Trade adjustment in the WTO system: are more safeguards the answer?

For countries to engage successfully in the international tradingsystem, their industries, firms, and workers must respond continuallyto new conditions of competition. The continuing need to adjustarises both from policy changes approved in multilateral negotiations—e.g.implementation of trade liberalization commitments, preferenceerosion, or adverse terms-of-trade consequences of export subsidyelimination—and from ongoing changes in competitive pressuresinherent in a liberal trading system—e.g. effects on comparativeadvantage of changes in technology or factor supplies. But thepolitical response to a situation calling for adjustment isoften a call for ‘safeguards’—whether as anex ante provision in negotiated agreements or as an ex postmeasure once the agreement has been signed and the reality ofnew conditions takes shape. This paper examines the range ofadjustment problems confronting the current and future internationaltrading system, the economic arguments for intervention to dealwith these problems, the adjustment environment as set out inthe current World Trade Organization (WTO) Agreements, and proposalsfor reform. While the adjustment problems we discuss apply toboth rich and poor WTO member countries, we highlight the issuesof adjustment especially relevant for developing countries.     

Galbraith revisited: advertising in non-affluent societies

The first part of the paper challenges J.K. Galbraith's view of advertising as: (i) a problem solely of affluent societies; and (ii) a close correlate of rising levels of income. It is shown that advertising is far from insignificant in poor countries and that it correlates only weakly with rising levels of national affluence. In the second part we suggest, furthermore, that advertising in poor countries is likely to have effects that are significantly different from those in rich countries, and that these warrant further research.     

Some Unpleasant Consequences of EMU

The recent economic woes of some Eurozone countries have raised doubts about whether they can remain in the Eurozone. Prior to these problems emerging, the price levels in these countries rose faster than the average Eurozone price level and their rates of economic growth were higher. It is conjectured in this paper that the two sets of events are connected. Using a formal theory of inflation in the Eurozone based on a stylised version of the New Keynesian model, it is shown that, due to a “one-size-fits-all” monetary policy, inflation rates in individual Eurozone countries are unlikely to converge, and their price levels are likely to diverge, causing large differences in levels of competitiveness over time. The reason for this is different real effects in these economies such as productivity differences or different fiscal policies. In other words the Eurozone is not an optimal currency area. Despite the outstanding record of the ECB in achieving its inflation goals, it is powerless to affect the underlying problem.     

Development assistance: Trade versus aid and the relative performance of industrial countries

Given that both theory and empirical analyses show that foreign trade and aid have similar effects on the development process, this study develops a methodology for assessing the joint (aid plus trade) contribution of industrial countries. The results show that countries like Sweden, Norway and Denmark, which are generally regarded as having liberal aid policies, perform below average when the combined effects of aid and trade are considered while the United Kingdom, Netherland and Belgium emerge as making maximum contributions to development. In addition, the trade practices of the United States and the Federal Republic of Germany largely offset these countries relatively poor aid record. The trade and aid contribution of the USSR and other socialist countries of Europe are also shown to fall far below that of the poorest performing DAC members. If the socialist countries matched average DAC performance measures their imports from developing countries would increase by $7 billion and their aid flows would be $3.1 billion higher. Finally, this study calls into question the rationale for uniform aid targets which do not account for the donor's differential trade contribution to the development effort.     

An Ecological Footprint Approach to External Debt Relief

This paper applies Martinez-Alier’s [Environ. Values 2 (1993) 97] “ecological debt” concept to the problem of debt relief, exploring the possibility of compensatory transfers from rich to poor countries based on existing ecological balances. I employ recent estimates on ecological footprints and ecosystem values to estimate the ecological debt to be distributed among eligible transfer recipients––all less-developed countries (LDCs). The results provide a policy criterion for transfers in the event that future circumstances make large-scale international debt relief compulsory. The study probably underestimates the appropriate transfer amounts because of conservative assumptions regarding the environmental values and the size of the north’s ecological debt in physical terms.     

Labour Standards and the 'Race to the Bottom': Rethinking Globalization and Workers' Rights from Developmental and Solidaristic Perspectives

There is a protracted stalemate between rich (the North) andpoor (the South) countries over the question of minimum labourstandards in developing economies. This paper is a sequel toSingh and Zammit (2000). It considers afresh key issues in thecontroversy. While fully recognizing the moral, political, andphilosophical dimensions of this complex issue, the paper concentrateson the central economic question of the ‘race to the bottom’.It emphasizes the difficulties of establishing labour standardsin the vast informal sectors in developing countries and suggeststhat the ILO conventions 87 and 98 should be amended to reflectproperly these concerns. It also argues that ILO core conventionsshould be broadened to include the right to a decent living.The overall conclusion is that labour standards are importantindicators of economic development, but their promotion is bestachieved in a non-coercive and supportive international environmentsuch as that provided by the ILO.     

Accounting for the stock of human capital: Selected evidence and potential implications

Accounting for the Stock of Human Capital: Selected Evidence and Potential Implications. — Given the observed distribution of output and labor across countries, most capital flows should be from rich to poor countries. As is shown for a limited sample of countries, accounting for differences in the stock of human capital substantially reduces the implicit cross-country rate of return differentials. Additionally, accounting for human capital externalities based on independent empirical evidence, turns around the predicted rate of return differentials in favor of rich countries. Hence, the world economy may converge to a rather unequal distribution of incomes as long as human capital accumulation is neglected as the key variable limiting economic development.     

Technology and the great divergence: Global economic development since 1820

The paper measures productivity growth in seventeen countries in the nineteenth and twentieth centuries. GDP per worker and capital per worker in 1985 US dollars were estimated for 1820, 1850, 1880, 1913, and 1939 by using historical national accounts to back cast Penn World Table data for 1965 and 1990. Frontier and econometric production functions are used to measure neutral technical change and local technical change. The latter includes concurrent increases in capital per worker and output per worker beyond the highest values achieved. These increases were pioneered by the rich countries of the day. An increase in the capital-labor ratio was usually followed by a half century in which rich countries raised output per worker at that higher ratio. Then the rich countries moved on to a higher capital-ratio, and technical progress ceased at the lower ratio they abandoned. Most of the benefits of technical progress accrued to the rich countries that pioneered it. It is remarkable that countries in 1990 with low capital labor ratios achieved an output per worker that was no higher than countries with the same capital labor ratio in 1820. In the course of the last two hundred years, the rich countries created the production function of the world that defines the growth possibilities of poor countries today.     

Can East Asia rise again?

In recent times, the economies of East Asia have been confronted by two major economic recessions, the first caused by the East Asian financial crisis, and the second by the slump in the ‘new economy.’ The causes of these two recessions, their scope and their influences differ significantly and during these periods of economic downturn the economies affected have adopted various monetary policies aimed at reducing interest rates and tax rates, and pursuing the expansion of government expenditure. However, these policies have obviously not yet been as effective as expected.This paper sets out to determine those factors affecting the possibility of East Asia rising again from the recent economic slump, a slump which has stemmed from excessive investment in the electronics and information industries. The paper begins with an overview of the East Asian economy, with particular reference to the recent serious decline following the steady recovery from the East Asian financial crisis and a review of the measures taken to counter it. Proposals are then made with regard to a number of lessons to be learned from the recent slump.There are three major issues involved in the question of whether East Asia can rise again from the current economic slump. First of all, many of the economies of East Asia have tried their utmost to upgrade their industrial structures from labor- to technology-intensive, or towards a knowledge-based economy and, to some extent, have actually been quite successful in achieving their goals. Secondly, almost all of the East Asian economies have paid particular attention to educational development, with many families having sent their children to foreign countries to receive advanced education in the hope that when they return they can make a substantial contribution to the progress of their home economies—examples of this trend are provided by Taiwan and India. Thirdly, there are abundant natural resources in East Asia along with rich sources of manpower with a hard-working spirit; these two factors can create comparative advantages and strengthen the competitiveness of these economies.In view of the recent developments towards regionalism, it is imperative for the economies of East Asia to form an East Asian Community in the near future, and many of the economies in this region are currently endeavoring to realize this vision, despite many obstacles still facing East Asia which will ultimately need to be overcome.     

Inter-country comparison of ‘real’ (PPP) incomes: Revised estimates and unresolved questions

Adjusting for purchasing power parities of national currencies makes a significant difference to inter-country income comparisons. However, PPP estimates require detailed price data which are not readily available for most countries. Kravis, Heston and Summers have used regression analysis to extend their PPP estimates from the 16 countries for which they have detailed prices to any country for which data are available on the share of trade in GDP and on inflation. The first part of this paper argues that a variant of this ‘short-cut’ approach, one which relies on measures of human-resource development rather than on trade and inflation, is preferable on theoretical and statistical grounds. The second part of the paper raises a more fundamental issue. It argues that the treatment of services in their detailed analysis, and hence in any short-cut approach derived from it, is biased. This bias tends to exaggerate the PPP incomes of countries with relatively good human-resource development, and so produces misleading estimates of relative incomes among poor countries and of the gap between poor and rich countries.     

关于党政建设亟需解决的若干问题之贫富差距控制

中国共产党作为唯一的执政党,加强自身建设、加强国家的基础建设刻不容缓。为追求更高的执政能力,需要对社会发展过程中出现的种种问题进行解决、缓和。文章就党政建设中关于贫富差距控制问题进行研究与探讨,分析了贫富差距的原因,提出了贫富差距控制的对策。     

Patterns of industrialization and the flying geese model: the case of electronics in East Asia

We use the “flying geese” framework to study the change in the geography of comparative advantages in the electronics sector in East Asia, China and the USA. Doubts have been raised about the capacity of the “flying geese” model to interpret the most recent phases of Asian development, in particular as far as progress in the electronics sector is concerned. This paper takes issue against these negative conclusions on both theoretical and empirical grounds. On the theoretical side, the paper takes up the formulation proposed by Kaname Akamatsu, arguing that some of the critical observations raised against the model look to a distorted and simplified version of Akamatsu's original theory. Analyzing the behavior of the “revealed comparative advantage index” per products and area, it is concluded that the “flying geese model” is compatible with manifold industrial development models, increasing interdependence in an integrated area which crucially also includes the US, and that asymmetries and hierarchical order persist across the countries.     

Old Age and Poverty in Developing Countries: New Policy Challenges

Almost all developing countries are now experiencing demographic ageing. This paper examines the consequences of ageing for the poor. It assesses the extent to which the poor are participating in demographic ageing, or whether the process is largely restricted to relatively privileged groups. The paper observes that policy and research mainly focus on pensions programs, which have little relevance for most poor older people. It then describes livelihood patterns for poor elders, highlighting the importance of intergenerational exchange. Health policies are also found to largely ignore the needs of this group, and the expansion of private financing presents particular problems.     

Recent Danish research in economic history — a survey

Abstract

Academic disciplines which straddle the traditional subject-boundaries have frequently to contend on the one hand with the great difficulty that the scientific environment is frail — e.g. university posts are few, library facilities poor and there is normally no serious research journal in the national language. On the other hand the very differences of academic working methods on each side of the traditional subject-boundaries can frequently give rise to fruitful controversies over theoretical and methodological problems, which can produce scholarly innovations at a pace which does not always necessarily characterise the established disciplines with their more copious resources. In what follows we shall test whether these two circumstances can be said to apply to the Danish border-discipline between economics and history. After a review of the institutional framework (in section 2) and an interim balance sheet of the discipline in section 3 the profile presented by the research subjects in the last couple of decades is sketched in section 4. Section 5 then raises the question of the interaction between social science theory and historical method, i.e. in large measure the question of the subject's real interdisciplinary raison d'être in Denmark. The article closes with a survey of some of the current problems for research in the subject.     

Economic rents, the distribution of gains from mineral exploitation, and mineral development policy

The ‘once-and-for-all’ character of mineral exploitation introduces a unique element into the analysis of mining and the formulation of mineral policy, making issues of mineral ownership, questions of the interests of producers and consumers, and of the timing of exploitation particularly important. Developing countries account for a considerable, though by no means dominant, proportion of the world's mineral output, but the bulk of consumption is in high-income industrialized countries, and these countries also own the major corporations with mineral exploitation expertise. The high degree of horizontal and vertical integration among these corporations, and their participation in mineral processing, is a further complication. This paper argues that the resource rents inherent in mineral exploitation, and the other monopolistic rents associated with mining and processing, are essential to an understanding of past trends and to the formulation of future policies. The difficulties of measuring these rents adds to the problems of determining their equitable distribution among mineral-rich countries, mineral exploitation companies and mineral consumers. The proper timing of mineral exploitation in relation to national economic development is a further complication. It is thus perhaps not surprising that in high-income, no less than in developing countries, mineral exploitation and use policies are in disarray. The paper concludes with a discussion of the principal mineral development policy options emerging from the debate on the distribution of gains from mining.     

Growth constraints on small-scale manufacturing in developing countries: a critical review

The question raised in this review is whether small-scale producers in developing countries can expand or whether they are up against constraints which stunt their growth. Most of the literature has been optimistic on this score; while internal constraints (e.g. lack of managerial ability) or external constraints (e.g. discrimination from government) are identified, expansion is seen as an open-ended process. In other contributions this view has been severely criticized; some allege that the small producers are exploited through various mechanisms, others suggest that their road to expansion is blocked as a result of factors such as the pre-existence of very advanced technology, the control of large firms over product markets, or difficulties in access to raw materials. In discussing the arguments put forward in the debate, an attempt is made to assess their theoretical bases and examine the extent to which they are supported empirically. While most studies express explicitly or implicitly a definite view on the growth potential of small producers, such judgement is rarely based on a comprehensive examination of the context which determines this potential.     

Contract farming and smallholder outgrower schemes in less-developed countries

Some studies of outgrower schemes involving smallholders and public or private corporations in less-developed countries suggest the potential value of such arrangements in facilitating transfer of technology, access to markets and other benefits for growers. A diverse literature is surveyed to see what economic and political questions have been raised which have a bearing on the issue of grower welfare. In some cases, existing literature or the author's own research provides adequate answers to the questions raised; in others the need for further research is indicated. Some possible directions and methodologies for systematic comparative studies are suggested.     

European integration and economic methodology and research: Questions and speculations

This paper will discuss the role of methodology in connection with different theoretical approaches. It is shown that a multitude of paradigms is appropriate when dealing with complex developments such as integration. The question is raised whether it makes sense to discuss a special European approach. Divergent views exist, but some differences between a European and an American tradition seem to exist due to a continent-wide competition among U.S. economists and a more fragmented European scene. Closer integration and academic cooperation in Europe could result in a more unified research environment resembling the U.S. picture. However, the role of language differences must not be overlooked and can contribute to a continuing diversification.Distinguished Address presented at the Forty-Seventh International Atlantic Economic Conference, Vienna, Austria, March 16–23, 1999.     

The ‘Basic Needs’ approach to development vs the new international economic order: The significance of Third World industrialization

The question has recently been raised whether the basic needs approach to development conflicts with Third World aspirations for faster industrialization and the establishment of the New International Economic Order. This paper argues: (a) That to meet the basic needs of the poor in the Third World on a sustainable basis, it is necessary to transform its productive structures. In this transformation modern industry (including in most cases an appropriate capital goods industry) must play a central role. (b) That a properly conceived basic needs strategy should in general positively aid Third World industrial development. The paper concludes that accelerated industrialization and a substantially redistributive fiscal policy must be the two pillars of any effective basic needs programme.     

Adjustment with a human face: Still relevant or overtaken by events?

This paper describes the extent to which the policy recommendations of “Adjustment with a Human Face” have been accepted. The concept has been accepted in principle, but large gaps remain in actual implementation. Some policy recommendations, such as the need for compensatory programs, have been more fully accepted and implemented than others, such as the need to stimulate productivity by poor households and to involve different social groups in policy making. The paper concludes that adjustment policies should be part of a long-term development strategy which emphasizes structural changes for countries to grow out of structural poverty. As such, the policy recommendations of “Adjustment with a Human Face” still remain valid, albeit with changes in emphasis on their various components.