468 research outputs found

    Industrial Policies in Developing Countries: History and Perspectives

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    This paper presents a historical and empirical account of the role played by government intervention in the form of industrial policies in spurring development and growth in developing countries in the last fifty years. Adopting the taxonomy proposed in Cimoli et alt. (2008), it describes the set of industrial policies implemented since the end of WWII to today in a number of developing countries. Which are the characteristics of successful industrial policies? Are there industrial policies, among the ones that have worked in the past, which can be also useful in the present context? Is there a fit-all recipe, or the high degree of country heterogeneity makes impossible to identify any general effective industrial policy? These are some of the questions this papers tries to suggest some answers.Industrial policy,Developing Countries,East Asia,Latin America

    Uncertainty, Trade Integration and the Optimal Level of Protection in a Ricardian Model with a Continuum of Goods

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    This paper analyzes how increasing trade integration affects individual utility when the international specialization pattern is stochastic, i.e. when the number of varieties each country produces depends on the realization of a random variable. I employ a Ricardian continuum of goods model to show that in this case a trade off emerges. As in the standard model, higher trade integration reduces prices and increases expected real income. However, higher trade integration, reducing the number of active sectors in the economy, also increases the displacement cost the worker would suffer in a bad state (i.e. when the sector she is employed into has to close down because, ex-post, the foreign countryā€™s competing sector results to be more efficient). The main result of the model is that there exists an optimal level of protection that it is higher the smaller the price reduction induced by trade integration and the more technologically similar are countries.Trade Intergration,Ricardian Model with a continuum of goods,Optimal protection,Uncertainty

    Uncertainty, trade integration and the optimal level of protection in a Ricardian model with a continuum of goods

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    This paper analyzes how increasing trade integration affects individual utility when the international specialization pattern is stochastic, i.e. when the number of varieties each country produces depends on the realization of a random variable. I employ a Ricardian continuum of goods model to show that in this case a trade off emerges. As in the standard model, higher trade integration reduces prices and increases expected real income. However, higher trade integration, reducing the number of active sectors in the economy, also increases the displacement cost the worker would suffer in a bad state (i.e. when the sector she is employed into has to close down because, ex-post, the foreign countryā€™s competing sector results to be more efficient). The main result of the model is that there exists an optimal level of protection that it is higher the smaller the price reduction induced by trade integration and the more technologically similar are countries.Uncertainty; optimal protection; Ricardian model with a continuum of goods

    Uncertainty, Gains from Specialization and the Welfare State

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    This paper presents a specific-factor model showing that, under technological uncertainty and risk averse agents, increasing trade integration is not always welfare increasing. The reason is that changes in the country's specialization level induced by trade integration produce both benefits and cost. Increasing specialization increases wages (efficiency gains), but, modifying the tax scheme of the Welfare State, it also increases income variance. The model identifies a trade-off, absent in the standard deterministic model, between gains from specialization and the higher cost of the Welfare State. It is shown that, depending on the parameter's configuration, it exists a specialization level beyond which aggregate expected income under free trade becomes lower than that achieved under autarky. ļæ½Free Trade,Specialization gains,Welfare State,Uncertainty

    Has the Chilean Neo-Liberal Experiment Run Out of Fuel? A View on Specialisation, Technological Gaps and Catching-Up

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    Due to an extraordinary growth performance during the last two decades the Chilean neo-liberal model of development, based on the exploitation of the countryā€™s static comparative advantages, has turned into a benchmark for most developing countries. The aim of this paper is to discuss the long term sustainability of the Chilean neo-liberal model of development. We present new empirical results obtained by using CAN2000 as well as input-output analysis that describe the Chilean model of development during the period 1986-1998. On the basis of these stylised facts, a simple ricardian-evolutionary model is developed in order to offer an interpretative framework to discuss the conditions under which Chile could maintain the current catching-up process in the long run. The main conclusion is that, with the recent ceasing of the push effects of the neo-liberal policies, it is unlikely that an increase of the export volume, given its structural characteristics, will be sufficient to this end. Indeed, an increase of the countryā€™s sectoral industrial interdependence and an improvement of its international specialisation pattern towards goods with higher technological content and higher income elasticity of world demand are necessary conditions for maintaining the current catching-up process in the long run.Chile, Technological gaps, International specialisation, Catching-up, Neo-Liberal Structural Reforms

    The Evolution of the World Trade and the Italian ā€˜Anomalyā€™: A New Look

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    This work provides an empirical assessment of the Ć¢sophisticationĆ¢ of the Italian international specialization pattern and of its evolution during the period 1980āˆ’2000. In particular we discuss the Italian Ć¢anomalyĆ¢, i.e. the evidence that Italy displays a specialization pattern more similar to the one of emerging economies than to the one of countries of comparable level of per-capita income. We show that combining the information coming from a new index measuring the income/productivity content of traded goods, i.e. the PRODY index recently proposed in Hausmann et al. (2005), with the index of Revealed Comparative Advantages (RCA) can shed light on the Italian anomaly. We begin providing a detailed picture of the theoretical and empirical characteristics of the PRODY index. In particular we calculate the index for 1980, 1990 and 2000 mapping its dynamics through that period. Then we describe the characteristic and evolution of the Italian RCA using both parametric and non parametric techniques finding that the Italian pattern of specialization is particularly persistent. Finally, we describe the co-evolution of the PRODY and of the RCA indexes. Our analysis shows that in the last two decades, the world trade has been rapidly changing with Italy becoming increasingly more competitive and specialized in products that are characterized by decreasing income/productivity levels. Thus, while the Italian Ć¢anomalyĆ¢ was not a problem in the past, it may have become an obstacle to future growth.Specialization pattern, RCA, PRODY index, Italian ā€™anomalyā€™

    Consumer boycott, household heterogeneity and child labour

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    Consumer boycott campaigns against goods produced using child labour are becoming increasingly popular. Notwithstanding, there is no consensus on which are the effects of such type of activism on child labour. If some agreement is to be found in the recent economic literature, it is that the boycott does not reduce child labour. We contribute to this debate presenting a simple model which shows, instead, that there are conditions under which a consumer product boycott does reduce child labour. We consider a small country two-factor economy populated by heterogeneous households. The boycott affects both the adult and the child labour markets. The income distribution determines how these changes affect child labour at the household level. We derive the conditions under which the consumer boycott reduces child labour also for some of the households whose' income is - before the boycott - under the subsistence level.Consumer product boycott, child labour, household heterogeneity, income distribution

    The evolution of world trade and the Italian ā€˜anomaly': a new look

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    This work provides an empirical assessment of the 'sophistication' of the Italian international specialization pattern and of its evolution during the period 1980 ļæ½ 2000. In particular we analyse the well-known Italian trade 'anomaly' combining the information coming from the PRODY index (Hausmann et al. (2005)) with the RCA index. Our results show that in the last two decades, the world trade has been rapidly changing with Italy becoming increasingly more competitive and specialized in products that are characterized by decreasing income/productivity levels. Thus, while the Italian 'anomaly' was not a problem in the past, it may have become an obstacle to future growth.PRODY index,RCA,Specialization pattern

    Successful strategies to help developing countries boost exports

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    Increasing exports ranks among the highest priorities of any government wishing to stimulate economic growth. There is, however, still strong disagreement on how governments should intervene. For instance, it has often been argued that the best governments can do is to eliminate the obstacles to the smooth functioning of market forces and provide information to exporting firms about destination markets and foreign competitors. This view is, of course, far from being unanimously shared
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