Will Japan,Taiwan or the US be isolated by China? A macroeconomic game approach

In Taiwan, Japan and even the United States, economic isolation has become a major concern due to the growing Chinese economy, which may lead to welfare losses for the isolated countries. On the basis of the framework developed by Plasmans et al. [Plasmans, J., Engwerda, J., van Aarle, B., Di Bartolomeo, G., Michalak, T., 2005. Dynamic Modelling of Monetary and Fiscal Cooperation Among Nations. Springer], this paper establishes a four-player game with an open-loop information structure to measure possible losses by an international policy coordination approach instead of the conventional free trade agreements. We simulate macroeconomic adjustments of the four countries according to the different institutional scenarios and economic shocks. The baseline simulation and sensitivity analyses indicate that Taiwan can get benefit by participating in coalitional mechanisms including China. In addition, most of the feasible policy coalitions cannot come into effect without US participation. This implies that at the current stage the US rather than China should be the main economic partner of Taiwan and Japan to prevent them from being economically marginalized.     

Causes of the Long Stagnation of Japan during the 1990s: Financial or Real?

Corporate investment is the most important factor to explain the long stagnation of Japan during the 1990s. Using the Bank of Japan diffusion indices of “real profitability” and “banks' willingness to lend,” we estimate investment functions for four groups of firms: large/small and manufacturing/non-manufacturing. Our results suggest that for large firms, financing constraints are not significant whereas the converse is true for small firms. A fall of investment during 1992–94 is largely explained by real factors. However, the credit crunch occurred beginning 1997 and it lowered the growth rate of GDP by 1.6%. J. Japan. Int. Econ., September 1999, 13,(3), pp. 181–200. Faculty of Economics, Nagasaki University, 4-2-1 Katafuchi, Nagasaki 850-8506, Japan; and Faculty of Economics, University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan. Copyright 1999 Academic Press.Journal of Economic Literature Classification Numbers: E22, E30, G21, N15.     

Should China Join the New Trans‐Pacific Partnership?

After President Donald Trump's ill‐advised pullout from the Trans‐Pacific Partnership (TPP) and despite the absence of the US, the remaining 11 Asian and Pacific countries agreed on a deal, renamed the Comprehensive and Progressive Agreement for Trans‐Pacific Partnership (CPTPP). The accord took effect on 30 December 2018 and provides rigorous, up‐to‐date rules for Asia‐Pacific trade, but excludes the region's two biggest economies: the US and China. In this paper, we calculate that Chinese membership in the CPTPP would yield large economic and political benefits to China and other members. The CPTPP, in its current form, would generate global income gains estimated at US$147bn annually. If China were to join, these gains would quadruple to US$632bn, or a quarter more than in the original TPP with the US. But to join the CPTPP, China would have to undertake unprecedented reforms and manage complex political challenges.     

Does Intra‐regional Trade Matter in Regional Stock Markets? New Evidence from the Asia‐Pacific Region

We provide new evidence on the relationship between bilateral trade and stock market returns across the Asia‐Pacific region. Using three country blocs in this region, including the Far Eastern bloc, the Chinese bloc and the Australian bloc, we examine whether trade linkages between countries affect their stock returns. Incorporating two distinct dynamic properties of regime shifting and cointegration in intra‐regional trade and stock market returns, we employ the newly suggested multivariable smooth transition autoregressive vector error correction model (STAR‐VECM). A series of estimations reveals evidence that bilateral trade significantly Granger‐causes stock returns in the Asia‐Pacific region, with effects that are asymmetric depending upon the stock market regime and the country pair. Among the three blocs, the Far Eastern bloc displays a more pronounced positive effect of bilateral trade growth on stock returns than do the other blocs.     

The China money puzzle: will devaluation of the yuan help or hurt the Hong Kong dollar?

A Chinese yuan devaluation could affect the stability of the Hong Kong dollar. This paper studies two linkages. The first is that trade balance effect is studied through a computable general equilibrium (CGE) model. The result shows that the net change in Hong Kong's foreign reserve after a yuan devaluation is, in fact, negligible. The second is that psychological effect is studied by a survey of financial market participants. In spite of the small trade balance effect, all respondents believe that a yuan devaluation would lead to a panic selling of Hong Kong assets. Therefore, a yuan devaluation is bad for the Hong Kong dollar primarily through market psychology.     

The `Latte Revolution'? Regulation,Markets and Consumption in the Global Coffee Chain

Coffee is a truly global commodity and a major foreign exchange earner in many developing countries. The global coffee chain has changed dramatically as a result of deregulation, new consumption patterns, and evolving corporate strategies. From a balanced contest between producing and consuming countries within the politics of international coffee agreements, power relations shifted to the advantage of transnational corporations. A relatively stable institutional environment where proportions of generated income were fairly distributed between producing and consuming countries turned into one that is more informal, unstable, and unequal. Through the lenses of global commodity chain analysis, this paper examines how these transformations affect developing countries and what policy instruments are available to address the emerging imbalances.     

Innovation,learning, and exporting in China: Does R&D or a technology index matter?

This paper undertakes econometric analysis of innovation, learning, and exporting in automobiles and electronics firms in China using a large-scale 2003 dataset to identify the most appropriate innovation proxy. Drawing on recent literature on innovation and learning in developing countries, it tests two alternative proxies: (i) a technology index (TI) to capture a variety of minor activities involved in using imported technologies efficiently; and (ii) the research and development (R&D)-to-sales ratio, which represents formal technological efforts to create new products and processes, often at world frontiers. A higher TI increases the probability of exporting in both industries, while the R&D-to-sales ratio was not significant. Foreign ownership, technical manpower, and the characteristics of the general manager/chief executive officer also matter. The findings suggest that China's remarkable success in the export of automobiles and electronics since initiating an open-door foreign direct investment (FDI) policy in 1978 is linked to technology transfer from multinationals; systematic investments in and upgrading of minor technological activities (like search, engineering, quality management and design); and human capital. As China's per capita income rises over time, however, formal R&D activities are likely to become more important to sustain competitiveness and technological upgrading in automobiles and electronics.     

Growth or stagnation? Farming in England, 1200–1800

Estimates of English income in Broadberry et al.’s British economic growth, 1270–1870 are founded upon a fourfold growth of farm output, and output per farm worker, over this interval. This article shows, using four separate tests, that farm output growth must have been much more limited. The tests are, first, whether in 1300 there was enough work at harvest to employ all the labour force; second, whether the value of output per worker in agriculture was greater than the annual earnings of workers; third, whether the implied relative outputs per acre of arable versus pasture were reasonable; and fourth, whether a much shorter medieval work year was possible. An alternative index of farm output consistent with the labour supply, wages, and farm rents is derived. This shows much less growth during the period 1270–1800. Overall economic growth in England during these years must consequently have been far less than Broadberry et al. estimate.     

Who comprised the nation of shareholders? Gender and investment in Great Britain,c. 1870–1935

This article explores the widening ownership of stocks and shares in Great Britain between 1870 and 1935. It demonstrates the extent of that growth and the increasing number of small investors. Women became more important in terms of the number of shareholders and value of holdings. Factors that encouraged this trend included the issue of less risky types of investments, and legal changes relating to married women's property. We examine the ‘deepening’ importance of stocks and shares for wealth holders, arguing that the growing significance of these kinds of financial assets was as important as the growth in the investor population.     

The caterpillar fungus boom on the Tibetan Plateau: Curse or blessing?

In the last two decades, the Tibetan regions of China have been experiencing a remarkable economic boom fueled by the caterpillar fungus, known in the West as the “Viagra of the Himalayas” or “Tibetan Gold.” This article examines the impacts of the caterpillar fungus boom on Tibetan pastoralists' current-day livelihood and the prospects of their future economic development. Our study is based on a household survey conducted in 2016 covering 58 villages across the Tibetan autonomous land area. Results show that the new stream of cash income from gathering and trading caterpillar fungus has had a strong short-term welfare-improving effect. Household consumption, healthcare spending, and religious charity have risen sharply with caterpillar fungus income. Unfortunately, the fungus boom has not brought about productive investment or human capital accumulation that is conducive to long-term growth. Rather, the resource windfall has created disincentives for school attendance, nonfarm labor participation, and productivity improvements in pastoralism. The resource boom-induced disinvestments, if persistent, will likely further limit the capabilities of rural Tibetans to compete in the urban labor market, reinforcing the emerging trend of socioeconomic marginalization. We contextualize these findings in terms of Tibetans' cultural and economic rationale, pointing out new directions for future research and policymaking.     

Product quality or market regulation? Explaining the slow growth of Europe's wine cooperatives, 1880–1980

Wine cooperatives were relatively scarce in Europe before the Second World War, but by the 1980s accounted for more than half of all wines made in France, Italy, and Spain, the three major producer countries. Unlike Danish dairy cooperatives, whose success before the First World War was linked to their ability to improve product quality and compete in high‐value niche markets, wine cooperatives are often associated with the production of large volumes of low‐quality products. This article argues that the initial slow diffusion of wine cooperatives was caused by the difficulties of improving quality due to environmental conditions in European vineyards (‘terroir’) and measurement problems, rather than institutional shortcomings. Cooperatives only became widespread when the state found them a useful instrument to regulate markets, especially after 1950. The problems associated with poor wine quality were never resolved, and cooperatives have become increasingly uncompetitive in the market place, especially following the major decline in per capita consumption and shift towards premium wines from the 1980s.     

The colonial roots of land inequality: geography,factor endowments,or institutions?

Land inequality is one of the crucial underpinnings of long‐run persistent wealth and asset inequality. This article assesses the colonial roots of land inequality from a comparative perspective. The evolution of land inequality is analysed in a cross‐colonial multivariate regression framework complemented by an in‐depth comparative case study of three former British colonies: Malaysia, Sierra Leone, and Zambia. The main conclusion is that the literature tends to overemphasize the role of geography and to underestimate the role of pre‐colonial institutions in shaping the colonial political economic context in which land is (re)distributed from natives to colonial settlers.     

Why did the industrial diet triumph? The massification of dairy consumption in Spain, 1965–90

The rise of a mass, agri‐industrial diet after the Second World War was crucial for the culmination of the nutritional transition that western countries had been involved in since the second half of the nineteenth century—but why did the industrial diet triumph? This article takes the massification of dairy consumption in Spain 1965–90 as a study case. Using a newly constructed database and qualitative material within an evolutionary socio‐economic framework, the article reaches two conclusions. First, the massification of dairy consumption was linked to most households’ transition to a softer budget constraint, which was driven mainly by increasing household incomes (and only secondarily by consumer price reductions caused by food industrialization). Second, the reason why the softening of the budget constraint played such a major role was that it was joined by a substantial increase in consumer trust in dairy products, which in turn resulted from industrial standardization. The article is in line with recent work that underlines the dietary change brought about by food industrialization, but questions whether the latter's major contribution was of a quantitative, price‐related nature and suggests that more attention should be paid to the qualitative, preferences‐related dimension.     

Job satisfaction and relative income in economic transition: Status or signal?: The case of urban China

We use two datasets for urban China to examine whether an increase in reference group income lowers or increases job satisfaction. The former is consistent with a status effect — an increase in the income of others lowers my satisfaction because I feel jealous. The latter is consistent with a signal effect — an increase in the income of others might make me jealous, but it also provides an information signal about my future prospects. When we use a single item indicator of job satisfaction we find no support for a status or signal effect; however, when we use a psychometrically valid instrument to measure job satisfaction, we find some support for the existence of a status effect. We consider the components of job satisfaction through which the status effect operates. We find that the status effect operates through satisfaction with co-workers, operating procedures, pay and supervision.     

Yeast or mushrooms? Productivity patterns across Swedish manufacturing industries, 1869–1912

This article applies Harberger's yeast versus mushrooms dichotomy to Swedish manufacturing industries in the four decades prior to the First World War. The evidence, broken down to cover five sub‐periods, points to a growth process resembling that of mushrooms more than that of yeast. In addition, it is argued that a yeast‐like (even) pattern of productivity growth rates invites one to search for a general purpose technology at work, whereas mushroom‐like progress leads one to dismiss the idea that a small number of technologies spilled over to a large number of manufacturing processes. The era under investigation coincides with the peak of the use of steam power and the infancy of electricity. The evidence makes it unlikely that steam in Sweden was a general purpose technology with the potential to affect the progress in productivity across industries in a yeast‐like fashion. The rampant spread of electricity may have contributed to the yeast‐like pattern in the last sub‐period preceding the First World War.