The Impact of Liberalizing Barriers to Foreign Direct Investment in Services: The Case of Russian Accession to the World Trade Organization

In this paper a computable general equilibrium model of the Russian economy is used to assess the impact of accession to the World Trade Organization (WTO), which encompasses improved market access, Russian tariff reduction, and reduction of barriers against multinational service providers. It is assumed that foreign direct investment in business services is necessary for multinationals to compete well with Russian business services providers, but cross‐border service provision is also present. The model incorporates productivity effects in both goods and services markets endogenously, through a Dixit–Stiglitz framework. It is estimated that Russia will gain about 7.2% of the value of Russian consumption in the medium term from WTO accession and up to 24% in the long run. It is also estimated that the largest gains to Russia will derive from liberalization of barriers against multinational service providers. Piecemeal and systematic sensitivity analysis shows that the results are robust.     

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.     

Changing fuel use behavior: The Pittsburgh smoke control movement, 1940–1950

Local policy development in Pittsburgh brought about cleaner air by influencing change in the household use of fuel and combustion equipment. By a combination of media campaigns, voluntary organizations, technical advisers, and business and labor leaders, the public was convinced of the necessity to reduce air pollution. The unique aspect is that the public accepted the costs of a long-range policy decision through education and persuasion.     

A transaction cost approach to analysing industrial districts

This article determines whether transaction cost theory can be used as a framework for analysing industrial district relationships, using the Gnosjö/Anderstorp industrial district in Sweden as a case example. Interviews with six firm owner/managers, representatives from the trade union and the local industrial development centre were conducted. Data was analysed using pattern matching in accordance to the theoretical framework. The findings indicate that interfirm relationships in the industrial district are motivated by the desire to reduce transaction costs. The article offers an alternative perspective in analysing industrial districts as current studies use network theory in explaining the industrial district phenomena.     

Trade Policy and Poverty Reduction in Brazil

A multiregion computable general equilibrium model is used toevaluate the regional, multilateral, and unilateral trade policyoptions of Mercosur from the perspective of the welfare of allpotential partners in several proposed agreements. The focusfor Brazil is on poverty impacts. The results show that thepoorest households in Brazil experience gains of 1.5–5.5percent of their consumption, which are about three to fourtimes the average gains for Brazil. Protection in Brazil favorscapital-intensive manufacturing relative to unskilled labor-intensiveagriculture and manufacturing. So trade liberalization raisesthe return to unskilled labor relative to capital and disproportionatelyhelps the poor.     

International Knowledge Flows and Economic Performance: A Review of the Evidence

An empirical analysis of the microeconomic links between tradeand knowledge diffusion is useful for singling out some of thekey predictions of the theory of endogenous growth in open economies.This literature postulates that total factor productivity ishigher when trade gives countries access to a wider or moresophisticated range of technologies. The articles reviewed herefind considerable evidence that imported technologies raisetotal factor productivity in importing countries, particularlydeveloping countries and particularly when technologies areacquired by way of imports of intermediate goods. They alsoprovide some support for the argument that exports and foreigndirect investment are channels for learning. Although accessto foreign technologies has a positive impact on developingcountries' total factor productivity, overall these countriesare shown to purchase older and simpler machines than industrialcountries. Relative factor and machinery costs and skill andtechnology endowments affect the choice of imported technologies.However, government attempts to limit or guide the selectionof technologies are likely to have a negative effect on growthbecause they discourage producers from purchasing the most appropriateand efficient machines. Rather, policies aimed at promotingtechnological development should strengthen the absorptive capacityof importing countries and address the complementarity betweenhuman and physical capital in a broader context.     

Effects of Restraining Steel Exports from the Republic of Korea and Other Countries to the United States and the European Economic Community

In this article a model is developed to evaluate the impacton an exporting country of a restraint imposed on its exportby an importing economy in the context of a three-region modelof world trade in a single product. The welfare changes in anyof the three regions in the model and in the global economycan be evaluated. The model is applied to the restraints imposed on steel exportsfrom the Republic of Korea to the United States and the EuropeanEconomic Community (EEC). The United States and the EEC arefound to have incurred significant losses as a result of therestraints. The largest part of these losses are quota rentstransferred to Korea and the rest of the world. Under reasonableparameter assumptions, Korea and the rest of the world obtainnet gains from the quotas, because the resource misallocationcosts are smaller than the quota rents. The model is modified to analyze a tariff barrier rather thana quantitative restraint. It is found that an "equivalent" tariffon steel transforms Korea and the rest of the world from netgainers to net losers as a result of a restraint.     

Trade, Exchange Rate, and Energy Pricing Reform in Iran: Potentially Large Efficiency Effects and Gains to the Poor

Iran is committed to substantial trade and market reform in its Third Five Year Development Plan. It started, however, with nontariff barriers on all products, a dual exchange rate regime with the market rate more than four times the official rate, and domestic energy product subsidies of about 90%. The authors develop a multisector computable general‐equilibrium model with ten rural and ten urban households to analyze the various reforms, separately and together. Reflecting the large initial distortions, they find that the combined reforms could generate large welfare gains equal to about 50% of aggregate consumer income. Moreover, the results show that well‐intentioned policies of commodity subsidies for the poor can have perverse effects. Even nontargeted direct income payments to all households (not just the poor) would enormously and progressively increase the incomes of the poor compared to the status quo.     

Developing performance measurement systems that support continuous improvement

Many organizations are in a perpetual state of change. Changing markets, changing competition, changing organization structures, total quality initiatives, and reengineering are often the rule rather than the exception. Often these initiatives fail to yield the desired results or, in the extreme, fail entirely. The reasons for this failure, of course, can be many and multiple. However, one that often stands out is the lack of change in the performance measurement system as the needs for measurement change.