Development and the Environment in Asia

Economic growth and environmental damage are associated, but the relationship is neither linear nor even monotonic. This is clearly seen in the diverse experiences of tropical Asian economies over recent decades. The nature of the growth–environment link depends on the changing composition of production and on growth-related changes in techniques and environmental policies; the enforcement of property rights over natural resources and over air and water quality is another important element. Moreover, environmental and economic policies interact: in effect, every economic policy that affects resource allocation is a de facto environmental measure. One important implication is that the environmental consequences of major policy shifts, such as the 'globalisation' of many tropical Asian economies since about 1980, have been profound. The analytical literature on growth and the environment in Asia tends to agree that environmental damage is costly to regional economies, and has begun to identify and quantify some of the many causal linkages now recognised between economic development and the valuation and use of environmental and natural resource assets.     

Global market shocks and poverty in Vietnam: the case of rice

World food prices have experienced dramatic increases in recent years. These “shocks” affect food importers and exporters alike. Vietnam is a major exporter of rice, and rice is also a key item in domestic production, employment, and consumption. Accordingly, rice price shocks from the world market have general equilibrium impacts and as such, their implications for household welfare are not known ex ante. In this article, we present a framework for understanding the direct and indirect welfare effects of a global market shock of this kind. We quantify transmission of the shock from global indicator prices to domestic markets. Then we use an applied general equilibrium model to simulate the economic effects of the price changes. A recursive mapping to a nationally representative household living standards survey permits us to identify in detail the ceteris paribus effects of the shock on household incomes and welfare. In this analysis, interregional and intersectoral labor market adjustments emerge as key channels transmitting the effects of global price shocks across sectors and among households.     

Induced innovation and land degradation in developing country agriculture

With few exceptions, induced innovation theories give little consideration either to the role of distortions as determinants of the factor biases of innovations, or to the influence of technical progress – with or without distortions – on the sectoral structure of production. This analysis identifies demand for innovations as a function of a specific policy setting which both conditions and is conditioned by the structure of production. In this context, when some sectors contribute more than others to environmental externalities, private and social optima in the allocation of research resources may diverge. In some circumstances it may be optimal to use research budget allocations as second-best substitutes for Pigouvian taxes.     

DOES TECHNICAL PROGRESS IN AGRICULTURE ALLEVIATE POVERTY? A PHILIPPINE CASE STUDY*

We examine the impact of technical progress in agriculture on changes in measured poverty and aggregate welfare in a developing country. Using a small general equilibrium model, we show how the economic components of an observed change in poverty can be isolated to expose the significance of intersectoral linkages and the economic roles of changes in relative commodity and factor prices. Variation in the measured rate and distribution of poverty alleviation depends somewhat on the choice of poverty measure, but more substantively on structural assumptions and the effects of policy interventions in agricultural markets.