Trade Policy Options for Chile: The Importance of Market Access

This article uses a multisector, multicountry, computable generalequilibrium model to examine Chile's strategy of "additive regionalism"—negotiatingbilateral free trade agreements with all of its significanttrading partners. Taking Chile's regional arrangements bilaterally,only its agreements with Northern partners provide sufficientmarket access to overcome trade diversion costs. Due to preferentialmarket access, however, additive regionalism is likely to provideChile with gains that are many multiples of the static welfaregains from unilateral free trade. At least one partner countryloses from each of the regional agreements considered, and excludedcountries as a group always lose. Gains to the world from globalfree trade are estimated to be vastly larger than gains fromany of the regional arrangements.     

Regional Integration and Economic Growth

The rapid economic growth of developing countries that openedtheir markets to free international trade during the past twodecades has stimulated a large empirical and theoretical literatureon the impact of trade on growth. This literature concludesthat free trade and growth were positively correlated duringthe 1970s and 1980s. However, most studies focus on nondiscriminatoryopenness. Does regional integration matter for economic growth?Do regional trade agreements have any impact on growth? This article presents empirical evidence that countries withopen, large, and more developed neighboring economies grow fasterthan those with closed, smaller, and less developed neighboringeconomies. The results are robust to different specificationsof the empirical model and different definitions of openness,suggesting that small economies should grow faster when theyform regional trade agreements with large and more developedeconomies. However, testing for the impact of five regionaltrade agreements during the 1970s and 1980s finds that noneled to faster growth. The main reason seems to be that mostof these agreements were among small, closed, and developingeconomies.     

Free trade agreements and market integration: Evidence from South Korea

We consider the effects of free trade agreements on market integration between South Korea and its solo and trade-bloc FTA partners. Free trade agreements should reduce tariffs and trade costs and lead to faster home-to-foreign price convergence. We investigate these ideas with a non-linear self-exciting threshold autoregressive (TAR) model, by introducing a threshold break at the effective FTA date. This strategy allows us to consider: (1) whether trade costs have declined after the free trade agreement; and (2) whether the speed of mean reversion in the home-foreign price differential is faster after the FTA. Our study includes nine of South Korea’s free trade agreements and covers twenty-eight partner countries. We find evidence that after free trade agreements, trade costs have been reduced for nine countries, providing evidence that greater market integration has been achieved on this score. However, evidence on whether the speed of home-to-foreign price convergence increases after free trade agreements is lacking.     

Deepening Democracy or Élite Governance? New Political Management Arrangements in Local Government

This article discusses the introduction of new political management arrangements in local government. It places the Government's current proposals for change in the context of recent research and debate about the strengths and weaknesses of local democracy, and then draws on recent research evidence, which suggests that current reforms may have a contradictory impact. The Government's proposals are likely to bring tighter and more strategic political leadership, more effective partnership with other local organizations and, if certain steps are taken, better 'scrutiny' of policy and performance. However, there are serious concerns about democratic accountability and transparency, community involvement and the implications for many councillors, party groups and a healthy local party politics. It is concluded that more thorough evaluation of the impact of the changes is desirable.     

SOUTH-SOUTH TRADE: Theory, Evidence, and Policy

Recently a number of commentators have argued that trade policyin developing countries should be deployed discriminatorilyto encourage the expansion of trade among southern countries.Such a strategy is seen as being central in the framing of anew international economic order. This article evaluates thearguments in favor of a relative expansion of South-South tradeand reviews the experience of developing countries with discriminatoryregional trading arrangements. It contends that the case forspecific policies to promote South-South trade is not convincingand that experience with discriminatory arrangements is notencouraging. The expansion of South-South trade can be expectedto continue in the context of multilateral trade expansion,and the potential gains are likely to be greater if this processis allowed to evolve freely in a multilateral setting.      

REFORM OF TRADE POLICY: Recent Evidence from Theory and Practice

In the 1980s many developing countries began to recognize thatrestrictive trade policies can constrain growth. To facilitatetrade and integration into the world economy, many countrieshave embarked on reform programs. This survey synthesizes theconclusions of the literature on trade policy reform with thoseof a recent study by the World Bank analyzing reforms in developingcountries, particularly those supported by adjustment lendingprograms. Its objective is to shed light on some of the questionsabout these programs to guide policymakers in the future. Thearticle reviews conditions in these countries before trade policyreforms were implemented and examines how much reform actuallytook place. It also examines the effects of the reforms on economicperformance and reviews the factors that constrained the reformprocess. The survey considers the most important issues in designingand implementing trade policy reforms and concludes that althoughpast reforms have had a positive impact, future programs shouldemphasize three elements: reducing the level of protection,maintaining macroeconomic stability, and accounting for theconflicts and complementarities with other policies.      

The Effects of Regional Integration in Central Asia

Since gaining independence, Central Asian countries have created and joined many regional economic organizations. It is not clear whether these organizations, especially the Eurasian Economic Community (EurAsEC), have boosted integration of this region. In this paper, I conclude that exports of Central Asian countries have benefited from integration but EurAsEC has failed to live up to the expectations of its member states. This is due mainly to the different levels of economic development, defective industrial structures, and poor marketization in EurAsEC member states. At present, an initial market-based trade integration network has formed in Central Asia and has had excellent accomplishments, but the governments of Central Asian countries have still not realized the network's function and advantage.     

十年来香港地区与大陆之间贸易与资本流动的结构性变化——基于国际收支框架的分析

近10年来,香港地区与大陆均经历了若干重大的内部变化与外部冲击,香港与大陆之间也签订了一系列CEPA协议。这些内部变化、外部冲击与制度性安排必将对两地之间的贸易与资本流动产生重大影响。本文从国际收支表框架出发,系统梳理了近10年来两地之间在商品贸易、服务贸易、FDI与证券投资等方面的资金流动趋势,并利用余额法估算了两地之间的其他跨境资本流动。结果表明,两地之间的贸易和投资在规模增长的同时也发生了一些显著的结构性变化,而其他跨境资本流动的变化则反映了两地之间可套利机会的变化。     

Southeastern European Trade Analysis: A Role for Endogenous CEFTA-2006?

The objective of this paper is to analyze the impact the Central European Free Trade Agreement of 2006 (CEFTA-2006) has had on trade and provide quantitative comparison with the original CEFTA and with trade liberalization under the EU integration process. The paper belongs to the strand of literature analyzing a free trade agreement in a gravity framework but treating the agreement as being potentially endogenous. The empirical evidence suggests that CEFTA-2006 exerted a positive, significant, and large effect on trade in Southeast Europe. This finding can be largely attributed to the distracted trade flows in the region over the 1990s. The effect of CEFTA-2006 has been estimated to be larger than the effect of the stabilization and association agreements. This counteracts the concern that the EU and the Southeastern European countries formed a "hub-and-spoke" structure in terms of trade.     

Capital Mobility in Developing Countries: Some Measurement Issues and Empirical Estimates

A fundamental determinant of the macroeconomic properties ofan economy is its degree of financial integration with the outsideworld. Yet very little is known about this characteristic ofmany developing economies. An important stumbling block in theempirical assessment of financial integration is the multiplicityof approaches to measurement. This article describes and evaluatesalternative tests of capital mobility and applies four suchtests to assess the degree of integration with external financialmarkets exhibited by a large group of developing countries inrecent years. The evidence suggests that a substantial numberof developing countries can be considered financially open.     

Regional Integration as Diplomacy

Regional integration agreements are examples of second-bestpolicies and have an ambiguous impact on welfare. This articlebuilds a model in which regional integration agreements unambiguouslyraise welfare by correcting for externalities. It assumes thattrade between neighboring countries raises trust between themand reduces the likelihood of conflict. The optimum interventionin that case is a subsidy on imports from the neighbor. Thearticle shows that an equivalent solution is for the neighboringcountries to tax imports from the rest of the world—thatis, to form a regional integration agreement—togetherwith some domestic taxes. The article shows that (1) the optimum tariffs on imports fromthe rest of the world are likely to decline over time; (2) deepintegration implies lower optimum external tariffs if it isexogenous; (3) optimum external tariffs are higher before deepintegration and lower thereafter if deep integration is endogenous;and (4) enlargement of bloc size (in terms of symmetric countries)has an ambiguous impact on external tariffs but raises welfare,and some form of domino effect exists.     

基于贸易与货币竞争视角的CAFTA人民币区域化策略

随着《中国-东盟自由贸易区框架协议》的签订,中国与东盟国家之间日益增长的经贸、旅游等往来,必然要求人民币为自由贸易区内的贸易与相互投资提供更广泛的金融服务,而且人民币已在不同程度上被周边国家或地区所接受,并在这些国家或地区内流通。研究并实施人民币在CAFTA区域化,已成为我国政府必须做出的抉择。本文在分析人民币区域化必要性的基础上,就如何实施CAFTA框架下的人民币区域化提出自己的观点。     

欧盟一体化模式的竞争优势

不同国家竞争力的升降变化决定和影响了世界格局的变化。在经济发展力上，保持和提升国家竞争力至关重要。欧州各国选择合适的道路，创新了一体化发展模式，汇聚参与国的竞争优势，形成了规模经济效应，取得了巨大的收益，对于中国发展地缘经济关系，提升国家竞争力具有重要的借鉴意义。     

Political Economy of Regional Integration: The Northeast Asian Model Revisited

It is found that the intra-regional trade share or functional integration plays an important role in the institutionalization of regional integration not only in the European Union (EU) but also in Northeast Asia. The crisis factor, which is measured by the regional economic growth rates, is empirically significant in Northeast Asia but not in the EU. This situation confirms the crisis model for Northeast Asia that emphasizes the stimulating role of crisis for the institutionalization of regional integration. However, the political leadership factor is not empirically significant in Northeast Asia and in the EU, and this finding does not support the political leadership model that emphasizes the facilitating role of political leadership for the institutionalization of regional integration.     

Trading Arrangements and Industrial Development

This article outlines a new approach for analyzing the roleof trade in promoting industrial development. It offers an explanationas to why firms are reluctant to move to countries with lowerlabor costs and shows how trade liberalization can change theincentives for firms to locate in developing countries. It modelseconomic development as the spread of concentrations of firmsfrom country to country. Different trading arrangements mayhave a major impact on this development process. By changingthe attractiveness of countries as a base for manufacturingproduction, they can potentially trigger—or postpone—industrialdevelopment. The analysis shows that unilaterally liberalizingimports of manufactures can promote industrialization but thatmembership in a preferential trading arrangement is likely tocreate larger gains. South-South preferential trading arrangementswill be sensitive to the market size of member states, whileNorth-South arrangements seem to offer better prospects forparticipating southern countries, if not for excluded countries.     

WHAT DO WE KNOW ABOUT THE POLITICAL ECONOMY OF ECONOMIC POLICY REFORM?

The recent wave of democratization in developing countries andin formerly communist ones has sparked renewed interest in therelation between politics and economic adjustment. Adjustmentprograms, however well designed in a technical economic sense,are often politically difficult to launch and, once launched,to keep afloat. Success in implementing an adjustment programmay depend on a government's skill in generating political supportand holding off the opposition. This article explores the politicsof economic reform, drawing on country studies by politicalscientists and country specialists, the growing theoreticalliterature by economists, and the findings of a World Bank researchproject on the political economy of adjustment in new democracies.The article examines three broad clusters of variables: institutionalcharacteristics of the political system, aspects of the internaland external economy, and the design of the reform program.It also considers the relevance of political analysis for policymakersand for international financial institutions.      

Endogenous Tariff Formation: The Case of Mercosur

Mercosur appears as an interesting case study for analyzingthe determinants of exceptions in regional trade agreements.Its member countries—Argentina, Brazil, Paraguay, andUruguay—intended to make Mercosur a full customs unionby January 1995. This goal turned out to be too ambitious, andthe Protocol of Ouro Preto and other agreements signed in December1994 led to a hybrid solution. Overall, out of a total of 9,119tariff lines, around 30 percent are subject, in at least onemember country, to either external deviations from the commonexternal tariff or internal deviations from free trade. Thusan important set of holes remains under the existing agreement,leading some authors to consider Mercosur an incomplete customsunion. This article compares the results of the theoretical literatureon endogenous tariff formation with evidence from Mercosur.The results show that Mercosur's common external tariff andmember countries' deviations from it and from internal freetrade can be explained by sector or industry lobbying as predictedby the endogenous tariff literature. If a viable political economyis a key to success, then Mercosur is here to stay.     

欧美债务危机的政治学解析

欧美债务危机此起彼伏,深刻地影响着世界经济的走向与发展。对于债务危机爆发的原因,很多人只关注其经济方面存在的问题,而对于其政治制度根源却置若罔闻。本文阐释了出西方民主政治制度是如何一步步地导致债务危机却又无力挽救债务危机的逻辑理路,并进一步揭示出西方以选举政治为核心的民主政治制度的诸多弊端以及中国民主政治制度的内在优越性。     

政治冲突与国际贸易:韩国萨德事件对中韩贸易的影响分析

运用双重差分模型,依据中韩两国产品贸易数据,考量萨德事件对中韩贸易的影响。结果表明：萨德事件引发的中国消费者抵制运动使得韩国向中国的出口损失幅度达到近30%,受影响的产品主要集中在替代性较高的日常生活消费品领域,韩国对华电子产品贸易并未受到萨德事件冲突的影响,侧面说明了中国官方表现出相对理性与克制的态度,韩国向中国出口的后果更多地来自民间自发性消费抵制;冲突带来的进口替代效应使得第三方出口国如日本、美国、德国等国家从萨德事件中受益,这些国家扩大了对华出口,但是这种进口替代效应具有短期性,随着时间的推延逐渐消失。     

Developing Countries' Changing Participation in World Trade

Recent years have seen substantial reductions in trade policyand other barriers inhibiting developing country participationin world trade. Lower barriers have contributed to a dramaticshift in the pattern of developing country trade—awayfrom dependence on commodity exports to much greater relianceon manufactures and services. In addition, exports to otherdeveloping countries have become much more important. Thesechanges have profound implications for the role played by developingcountries in the world economy and trade system.