Incremental Reform and Distortions in China's Product and Factor Markets

The purpose of economic reform is to reduce distortions andenhance efficiency. However, when reforms are partial and incremental,individuals and local governments are often able to capturethe rent inherent in the gradual transition process. Young (2000)warned that such rent-seeking behavior might lead to increasingmarket fragmentation. Empirical studies have shown the oppositein the product market. This article argues that as the rentfrom China's product market has been squeezed out due to deepeningreforms, rent-seeking behavior may have shifted to the capitalmarket. Further reforms are needed in the capital market tosqueeze out these rent-seeking opportunities, just as thosefrom the product and labor markets were squeezed out earlier.     

Strategic Interests of ASEAN-5 in Regional Trading Arrangements in the Asia-Pacific

We examine the strategic interests of ASEAN countries within APEC when forming regional trading arrangements in the pursuit of trade liberalization. Employing a Computable General Equilibrium (CGE) model, the effects of ASEAN's various Free Trade Area arrangements with the U.S., Northeast Asia as well as APEC are analyzed. The impact on ASEAN as a whole as well as for each individual member coutry is examined. A free trade area with the U.S. is likely to benefit the Philippines and Indonesia most.