A Systematic Decomposition of World Trade into Horizontal and Vertical IIT

We provide a systematic decomposition of world trade using harmonized bilateral flows at the most available detail (some 5,000 product categories), into three trade types: inter-industry, intra-industry in horizontally and in vertically differentiated products. The analysis is diachronic and considers country pairs such as France-Germany, United States-China, Malaysia-Singapore, or India-Nigeria. We show that the increase in IIT at the world level is due to two-way trade of vertically differentiated products. We find France and Germany having the highest share of IIT in their bilateral trade among all country pairs in the world. In value terms, the most important bilateral IIT is between the United States and Canada. Recently, specialization according to the classical theories of international trade (inter-industry trade), has recovered, due to the increasing participation of emerging economies in world trade. JEL no. F14, F15     

The Poverty of Politics: How Income Redistribution Hurts the Poor

In spite of the significant research literature identifying a tradeoff between income redistribution and economic growth, massive public programs have been implemented to help the poor by transferring income to them. Since Lyndon Johnson's war on poverty began in 1964, over 3.5 trillion dollars have been transferred. However, the possibility that everyone, including the poor, may in fact be made worse off by the transfer has largely been ignored. With a simple algebraic model, the authors demonstrate that, over time, both high and low-income groups are harmed by redistribution. In addition, social mobility, as well as political concerns with relative poverty and international income redistribution increases the damage to all income groups produced by redistribution.     

Additional Empirical Evidence on Real Convergence: A Fractionally Integrated Approach

We examine the real convergence hypothesis for 14 OECD countries looking at the fractional order of integration of the differences of real GDP per capita in these countries with respect to the United States. Using parametric procedures, the results vary depending on how we specify the I(0) disturbances. If they are white noise, convergence is achieved for Canada and Australia, and with autocorrelated disturbances, this hypothesis is satisfied for France and the Netherlands. However, allowing for a break at World War II, evidence of convergence is obtained for all countries. JEL no. C32, O41     

Macroeconomic factors of growth of Russian cities and town planning policy objectives

This paper was prepared for the 70th birthday of Oleg Sergeevich Pchelintsev, but he did not live to see it in print. For memorials of O.S. Pchelintsev, see www.demoscope.ru Nos 243–244 of April 17–30, 2006. The paper analyzes the channels and ways by which macroeconomic policy impacts the development of urban settlement and individual groups of cities. Its findings are used to validate new directions and measures of urban policy     

AIDS and agricultural production. Report of a land utilization survey,Masaka and Rakai districts of Uganda

Increased AIDS mortality and other preexisting conditions have contributed to agricultural productivity declines in the districts of Masaka and Rakai in Uganda. These two districts were the most fertile in Uganda and also had the highest HIV seroprevalence rates in Africa. 66% of study households experienced land use decline to some extent over the past 5 years. The 11% decline in poultry production and 32% decline in cattle production was reportedly due to poor management and loss of grazing land from overpopulation and larger scale farms. The most frequently reported reasons for crop reductions were death and sickness; these was estimated as affecting 8% of families with children under 5 years in the study area. Morbidity and mortality as a reason for the decline was reported two times as much as poverty and decline in international coffee prices. Other reasons for loss of productivity were food shortages and insecurity, loss of income, and reduced ability to respond to educational and medical needs. Cassava is replacing the culturally preferred matooke banana as a crop that is more disease-, pest-, and drought resistant. The banana weevil has been a recent problem. Marginal farming systems have been the most affected by declines in land use and livestock production, but fertile areas have not been spared the impact from AIDS and adult mortality. Poverty has decreased the use of pesticides, herbicides, and fertilizers in the districts. Policy has had an impact on agricultural practices: population growth and inheritance have added to loss of individual land holdings and contributed to fallow periods and infertility. Appropriate land management practices have not been adequately promoted in the agricultural extension service. Civil wars and the drop in coffee prices have reduced the number of farm laborers. Common grazing land has been turned over to large commercial ranches. Government should maintain research and monitoring of declines in food and cash crop production and manpower needs. Policy must be designed to respond to the complicated factors affecting productivity. High AIDS prevalence areas and marginal areas where reduced production effects would be the most severe must be given priority status. Development of cash crop alternatives must be examined and perhaps supported on an experimental basis by donor agencies. Maximum productivity should be encouraged by rural extension and education agencies. A number of other specific recommendations were made for individual survival strategies to maintain high agricultural productivity.     

REBALANCING EC CEREALS PROTECTION AND THE GATT URUGUAY ROUND

This paper considers the proposals put forward by the EC at the GATT Uruguay Round in December 1990. The EC's objective of rebalancing the Common Agricultural Policy in the context of a partial liberalisation of agricultural support on the world cereals market is assessed, as is the choice of base year from which liberalisation would have been initiated. The US's proposal for more significant reduction in agricultural support is also considered. The results show that the EC would not necessarily have benefited from rebalancing, since the effects would have depended on the choice of base period. For example, with 1986 (1988) as the base year, net welfare changes would have been 20 (50) percent higher (lower) with rebalancing, relative to the case without. Not surprisingly, the more substantial liberalisation proposed by the US would have resulted in greater net welfare gains even if rebalancing was conceded by the US.     

RELATIVE PRICE VARIABILITY AMONG AGRICULTURAL COMMODITIES AND MACROECONOMIC INSTABILITY IN THE UNITED KINGDOM

This paper develops measures of relative price variability among agricultural commodities in the UK farm sector for the period 1956-88. Econometric tests of the hypothesis that relative price variability is positively correlated with instability in the macroeconomy are carried out. The results indicate that UK agricultural commodity prices become more volatile relative to one another when the economy-wide inflation rate increases and when aggregate output becomes more variable. These findings suggest that UK producers and consumers of domestically grown farm products experience increased risk and uncertainty in their production and consumption decisions during periods of macroeconomic instability. The effects of UK entry into the European Community are also examined; no evidence is found to suggest that adoption of the Common Agricultural Policy reduced year-to-year relative price variability among agricultural commodities.     

Nonf arm Labor Market Participation of Farm Women

Structural changes in Saskatchewan agriculture have led to significant changes in the time allocation of labor of farm women. This paper analyzes the nonfarm labor market participation and labor supply of farm women in the theoretical context of a household production function and contrasts them with those of men. Participation is analyzed using probit models, and nonfarm labor supply functions are estimated using tobit models. Personal characteristics such as age, education, number of children and nonfarm labor participation of the spouse are significantly related to the nonfarm labor market participation and labor supply of farm women, and the direction of influence is as expected. Farm characteristics such as farm size and type are significant in the case of males but not for females. Labor market characteristics are represented only by distance to the nearest center of Complete Shopping Center status or higher and, while this variable is negatively significant for males as expected, it is not significant for females Les changements structurels qui on frappé l'agriculture de la Saskatchewan ont entraîné des modifications significatives à la répartition du temps des agricultrices en matière de travail. L'article présente une analyse de la participation au marché du travail non agricole, ainsi que de l'offre de main-d'oeuvre des agricultrices, dans le contexte théorique d'une fonction de production de ménage, en comparaison avec la situation observée chez les hommes. Le degré de participation e'tait analysé à partir de modèles probit et les fonctions d'offre de main-d'oeuvre non agricole étaient estimées à partir de modéles tobit. Les caractères personnels comme l'âge, I'instruction, le nombre d'enfants et la participation du conjoint à un travail non agricole étaient significativement reliés, dans le sens attendu, à la participation des femmes au marché du travail non agricole et au temps qu'elles pouvaient y consacrer. Les caractères de l'exploitation, superficie et type, n'étaient significatifs que pour les hommes mais pas pour les femmes. Le seul caractére du marché de main-d'oeuvre considéré était la distance entre la ferme et l'agglomération la plus proche de niveau de centre commercial complet ou de niveau supérieur. Bien que, comme on pouvait s'y attendre, cette variable était significativement négative dans le cas des hommes, elle n'avait pas de valeur significative pour les femmes     

The Local Economic Impacts of the North American Waterfowl Management Plan in Saskatchewan

The North American Waterfowl Management Plan seeks to improve wildlife habitat and increase waterfowl numbers through voluntary transactions with farmers to modify their land management practices. The impact of modified land use practices on the incomes of participating farmers and the regional economy are estimated. The compensation offered under the Plan for modification of land use is determined to adequately offset any loss in participants' income. Income losses to the community due to reduced farm input sales were more than offset by the increase in NAWMP direct expenditures (excluding compensation payments). Distributional effects and externalities must be recognized and monitored to ensure success of the program