Do Preferential Trade Agreements Promote Growth? An Evaluation of the Caribbean Basin Economic Recovery Act

The few empirical studies which examine the effects of preferential trade liberalization on growth find no direct relationship between membership in a PTA and growth across countries. This is somewhat surprising, given the large literature which argues that trade liberalization is likely to encourage more rapid growth. However, sensitivity analysis has shown that this link between freer trade and growth may be indirect, as freer trade strongly increases investment, and higher investment strongly increases growth. This paper tests for both direct and indirect effects of preferential trade liberalization on growth and investment, by examining the impact of the Caribbean Basin Economic Recovery Act--a non-reciprocal PTA implemented by the U.S. in 1984 to encourage growth and development in Caribbean and Central American countries. A two-equation simultaneous system is estimated, using pooled data on twelve beneficiary countries, from 1970-1998. Results suggest that CBERA did not result in any "trade-induced investment-led growth." It may have had a direct impact on growth in the region, but the effect was small, and significant only when combined with trade and foreign exchange reforms on the part of the beneficiary countries themselves. However, preferential trade liberalization through the production-sharing program, and unilateral and regional trade reforms in beneficiary countries and in the US did lead to investment-led growth, and to higher growth directly, in the CBERA countries.International Development, International Relations/Trade,

Trade and the environment : a survey of the literature

The recent revitalization of concern for environmental quality has generated many questions about the interaction between trade and the environment. Most of these questions have to do with the impact of environmental regulation on trade patterns and gains from trade. If a tradeoff is perceived, it is often argued that some intervention becomes appropriate: either a specific trade policy or the establishment of an international environmental standard. Present GATT policy then becomes an issue of debate. Should GATT revise its rules to accommodate the specific trade measures suggested? How can GATT ensure that the environmental objective is not a disguise for a trade barrier? Should GATT establish some international environmental standard with procedures to ensure compliance? The importance given to trade liberalization and exchange rate policy reform as part of adjustment for development has raised another set of questions: Is there a direct link between the removal of trade barriers and environmental degradation? If so, how should liberalization strategies incorporate this cost? Should trade policy be used to meet environmental objectives? The author surveys the literature on the main questions being debated in both of these areas. Among her conclusions: (1) More stringent regulations in one country are thought to result in reduced competitiveness and perhaps industrial flight and the development of pollution havens. The many empirical studies that have tried to test these hypotheses have shown no evidence to support them. (2) Countervailing duties or an international environmental standard have no place here. Both concepts ignore the reallocation of resources that must occur if externalities are to be efficiently incorporated into costs. They also ignore the fact that standards should be based on local calculations of marginal costs and benefits. Only if an exporter's standards are below what is locally optimal would a countervailing duty be justified. (3) Subsidies are likely to be trade barriers in disguise and should generally not be accommodated. They are not usually an efficient means of achieving an environmental objective and may hinder the efficient allocation of resources away from pollution-intensive industries. (4) Imposing a tariff when pollution spills over national boundaries can be no more than a second-best policy. If the tariff is based on damage to the victim country alone, it will not reduce trade in the polluting product enough; if it maximizes the welfare of the victim, it may reduce trade in the product too much. (5) There seems to be a case for establishing some international code of product standards, to prevent the use of such standards as nontariff barriers.Environmental Economics&Policies,Economic Theory&Research,Water and Industry,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Health Monitoring&Evaluation

How vertically specialized is Chinese trade?

Two recent phenomena have transformed the nature of world trade: the explosive growth of Chinese trade, and the growth of vertically specialized trade due to international production fragmentation. While vertical specialization may explain much of the growth and unique features of Chinese trade, few papers have quantitatively assessed these two phenomena together. In part, this is because it is difficult to measure just how vertically specialized Chinese trade is. The unique features of China's extensive processing trade cause both the identification of imported intermediate goods, and their allocation across sectors, to depend upon the Chinese trade regime. In this paper, we estimate the vertical specialization of Chinese exports, addressing these two challenges. Using two Chinese benchmark input-output tables, and a detailed Chinese trade dataset which distinguishes processing trade from other forms of trade, we develop a new method of identifying intermediate goods imported into China. Vertical specialization is then estimated using two methods. The first method uses the Hummels, Ishii and Yi (2001) measure, the official benchmark IO tables, and incorporates our identification correction. The second method follows the first, but also incorporates the Koopman, Wang and Wei (2008) method of splitting the benchmark IO tables into separate tables for processing and normal exports, in order to address the allocation problem. Results show strong evidence of an Asian network of intermediate suppliers to China, and the two methods provide a range of estimates for the foreign content of Chinese exports. In 2002 aggregate exports ranges between 25% and 46%, with some individual sectors are as high as 52%-95%. Across destinations, under both methods, the vertical specialization of Chinese exports declines with the level of development of the trading partner.China; fragmentation; vertical specialization; trade growth

Are foreign investors attracted to weak environmental regulations? Evaluating the evidence from China

One of the most contentious debates today is whether pollution-intensive industries from rich countries relocate to poor countries with weaker environmental standards, turning them into pollution havens. Empirical studies to date show little evidence to support the pollution haven hypothesis, but suffer potentially from omitted variable bias, specification, and measurement errors. The authors estimate the strength of pollution-haven behavior by examining the location choices of equity joint venture (EJV) projects in China. They derive a location choice model from a theoretical framework that incorporates the firm's production and abatement decision, agglomeration, and factor abundance. The authors estimate conditional logit and nested logit models using new data sets containing information on a sample of EJV projects, effective environmental levies on water pollution, and estimates of Chinese pollution-intensity for 3-digit ISIC (International Standard Industrial Classification) industries. Results from 2,886 manufacturing joint venture projects from 1993-96 show that EJVs from all source countries go into provinces with high concentrations of foreign investment, relatively abundant stocks of skilled workers, concentrations of potential local suppliers, special incentives, and less state ownership. Environmental stringency does affect location choice, but not as expected. Low environmental levies are a significant attraction only for joint ventures in highly-polluting industries with partners from Hong Kong, Macao, and Taiwan (China). In contrast, joint ventures with partners from OECD sources are not attracted by low environmental levies, regardless of the pollution intensity of the industry. The authors discuss the likely role of technological differences in explaining these results.Environmental Economics&Policies,Economic Theory&Research,Water and Industry,Decentralization,Public Health Promotion,Environmental Economics&Policies,Water and Industry,Economic Theory&Research,Health Monitoring&Evaluation,ICT Policy and Strategies

Evaluation of Mutagenicity Testing of Extracts from Processed Oil Shale

The Ames

Changes in Provider Attitudes Toward Telemedicine

A longitudinal study was conducted in which the pre- and post-telemedicine encounter attitudes of healthcare providers were compared in order to ascertain whether and how experience with telemedicine changes their attitudes toward telemedicine. Attitudinal changes of providers who had used telemedicine previously were compared to those experiencing telemedicine for the first time. Data were gathered from the providers in two telemedicine programs located in Georgia and Nebraska. Both used real-time videoconferencing and peripheral devices to conduct telemedicine consultations. A total of 87 providers completed questionnaires just prior to and immediately after each telemedicine encounter in their respective programs. The questions focused on the expected impact of telemedicine on their productivity and ability to prescribe treatment. A 3-point scale was used to measure the responses. More than three quarters (79.3%) of the providers did not change their attitudes subsequent to the use of telemedicine. There was no significant difference between first-time users and those who had experience (p = 0.392). The shift in attitude in the minority (n = 18) of providers who did change their minds after the telemedicine encounter was more positive among those who used telemedicine for the first time as compared to those with experience. Contrariwise, those with experience became more negative (p = 0.025). This finding suggests that experience with telemedicine results in more positive attitudes that may not be realized in subsequent interactions with the technology.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/78107/1/tmj.2008.0052.pd

Measuring the vertical specialization in Chinese trade

In recent years, two important related developments have transformed the nature of world trade: the explosive growth of Chinese trade, and the growth of vertically specialized trade due to international production fragmentation. The literature in each of these two separate topics is large and growing. However, very few papers quantitatively assess these two trends together. In this paper, we measure the degree to which Chinese trade has become vertically specialized, using a new measure adapted from Hummels, Ishii and Yi (2001). By making use of the latest Chinese input-output tables, and a new detailed Chinese trade dataset which distinguishes processing trade from other forms of trade, we develop a new method of identifying intermediate goods imported into China. With this new method, we measure Chinese vertical specialization over time, and by sector, export destination, and input source. We find about 35 percent of the value of China's exports to the world is attributable to imported inputs. This vertical specialization exceeds 50% in some sectors, and is growing over time

Trade Growth, Production Fragmentation, and China's Environment

Trade growth for a relatively poor country is thought to shift the composition of industrial output towards dirtier products, aggravating environmental damage. China's rapidly growing trade and serious environmental degradation appear to be no exception. However, much of China's trade growth is attributable to the international fragmentation of production. This kind of trade could be cleaner, if fragmented production occurs in cleaner goods, or if China specializes in cleaner stages of production within these goods. Using Chinese official environmental data on air and water pollution, and official trade data, we present evidence that (1) China's industrial output has become cleaner over time, (2) China's exports have shifted toward relatively cleaner, highly fragmented sectors, and (3) the pollution intensity of Chinese exports has fallen dramatically between 1995 and 2004. We then explore the role of fragmentation and FDI in this trend toward cleaner trade. Beginning with a standard model of the pollution intensity of trade, we develop a model that explicitly introduces production fragmentation into the export sector. We then estimate this model using pooled data on four pollutants over ten years. Econometric results support the view that increased FDI and production fragmentation have contributed positively to the decline in the pollution intensity of China's trade, as has accession to the WTO and lower tariff rates.