Impact of China's WTO Accession on East Asia

The industrialized and newly industrializing economies (NIEs) in East Asia will benefit from China's WTO accession, and the developing economies in the region may incur small welfare losses. China will increase its demand for high-end manufacturing products from Japan and the NIEs and farm products, natural resources, and manufactured goods from developing East Asia. New foreign investment may flow into these expanding sectors. The overall impact on foreign investment is likely to be positive in the NIEs but negative in developing East Asia. The NIEs may face heightened competition in global markets as China's comparative advantage shifts into high-end products. (JEL F11 , F13 , F15 )     

Book Review

Qualitative Research in Tourism: Ontologies, Epistemologies and Methodologies. London: Routledge, 2004. 0-415-28086-9     

Bilateral Free Trade Agreements and Customs Unions: The Impact of the EU Republic of South Africa Free Trade Agreement on Botswana

The EU has indicated that after 2008 its trade relationships with developing countries will be dominated by the development of preferential trade agreements. Although not a consequence of the Cotonou Agreement, the free trade agreement between the EU and the Republic of South Africa (EU RSA FTA) was clearly one of the first fruits of this approach to trade relationships. However, there is no evidence that the design of the EU RSA FTA incorporated a comprehensive general equilibrium evaluation of the agreement for either the signatories or the other southern African nations. The analyses reported here indicate that while the EU RSA FTA may substantially benefit the signatories, there are appreciable negative impacts for other states, especially the Republic of South Africa's immediate neighbours. Moreover, the analyses indicate that the structural adjustments for African economies signalled by the FTA are substantial, which implies that there will be substantial economic costs associated with the FTA.     

Outsourcing and the US Labour Market

There is worldwide concern about the vulnerability of the current labour force to displacement by future imported services. In the USA, some have suggested that as much as one‐third of the workforce might be vulnerable to such outsourcing. However, the labour market impacts of this displacement are difficult to assess using purely analytical or statistical approaches. In this paper, simulation methods are used to understand how sensitive the US economy and labour market are to increases in services imports. Specifically, the scenario examined assumes that the share of imported services in total employment increases from 0.8 per cent to 7.25 per cent over a time horizon in which workers are unable to change occupations. In response, it is found that all industries increase their use of imported services and their use of the composite input that is comprised of imported services and tradable labour. With the exception of legal workers, all workers in tradable occupations experience declines in their real wages. Demand for non‐tradable occupations labour rises in the industries that expand the most, while demand falls in shrinking industries. The non‐tradable occupations that are used intensively in the shrinking industries experience declines in real wages, while the real wages rise for workers in non‐tradable occupations used intensively in the expanding industries.