U.S. trade policy towards developing countries

The United States has often been criticized for protectionist measures taken against developing country products. Yet, average agricultural protection has reemained practically nil in the U.S. over time, while rising in the European Common Market (E.C.M) and, even more, Japan. It further appears that manufactured imports from developing countries have increased much more rapidly, and reached higher levels, in the U.S. than in the E.C.M and, in particular, Japan. The U.S.-Japan comparisons for manufactured goods do not conform to the data on the extent of nontariff barriers, as measured by the share of imports from the developing countries which are subject to such trade barriers. The solution to the puzzle lies in part in the inadequacies of data on the share of imports subject to nontariff measures for gauging the protective effects of such measures and in part in the reliance on formal measures of protection in the United States as against the informal measures in Japan. More generally, one may explain the results obtained by reference to the openness of the U.S. market that has generally been more hospitable to imports from developing countries than have the markets of other industrial countries, particularly Japan.Poverty Assessment,Trade and Regional Integration,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Environmental Economics&Policies,Trade Policy

Economic integration in Eastern Europe

The Council for Mutual Economic Assistance (CMEA) was established by Bulgaria, Czechoslovakia, Hungary, Poland, Romania and the Soviet Union in 1948 as a response to the Marshall Plan. But unlike the Marshall Plan it provided no financial assistance to its member countries and its activities were limited to trade in the framework of bilateral and multilateral negotiations. Because of centralized decisionmaking, the lack of price signals and the bilateral balancing of trade flows, the CMEA countries failed to exploit their trade potential. And although the smaller CMEA countries benefited from receiving Soviet energy and raw materials at low prices in exchange for often poor quality manufactured goods, these gains were more than offset by the losses suffered because of insufficient technical change and the straightjacket of the socialist planning system. For the future of the CMEA, four alternatives present themselves: maintaining the present arrangements, marketizing the CMEA, reforming the CMEA and dissolving the CMEA. In view of differences in the extent and the speed of the reform efforts in Eastern European countries, the last alternative appears most appropriate.At the same time, the more developed CMEA countries should seek association with the EC, followed by membership.Environmental Economics&Policies,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade Policy,Common Carriers Industry

Incentive policies and agricultural performance in sub-Saharan Africa

Exports in general, and agricultural exports in particular, are more responsive to price incentives in Sub-Saharan Africa than in developing countries.. These are the results of an econometric investigation on the effects of real exchange rates on exports. It further appears that in Sub-Saharan Africa the impact of real exchange rates is greater on agricultural exports than on the exports of goods and services. Within Sub-Saharan Africa, market-oriented countries generally gained export market shares while interventionist countries lost shares. This occurred when market-oriented, not interventionist countries, maintained realistic exchange rates and did not bias incentives against exports. For example, Kenya and the Ivory Coast exemplify market-oriented, and Tanzania and Ghana interventionist, countries. Pairwise comparisons between the Ivory Coast and Ghana have indicated the superiority of the market-oriented approach in promoting exports and agricultural production.Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Export Competitiveness,Environmental Economics&Policies,Access to Markets

Perestroyka and its implications for European socialist countries

Perestroyka, introduced in the Soviet Union to reform the economy after the"period of stagnation"under Brezhnev, involves combining centralized planning with elements of a market economy. For it to succeed, certain micro and macro conditions need to be fulfilled. As far as micro conditions are concerned, the interdependence of rational prices, decentralization, profit maximization, incentives, and competition should be emphasized. For commodities produced domestically, the establishment of rational prices requires that prices equate demand and supply. This, in turn, necessitates the decentralization of decision-making and profit maximization by the firm. At the same time, managers will have to be provided with appropriate incentives in order to ensure that firms maximize profits. Finally, there is need for competition to guarantee that profit maximization does not lead to the exploitation of monopoly positions and inflation. Various macroeconomic conditions also need to be fulfilled for perestroyka to succeed. The government should aim at realistic growth rates, establish a balance between investment and consumption, eliminate the overhand in the market for consumer goods and services, and drastically reduce the budget deficit.Environmental Economics&Policies,Economic Theory&Research,Access to Markets,Markets and Market Access,Banks&Banking Reform

Reflections on perestroyka and the foreign economic ties of the USSR

The exploitation of the Soviet Union's foreign trade potential would necessitate adopting a realistic exchange rate and increasing the foreign exchange retention quotas for direct and indirect exporters. It would also require reforms of domestic policies. The first prerequisite is the establishment of rational prices. Eventually, world market prices would be brought to bear on domestic prices in conjunction with the liberalization of imports, but this will be a long process since the pent-up demand for imports, cannot be satisfied from available foreign exchange. It would further be necessary to decentralize decision making on foreign trade in enlarging the scope of firms that can directly trade abroad. The decentralization of decision making in foreign trade should be accompanied by decentralization in the domestic economy, to be complemented by the introduction of the profit motive and competition. In fact, rational prices, decentralization, profit maximization, incentives to managers, and competition are interdependent, and they will have to be pursued simultaneously for efficient resource allocation.Environmental Economics&Policies,Economic Theory&Research,Access to Markets,Markets and Market Access,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT

A conceptual framework for adjustment policies

This paper begins by examining the existing conceptual framework for stabilization policies and inquires into the question as to an appropriate framework for adjustment policies. Next, the instruments of adjustment policies are briefly reviewed; followed by a discussion of the principal types of policies, including policies aimed at improving the use of existing resources, increasing savings and investment, and ensuring an efficient choice of investments. Furthermore, brief consideration is given to the coordination of stabilization and adjustment policies and to adjustment with equity.Environmental Economics&Policies,Economic Theory&Research,Banks&Banking Reform,Economic Stabilization,Financial Intermediation

Exchange rates and foreign tradein Korea

Korea's exports have made an important contribution to its outstanding economic growth. Its exports, in turn, have been affected by domestic economic variables, including exchange rate policy, and by external influences. Among domestic economic variables, the exchange rate appears to have had a greater influence on exports than changes in export prices or changes in the prices of competing domestic goods. Taking into account that Korean exports are influenced by external factors, such as foreign export prices and foreign incomes, does not affect this conclusion. Korean imports are affected by domestic income, the exchange rate, import prices, and the prices of competing domestic goods. Again, the influence of the exchange rate is greater than that of import prices and the price of domestic goods. The results indicate that Korea can usefully employ the exchange rate as a policy variable. This has been the case during much of the 1965-88 period that the author considers, except for 1975-80, when it led to a substantial overvaluation of the currency. Korea should also use the exchange rate in the future as long as domestic and foreign inflation rates differ.Economic Theory&Research,Environmental Economics&Policies,Access to Markets,Markets and Market Access,Economic Stabilization

Public finance and economic development

This paper reports on tests of alternative hypotheses as to the effects of a budget deficit, examines the influence of the size of the government on economic growth, and investigates the impact of public investment on private investment, total investment, and economic growth. The findings have important implications for the developing countries. They show that budget deficits have adverse effects on the balance of payments as well as on domestic investment. It further appears that increases in government consumption adversely affect economic growth. Finally, increases in public investment not only crowd out private investment but tend to lower the efficiency of investment, with adverse effects on economic growth. The conclusions point to the need for reducing budget deficits in developing countries. They further favor lowering government consumption as well as public investment in these countries.Economic Stabilization,Economic Theory&Research,Environmental Economics&Policies,Macroeconomic Management,Achieving Shared Growth