Issues in economic growth and trade policy in East Asia

Abstract

This thesis consists of three studies. The topics discussed are in the area of international trade and economic growth with a reference to the policy issues in East Asia. The study in Chapter 2 presents a model of North-South trade which can explain the observed cross-country variations in factor prices. Intuition and evidence suggest that knowledge is largely non-excludable and hence all countries should have access to broadly similar technology. However, this public-good assumption for technology leads to implausible predictions of factor prices in standard models. The model in this study does not assume any differences in technology but its predictions are consistent with observations. In Chapter 3, the implications of the two vintage models for growth accounting are examined. Growth accounting studies have shown that total factor productivity growth in East Asian economies has been slower than expected. Analysis of the vintages models suggests that this puzzling finding could be due to mismeasurements of capital arising from the particular characteristic of East Asian growth experience. In Chapter 4, it is shown that when asymmetric economies adopt an open regionalism policy, some of them may gain at the expense of others. This result is very different from the commonly held view in the literature. In certain situations, some economies in the bloc achieves a higher welfare level than under global free trade. A policy of open regionalism could therefore turn out to be an obstacle to the process of multilateral trade liberalization