Accounting for Growth: Comparing China and India

We compare the recent economic performances of China and India using a simple growth accounting framework that produces estimates of the contribution of labor, capital, education, and total factor productivity for the three sectors of agriculture, industry, and services as well as for the aggregate economy. Our analysis incorporates recent data revisions in both countries and includes extensive discussion of the underlying data series. The growth accounts show a roughly equal division in each country between the contributions of capital accumulation and TFP to growth in output per worker over the period 1978-2004, and an acceleration of growth when the period is divided at 1993. However, the magnitude of output growth in China is roughly double that of India at the aggregate level, and also higher in each of the three sectors in both sub-periods. In China the post-1993 acceleration was concentrated mostly in industry, which contributed nearly 60 percent of China’s aggregate productivity growth. In contrast, 45 percent of the growth in India in the second sub-period came in services. Reallocation of workers from agriculture to industry and services has contributed 1.2 percentage points to productivity growth in each country.

Rebalancing the US Economy in a Postcrisis World

The objective of this paper is to explore how the external balance of the United States (US) might evolve in future years as the economy emerges from the recession. We examine the issue from the domestic perspective of the saving and investment balance and from the external side in terms of the basic determinants of exports and imports and the role of the real exchange rate. Using these two respective perspectives, we highlight (1) causes and consequences of low private and public saving in the US, and (2) sensitivity of trade to variations in the real exchange rate. We highlight the need for sustained depreciation of the dollar to improve the competitiveness of US exports and argue that the current exchange rate is consistent with a significant reduction in the size of the trade deficit. However, the favorable external outlook is very inconsistent with a projected domestic situation of low rates of private saving and a very large public sector budget deficit matched by a cyclically depressed rate of investment. Changes in US corporate tax structure, reconsideration of capital controls, and perhaps some further decline in the level of real exchange rates could help soften the impact of a potentially very hard postrecession landing for the United States.savings rate, exchange rate policy

Economic Growth in East Asia: Accumulation versus Assimilation

macroeconomics, Economic Growth, East Asia, Accumulation, Assimilation

Trading with Asia’s Giants

The United States large and sustained trade deficit with Asia raises concerns in the United States about its competitiveness in the region. The purpose of this paper is to examine the patterns of U.S. trade relationships with China and India, and the factors that are influencing their evolution. In contrast to the current public policy debate, the discussion largely addresses how these two economies compare as markets for U.S. exporters. This paper begins by noting that U.S. exports to both countries do appear low relative to the performance of Japan and the EU-15. We examine potential explanations for the weak exports from three different perspectives. First, we analyze the composition of U.S. exports to these economies, and consider how this mix of products compares to those which it appears to be competitive in exporting to the rest of the world. Second, we examine the role of multinational corporations in facilitating the trade flows between the U.S and these two economies. Finally, we employ the use of gravity equations to examine the bilateral trade patterns while controlling for a variety of country specific characteristics, such as distance. In this context, we are also able to analyze the pattern of trade in services as well as the more traditional focus on goods trade.China, India, United States, trade, and exports

Returns on FDI: Does the U.S. Really Do Better?

According to the U.S. external accounts, U.S. investors earn a significantly higher rate of return on their foreign investments than foreigners earn in the United States. This continued strong performance has produced a positive net investment income balance despite the deterioration in the U.S. net asset position in recent years. We examine the major competing explanations for the apparent differential between the rates of return. In particular, almost the entire difference occurs in FDI, where American firms operating abroad appear to earn a persistently higher return than that earned by foreign firms operating in the U.S. We first review a number of explanations in the literature for this differential. We then offer some new evidence on the role of income shifting between jurisdictions with varying rates of taxation. Using country-specific income and tax data, we find that about one-third of the excess return earned by U.S. corporations abroad can be explained by firms reporting "extra" income in low tax jurisdictions of their affiliates.

An applied cognitive task analysis investigation of professional judgement and decision making in a small group of high-level, UK based caving instructors

The professional judgement and decision-making processes of adventure sports coaches’ coaching and leadership practice is a growing area of research. However, the professional judgement and decision-making and underpinning epistemological beliefs of caving instructors is yet to be fully considered. Consequently, this paper investigates the leadership practice of a purposive sample of 3 UK based caving instructors, utilising an Applied Cognitive Task Analysis to access their expert cognition. The study aimed specifically to examine the decision-making processes of this sub-group of outdoor professionals who regularly work in difficult and demanding environments. Results supported and built upon previous work, in adventure sports and specifically in confirming the complexity of judgement and decision-making underground. In particular decision-making creates high cognitive loads because of environmental factors inherent in extended caving journeys. These loads are assuaged by application of heuristics and planning. Naturalistic decision-making in particular is numerous and multifaceted. Findings have implications for National Governing Body instructor training programme design and operation, with particular refence to the development of decision-making expertise in complex environments

From Boom to Crisis and Back Again: What Have We Learned?

It seems increasingly evident that the problems of the financial crisis in Asia were caused by a variety of different factors, the importance of which varied from country to country. However, according to the authors two points must be emphasized. First, the rapid movement toward capital account convertibility put severe strains on relatively unsophisticated financial systems that had previously focused on simple bank intermediation of funds between savers and investors. Second, governments were surprisingly unprepared to respond to pressures on their currencies