s Economic Reform

This paper summarises China’s financial liberalisation experience and examines the contributions of financial resources on economic growth during the post‐reform period. Financial liberalisation has resulted in the reallocation of the four sources of total investment in fixed assets: state budget appropriation, national bank loans, self‐raised funds, and foreign investment. We find that the growth of GDP and industrial production are positively related to the growth of self‐raised funds and foreign investment. We conclude that the use of foreign investment and funds raised by the enterprises themselves are more efficient than the government’s appropriation and provision of bank loans.     

省际贸易、国际贸易与经济增长——基于长三角制造业数据的经验分析

在描述长江三角洲制造业省际贸易和国际贸易发展的基础上,利用江苏、浙江、上海三省市2002-2007年的投入产出表,实证检验了省际贸易和国际贸易对经济增长的影响.研究结果表明:省际贸易和国际贸易都对经济增长产生了正面影响,但省际贸易的经济增长效应要大于国际贸易,而且省际贸易和国际贸易对低技术行业的经济增长效应要大于高技术行业.     

Trade and Market Liberalisation in Eastern Europe

SUMMARY

The question of why multinational companies (MNCs) choose to locate in one region rather than another has been an important topic in IB research for many years, but has recently received even more attention. This paper presents the results of an econometric investigation of the locational determinants of Italian firms in Central and Eastern Europe. Italian firms have been very active investors in the CEE countries. Our results broadly confirm the findings of previous studies, but we also find that both trade liberalisation and market liberalisation are important influences upon the location decision. If the CEE governments wish to attract further (Italian) foreign investment, then further liberalisation of their domestic economies should be a policy priority.     

Bilateral versus Multilateral Trade and Investment Liberalisation

To assess the welfare effects of bilateral versus multilateral trade and/or investment liberalisation in general equilibrium, we set up a three‐country and three‐factor knowledge‐capital model of trade and multinational activity. Numerical simulation results indicate that multilateral liberalisation tends to dominate bilateral liberalisation in welfare terms. A transition economy tends to prefer bilateral over multilateral liberalisation to avoid plant relocation. For similar reasons, a developed country may prefer bilateral over multilateral liberalisation, if the other economies exhibit big relative factor endowment differences.     

Trade Liberalisation and Capital Spending by US Manufacturers

This is the first paper to study the impact of long‐term tariff reductions on capital spending by US manufacturers. We investigate fluctuations in investment for approximately 400 different four‐digit industries during the period 1974–2005. Our results indicate that the dismantling of tariff and quota protection has had a stimulatory effect on US manufacturing investment, despite the relatively low average tariff rate that existed at the start of our sample period. However, our findings reveal that reductions in input tariffs rather than output tariffs were the source of this effect, suggesting that better access to foreign inputs rather than increased foreign competition at the output level served as the primary stimulus for increased US manufacturing investment.     

加工贸易与经济增长:研究综述

加工贸易作为一种贸易方式,已经逐步成为我国对外贸易发展中的重要组成部分,与此同时,其与经济增长的关系也逐渐成为研究热点之一。本文试图对研究加工贸易与经济增长的众多理论和实证文献进行系统的梳理和评述,以期能对进一步认识加工贸易的作用及如何促进其发展提供一些帮助。     

Trade Liberalisation,Market Structure and the Incentive to Merge

In this article, we consider whether a movement towards freer international trade generates incentives for firms to merge and if so what forms of merger are most profitable. In a linear Cournot framework, we show that a reduction in trade costs may, but will not necessarily, encourage mergers. Both market structure and the level to which trade costs fall are shown to play a decisive role. Domestic mergers will be encouraged only if the product market is not highly concentrated and trade costs fall below a threshold level. International mergers can be encouraged in any market structure, and are generally more profitable than domestic mergers.     

On the Path to Trade Liberalisation: Political Regimes in Trade Negotiations

The number of free trade agreements (FTA) has increased substantially since 1990 despite efforts to promote multilateral trade liberalisation. While there is evidence on the determinants of FTA formation, still little is known on the processing of trade agreements, particularly regarding the pre‐implementation duration. This paper fills the research gap by using event data on the negotiation, the signing and the implementation of trade agreements. Duration analysis is employed to examine the connection between regime types and the lengths of the negotiation and the ratification stages. The results support the claim that higher levels of democratisation are associated with shorter negotiations, while political constraints lead to delays. Moreover, the depth of an agreement matters: a higher number of WTO‐X and WTO+ provisions do not only prolong the negotiation stage, but also the subsequent ratification. Against the background of potential anticipation effects of trade agreements, these results are of interest for exporting firms that assess the timing of implementation.     

Aid and Trade Sustainability under Liberalisation in Least Developed Countries

This study investigates the effect of trade liberalisation on export growth, import growth, the trade balance and the current account of the balance of payments in 17 Least Developed Countries (LDCs) over the period 1970 to 2001. The paper also assesses the marginal relation between capital flows (e.g. aid flows) and import growth, and the trade balance and the current account of the balance of payments. The higher import growth contrasts with the more modest export growth following trade liberalisation and that has fundamental policy implications, especially for the balance of trade and the balance of payments. However, the financing and sustainability of the trade deficit in the reforming countries will depend not only on the outcome of trade liberalisation, but also on other macroeconomic policies, developments in the real exchange rate and the inflows of foreign capital.     

外贸乘数与经济增长关系的变因分析

外贸乘数不是“出口乘数” ,它与包括进口在内的多种因数密切相关。要发挥外贸乘数效应 ,推动经济增长 ,必须注意增大最核心变因MPC的值。本文认为 ,斯蒂格利茨所用的外贸乘数表达式 ,比较科学地表达了各种变量的相互关系。但为了更准确地描述外贸乘数对经济增长的变因关系 ,必须对变因MPC作具体分析 ,要考虑MPI对MPC的反向激励作用。这样 ,既可以解释外贸与经济增长速度不同步的现象 ,又可以从中找到解决扩大MPC的办法。     

我国对外贸易与经济增长的实证分析

经济全球化的发展加强了对外贸易对一国经济的影响,对外贸易对经济增长的作用分析成为研究的热点。从一般贸易和加工贸易角度,研究贸易以何种方式和途径影响经济的增长。通过对我国1981-2002年的数据进行计量分析,揭示出我国一般贸易出口和加工贸易进口的发展对经济增长作用显著。