Economic Growth and Social Capital in Asia

The paper reviews the growth performance of different groups of Asian economies, confirms the role of openness as a key factor explaining the growth differences among the Asian economies, and undertakes a preliminary investigation of the role of social capital and institutions. The role of openness in explaining growth differences among the Asian economies appears to be if anything greater than has been established in global samples. Various measures of social capital and institutional quality were not found to add explanatory power, perhaps because of the shortage of comparable data for the Asian economies. It is conjectured that the prospects are good for the technological catchup that has taken place in South-East Asia to be repeated elsewhere in Asia, and especially South Asia, partly in response to recent increases in openness. The role of social capital and institutions in facilitating this catchup remains to be established.

National Borders, Trade and Migration

The paper first extends and reconciles recent estimates of the strikingly large effect of national borders on trade patterns. Estimates comparing trade among Canadian provinces with that between Canadian provinces and U.S. states show interprovincial trade in 1988-90 to have been more than twenty times as dense as that between provinces and states, with some evidence of a downward trend since, due to the post-FTA growth in trade between Canada and the United States. Using approximate data for the volumes and distances of internal trade in OECD countries, the 1988-92 border effect for unrelated OECD countries is estimated to exceed 12. Both types of data confirm substantial border effects, even after accounting for common borders and language, with the directly-measured data for interprovincial and province-state trade producing higher estimates." Initial estimates from a census-based gravity model of interprovincial and international migration show a much higher border effect for migration, with interprovincial migration among the Anglophone provinces almost 100 times as dense as that from U.S. states to Canadian provinces. Effects of migration on subsequent trade patterns are found for international but not for interprovincial trade, suggesting the existence of nationally-shared networks the large national border effects for trade flows.

The Effects of Fiscal Policy on International Imbalances: Japan and the United States

Evidence from three multicountry models is used to assess the current account effects of U.S. and Japanese fiscal policies. Asymmetries in the effects of U.S. and Japanese policies are analyzed in some detail, and attributed to differences in country size, in trade patterns (which have only a small effect) and in the extent to which induced changes in real exchange rates switch demand from domestic to foreign output. Fiscal policy has substantial current account effects in the models. For example, switching $50 billion of sustained government spending from the United States to Japan would, in the third year, improve the U.S. current account by$24 billion and worsen that of Japan by $20 billion. Induced changes in nominal exchange rates are found to play a relatively small role in determining the effects of fiscal policy on the nominal current account.

From Flapper to Bluestocking: What Happened to the Young Woman of Wellington Street?

Helliwell traces the changes that have occurred at the Bank of Canada since the early 1960s, when he first began a long and extensive relationship with the institution and its staff. He begins with his work on the Royal Commission on Banking and Finance (the Porter Commission) and continues over the next 40 years, giving particular focus to the Bank's analytic and research activities. Although he is careful to note the benefits of alternative analytical and information-gathering techniques, such as the extensive mail and direct interview survey that he and his colleagues conducted as part of the Royal Commission, Helliwell devotes most of his attention to the Bank's econometric modelling efforts, starting with RDX1 and RDX2 in the late 1960s and early 1970s. He cites some of the internal, as well as external, obstacles that had to be overcome as the Bank's modelling efforts advanced, and how shifting trends in the economics profession have sometimes posed a challenge. Helliwell concludes that these developments helped the Bank to come of age and take its place in the front ranks of the world's evidence-based policy-research institutions.

Where Are They Now? Migration Patterns for Graduates of the University of British Columbia

In an empirical analysis of the migration patterns of University of British Columbia (UBC) graduates, John F. and David F. Helliwell show in their paper how much the situation has changed between the 1960s and the 1990s. Canadian research and graduate education have expanded dramatically, leading many more undergraduates to stay in Canada for their graduate work. According to the Helliwells, this is perhaps the single most important reason why the south-bound flows of bachelor’s graduates has fallen so much from the early 1960s to the 1990s. Consequently, they argue that the resurgence of discussion of a brain drain in the 1990s has much less basis in the data, and probably represents factors specific to certain sectors, such as health spending, research and university financing, where funding support has risen much less rapidly than in the United States. It has also been fuelled to some extent by sharp increases in the numbers in temporary NAFTA visas to Canadians working in the United States, and in part to increasing gaps in salaries and tax rates in the 1990s that favoured high-income earners in the United States, relative to their Canadian counterparts. The UBC graduate data show that over the past five decades there have been continuing reductions in the shares of UBC graduates living in the United States. For all of the large-scale bachelor’s programs the proportion of graduates living in the United States has continued to fall during the 1990s. For the graduate programs, the proportion living outside Canada is and has always been high, reflecting a very international mix of both the student intake and the available career positions. For all degrees, the proportion of 1990s UBC graduates living in the rest of the world is higher than that in the United States. For graduate degrees, the proportion of the graduates subsequently living and working in Canada, and especially in British Columbia, is much higher than the share of Canadian citizens among the incoming students. With respect to the international distribution of those with the highest level of educational aptitude and attainments, as represented by the master’s and PhD graduates of UBC, Canada and British Columbia stand in the middle ground between the United States and the rest of the world. Comparing the citizenship of UBC’s graduate intake with the country of residence of the graduates, the United States is the largest proportionate net recipient (7 per cent U.S. citizen intake, 14 per cent U.S.-resident 1990s PhDs), Canada is the largest recipient in terms of numbers of PhDs (46 per cent Canadian citizen intake, 70 per cent Canadian-resident 1990s PhDs), with students from 100 other countries providing a net flow into Canada and the United States.Canada, United States, Migration, Brain Drain, Brain-drain, Braindrain, Graduates, Temporary Visa, Visas

New measures of the costs of unemployment: Evidence from the subjective well-being of 3.3 million Americans

Using two large US surveys, we estimate the effects of unemployment on the subjective well-being of the unemployed and the rest of the population. For the unemployed, the non-pecuniary costs of unemployment are several times as large as those due to lower incomes, while the indirect effect at the population level is fifteen times as large. For those who are still employed, a one percentage point increase in local unemployment has an impact on well-being roughly equivalent to a four percent decline in household income. We also find evidence indicating that job security is an important channel for the indirect effects of unemployment.

A Synthesis of Keynesian, Monetary, and Portfolio Approaches to FlexibleExchange Rates

This paper presents a simple synthesis of Keynesian, monetary, and portfolio approaches to macroeconomic theory under flexible exchange rates. By including the key features of all the partial approaches in a general model, we show that some of the important contrasts that have been drawn between the approaches are due to a neglect of repercussions elsewhere in the economy. After reconciling these false contrasts, we show how some of the approaches still give different predictions about the effects of monetary and fiscal policy using differing assumptions about the international mobility of goods and financial assets.

Convergence and Growth Linkages Between North and South

Using cross-sectional data for 98 countries for 1960-85, this paper shows that growth of per capita GDP depends negatively on initial income levels, as implied by the convergence hypothesis, as well as on international differences in investment rates in physical and human capital. There is some evidence of slight economies of scale (1.06) among the industrial countries. The evidence in favor of the convergence hypothesis is strongest for the countries of the OECD and Latin America, and weakest for Asia. Growth in Latin America and Africa is lower than elsewhere even after allowing for international differences in initial income levels, scale, schooling and capital investment. Analysis of Solow residuals for the OECD countries (for which capital stock data are available) shows convergence in rates of technical progress, suggesting that convergence of per capita GDPs is not Just a function of differences in investment rates. The linkage between per capita GDP and the real exchange rate is found to be strong for the OECD and Asia, weak for Africa and negative for Latin America.