Global manufacturing SO2 emissions: does trade matter?

A growth-decomposition (scale, technique and composition effect) covering 62 countries and seven manufacturing sectors over the 1990–2000 period shows that trade, through reallocations of activities across countries, has contributed to a 2–3% decrease in world SO₂ emissions. However, when compared to a constructed counterfactual no-trade benchmark, depending on the base year, trade would have contributed to a 3–10% increase in emissions. Finally adding emissions coming from trade-related transport activities, global emissions are increased through trade by 16% in 1990 and 13% in 2000, the decline being largely attributable to a shift of dirty activities towards cleaner countries.     

Productivity and externalities: models of export-led growth

In developing countries, successful export-led growth (ELG) industrialization has been associated with rapid structural change and productivity growth. There are major difficulties in explaining this performance using a standard neoclassical growth model. To develop a more satisfactory framework, we start from empirical and theoretical work with models incorporating externalities. We develop a simple analytical model with an export externality that captures the large increase in both total factor productivity and trade share associated with ELG. A second model is developed to decompose growth into various components: (i) factor accumulation, (ii) a factor reallocation effect from moving factors from low to high productivity sectors, (iii) an export externality effect arising from exporting light and heavy manufactures and (iv) an import externality effect arising from importing capital goods (heavy manufactures). The second model is implemented with data for an archetype semi-industrial country. In addition to accounting for the higher total factor productivity growth observed in countries pursuing ELG strategies, the model captures the patterns of structural change experienced by such countries better than simpler neoclassical models without disequilibrium features or externalities.     

Daniel Lederman. The Political Economy of Protection: Theory and the Chilean Experience. Stanford, Calif.: Stanford University Press, 2005. ix + 191 pp. ISBN 0-8047-4917-5, $55.00.

To anyone teaching the political economy of protection, Chilemust be among the closest "natural" experiments around. Thisbook provides a rich and very informative interpretation ofChilean trade policies that covers the period 1810–2000. Chapter 1 reviews the contributions by economists and politicalscientists to the public choice approach to the determinantsof protection. Contributions by the economics and politicalscience literature are grafted to a supply-demand frameworkof protection, with much of the discussion focusing on     

Market Access and Welfare under Free Trade Agreements: Textiles under NAFTA

The effective market access granted to textiles and apparelunder the North American Free Trade Agreement (NAFTA) is estimated,taking into account the presence of rules of origin. First,estimates are provided of the effect of tariff preferences combinedwith rules of origin on the border prices of Mexican final goodsexported to the United States and of U.S. intermediate goodsexported to Mexico, based on eight-digit Harmonized System tariff-linedata. A third of the estimated rise in the border price of Mexicanapparel products is found to compensate for the cost of complyingwith NAFTA’s rules of origin, and NAFTA is found to haveraised the price of U.S. intermediate goods exported to Mexicoby around 12 percent, with downstream rules of origin accountingfor a third of that increase. Second, simulations are used toestimate welfare gains for Mexican exporters from preferentialmarket access under NAFTA. The presence of rules of origin isfound to approximately halve these gains.     

Adjustment with a Fixed Exchange Rate: Cameroon, Cote d'Ivoire, and Senegal

As members of the Communauté Financière Africaine,Cameroon, Côte d'lvoire, and Senegal cannot use the nominalexchange rate as a tool of macroeconomic adjustment. This articleconsiders these countries' responses to the commodity and oilprice shocks of the 1970s in light of this and other institutionalconstraints. Using a two-sector model, it shows that there existinstruments that, in principle, permit the real exchange ratedepreciation necessary for adjusting to macroeconomic imbalances.The authors interpret the very different adjustment experiencesof the three countries (despite their common economic structureand institutional setting) in terms of different uses of theseinstruments. Alternative assumptions about the labor marketleave the qualitative nature of the results unaltered. Statisticalanalysis of data from the three countries confirms the model'slinking of the current account and real exchange rate with theinstruments of adjustment.     

WHO WINS AND WHO LOSES FROM VOLUNTARY EXPORT RESTRAINTS?:The Case of Footwear

Voluntary export restraints have been a popular resort of industrialcountries faced with increasing competition from exports ofdeveloping countries. As a strategy for circumventing the rulesof the GATT (whose regulations preclude increases in tariffs),these nontariff barriers have been rather successful; whetherthey have been as successful in their aim of protecting andstimulating the industry concerned is another matter. This article looks at what happened when industrial countriesimposed—and then removed—voluntary export restraintson the footwear industry during the 1970s and 1980s. Why didprotectionism spread so fast and then dissipate almost as rapidly,and what effects did this coming and going have on the exportingcountries We suggest that industrial countries removed the restraintsbecause they found ?them either superfluous (the expected employmenteffect failed to materialize) or ineffective (the principalexporters maintained their market share during the height ofthe restrictions), or else because the industry was able toadjust by importing footwear at a profit. Predicting the effect of VERs, and determining how best to managethem, are critical questions for developing countries strugglingto improve their export performance in the 1990s. The resultsof detailed study of a representative industry, summarized here,may assist in the prediction and determination.      

Beta spatial linear mixed model with variable dispersion using Monte Carlo maximum likelihood

We propose a beta spatial linear mixed model with variable dispersion using Monte Carlo maximum likelihood. The proposed method is useful for those situations where the response variable is a rate or a proportion. An approach to the spatial generalized linear mixed models using the Box–Cox transformation in the precision model is presented. Thus, the parameter optimization process is developed for both the spatial mean model and the spatial variable dispersion model. All the parameters are estimated using Markov chain Monte Carlo maximum likelihood. Statistical inference over the parameters is performed using approximations obtained from the asymptotic normality of the maximum likelihood estimator. Diagnosis and prediction of a new observation are also developed. The method is illustrated with the analysis of one simulated case and two studies: clay and magnesium contents. In the clay study, 147 soil profile observations were taken from the research area of the Tropenbos Cameroon Programme, with explanatory variables: elevation in metres above sea level, agro‐ecological zone, reference soil group and land cover type. In the magnesium content, the soil samples were taken from 0‐ to 20‐cm‐depth layer at each of the 178 locations, and the response variable is related to the spatial locations, altitude and sub‐region.