"Trade Liberalization and Poverty Reduction in General Equilibrium: The Role of Labor Market Structure"

The paper uses a dualistic, compact and "generic" (macroeconomic) computable general equilibrium (CGE) model specially constructed for the purpose of investigating the implications of trade liberalization for poverty reduction in South Asia under different labor market specifications. The model is a stylized representation of economies with large populations including large numbers of both urban and rural poor as in India, Pakistan or Bangladesh. The current "generic" model uses CES production functions and Harris-Todaro type migration model together with Indian data to generate economy wide results. The model's general equilibrium results allow us to test a number of hypotheses regarding the role of labor markets in inducing poverty reduction when trade liberalization policies are adopted.

"On Mortality and Poverty: An Axiomatic Approach With A Modified Index"

The purpose of this note is to analyze a somewhat novel aspect of poverty measurement, namely the impact of premature deaths of poor people on measured poverty. The perverse results one could easily obtain theoretically can be illustrated by using the widely used headcount ratio index. The proposal for a correction offered here involves the introduction of a new axiom of biological stress (ABS) to handle the case of premature mortality among the poor specifically, and to address the issue of increasing biological stress generally. A new headcount ratio index adjusted for the specific biological stress leading to premature deaths among the poor is constructed. It is simple, consistent with ABS, and easy to estimate. It is hoped that given the relevance of the critical demographic variables already acknowledged in the literature, the new index will be of use to the poverty reduction specialists.

"Soft Infrastructure, Trading Costs and Regional Co-operation "

The main purpose of this paper is to clarify some important links between regional co-operation, (soft) infrastructure and trading costs, and to suggest some hypotheses for further investigation. Khan and Weiss(2006) discuss the issue of both hard and soft infrastructure in this context. This paper is a continuation of Khan and Weiss(2006) but in the specific context of soft infrastructure, and particularly governance, including corporate governance. As Khan and Weiss(2006) point out, conceptually such discussions can be seen as a part of the analysis of the 'New Regionalism' The key idea here is co-operation through preferential trade and investment agreements that aim to strengthen structural economic reform, aid economic transformation, attract foreign investment and generally raise the international competitiveness of participating countries. This paper identifies several crucial areas of future research with potentially large value added. The general hypothesis with significant policy implications which can be elaborated and tested is that trade costs are negatively related to the existence of and improvements in soft infrastructure. A related hypothesis is that cross-border cooperation in building and maintaining both hard and soft infrastructure synergistically will lead to a reduction in trade costs. More specifically it will be useful to know the how high are the barriers to trade created by factors like high freight costs, slow port handling, customs delays, lack of competition in the insurance sector, poor corporate governance, unofficial payments and so forth. Some of these factors may be intrinsically difficult to quantify but the potential pay-off from policy-relevant research of this type is enormous. Optimal policies for regional cooperation in soft infrastructure will be difficult if not impossible to formulate in the absence of this type of research.

"Value, Social Capabilities, Alienation:The Right to Revolt"

The labor theory of value in classical political economy, particularly as developed in Marx's Capital, has been the source of a number of interpretations and controversies. The purpose of this paper is to make an analytical distinction between two types of labor theories of value that can illuminate the role of the less well known of the two different theories in understanding the dynamics of capital accumulation and of systemic changes. This qualitative theory of value can be used to explore the significance of value form in both capitalism and the concept and practices of socialism. It can also offer a new way of defending the right to revolt on the part of those who are exploited under both capitalism and socialism.

"China's Energy Dilemma"

PRC's energy dependence is growing and has become a major concern for both economic and national security policymakers in that country. The ambitious goal of modernization of the economy along the lines of the other newly industrialized economies(NIEs) of Asia has succeeded only too well, and it is difficult to reorient economic priorities. If examined rigorously, such an economic strategic assumption can be seen to entail the goal of creating further technological capabilities. In particular, China seems to be firmly committed to the creation of a largely self-sustaining innovation system as part of a knowledge-based economy of the future . Such innovation systems, called positive feedback loop innovation systems or POLIS have been created by advanced countries, and NIEs such as South Korea and Taiwan are proceeding to create these as well. But this will add to its energy burden and further dependence on the US as the power which controls the key sea lanes. Only a strategic reorientation to building a self-sustaining POLIS and appropriate regional cooperation institutions can lead to the way out of the current dilemma for China.

"Deconstructing Postmodernism and the Mainstream Developmental Discourse of Women's Empowerment in the (South) Asian Context"

This paper starts with an initial gesture accepting the validity of many of the criticisms of modernity by some leading postmodern thinkers. From this initial position, it then evaluates the postmodernist positions themselves with regards to democracy, women's empowerment and justice by paying careful attention to the arguments of these leading postmodernists. It then develops a theory of deep democracy and radical subjectivity which can be used to deconstruct the rhetoric of international organizations on women's empowerment. However, shallow and self-serving as this rhetoric is, it nevertheless can lead to a limited improvement in women's status contrary to the claims of the conservatives. Furthermore, the theory can also be used to de/reconstruct the liberal and social democratic positions on women's empowerment. Such a deep democratic perspective in South Asia focuses attention on enhancing social capabilities through all means, but most importantly through the political self-activities of the multitude---- particularly the radical subjectivities and actions of the most oppressed women who can and will increasingly take leading roles in overcoming the rule of global capital.

"Corporate Governance in Singapore and Hong Kong: What Can the Other Asian Economies Learn?"

The relative immunity of Singapore's corporations, including family-owned and controlled corporations, from the recent financial crisis can be attributed to reasonably well-functioning financial markets, government oversight and cooperation and coordination among the major domestic players in an open and competitive market structure. The reforms with respect to auditing and accounting - and to some extent board of directors - will undoubtedly strengthen the governance structure; but it does not seem that Singapore will be transformed into a purely equity market based governance structure in the near future. However, a more consolidated banking structure with strong government backing can be expected to become more involved in monitoring the corporations. Over time, some institutional and other large domestic and foreign investors can also be expected to play an enhanced role in monitoring the corporations in Singapore. Hong Kong has a predominance of family-based system (FBS) of corporate governance. The main difference between FBS as a governance system and others such as bank-led (BLS) or equity market-based (EMS) system of corporate governance is that ultimate control of the firm resides with the family groups rather than banks or the equity markets. As the share of external finances rises with the growth of the firm, agency costs increase due to problems of asymmetric information between management and external financiers. FBS can be a workable form of governance under such conditions only with proper monitoring capabilities of the financial system, managerial expertise and market competition. Particularly important for reforming the FBS is the need for recruiting and training competent professionals so that the financial institutions can gather and analyze the relevant information about the firms they finance. Furthermore, there must be formal and informal means to influence the decisions of a borrowing firm when it appears to be not performing well. Several factors explain Hong Kong's success in continuing with gradual corporate governance reforms. First and foremost, is the relative strength of the financial sectors. Both the banks and the equity markets have proved to be much stronger than those in other regional economies during and after the crisis. Second, the presence of both competition and cooperation in the financial sector has made it possible to regulate effectively through the Banking Ordinances and Listing Rules and Takeover Codes. A third factor is that in Hong Kong the insolvency and bankruptcy procedures are relatively straightforward. This makes exit of insolvent firms economically less costly and after such exits the system regains its vigor. Fourthly, increasing the emphasis on accounting and auditing standards improvements will make monitoring, including some further self-monitoring by the family businesses themselves easier. Finally, although this may not be the most significant, the smallness of Hong Kong also makes it easier for informal agreements to be made and kept through reputational and other relational mechanisms. In economies where some of the above characteristics that make reforming FBS in Hong Kong possible are present, some degree of reform of FBS may be possible, so that this system remains effective as an interim type of governance for some time to come. However, the role of banks even in this interim period must be strengthened a great deal more than it is today. Without a strong, independent banking system the agency costs arising from the monitoring problems in most Asian economies will still remain high. In order to improve corporate governance in Asia, the monitoring capabilities of the financial sector - in particular the banking system - must be given top priority.

"Digital Transitions: The POLIS Theory and The NIEs"

In the fast developing digital technological revolution even the newly industrialized economies (the NIEs) have found it hard to catch up and maintain the pace required for not falling behind. The developing economies are clearly at a great disadvantage in such a fast paced technological race. Thus there is a digital divide that is growing and through a cumulative causation the gap will widen further unless coordinated action is taken. This paper discusses some of the most important economic issues conceptually and offers some modest policy advice. The basic problem of adoption of a new technology system such as the ICT( information and communications technologies) is explored via the theory of a positive feedback loop innovation system (POLIS) in a nonlinear, path-dependent world where institutional structure and its evolution matter crucially. By investing strategically in physical, intellectual and other forms of human and organizational capital as well as building new institutions of cooperation the NIEs may be able to forge a path not only in the ICT sectors, but also create innovation systems of their own that can be extended to region-wide systems. Under the emerging globally competitive market environment this will be the best way to compete dynamically. However, creating comparative advantage in this way requires capabilities that many NIES in Asia will need to promote. Creative policy interventions with a mix of market promotion, good governance, relative openness, and promotion of sustainable development in an equitable manner are necessary if the NIEs are not to be left far behind. The theoretical approach developed here also allows to evaluate the state of the economy and society ethically by extending and incorporating Amartya Sen's capabilities approach within the POLIS.

"Can Banks Learn to Be Rational?"

Can banks learn to be rational in their lending activities? The answer depends on the institutionally bounded constraints to learning. From an evolutionary perspective the functionality (for survival) of "learning to be rational" creates strong incentives for such learning without, however, guaranteeing that each member of the particular economic species actually achieves increased fitness. I investigate this issue for a particular economic species, namely, commrercial banks. The purpose of this paper is to illustrate the key issues related to learning in an economic model by proposing a new screening model for bank commercial loans that uses the neuro fuzzy technique. The technical modeling aspect is integrally connected in a rigorous way to the key conceptual and theoretical aspects of the capabilities for learning to be rational in a broad but precise sense. This paper also compares the relative predictability of loan default among three methods of prediction--- discriminant analysis, logit type regression, and neuro fuzzy--- based on the real data obtained from one of the banks in Taiwan.The neuro fuzzy model, in contrast with the other two, incorporates recursive learning in a real world, imprecise linguistic environment. The empirical results show that in addition to its better screening ability, the neuro fuzzy model is superior in explaining the relationship among the variables as well. With further modifications,this model could be used by bank regulatory agencies for loan examination and by bank loan officers for loan review. The main theoretical conclusion to draw from this demonstration is that non-linear learning in a vague semantic world is both possible and useful. Therefore the search for alternatives to the full neoclassical rationality and its equivalent under uncertainty---rational expectations--- is a plausible and desirable search, especially when the probability for convergence to a rational expectations equilibrium is low.

"Social Accounting Matrix: A Very Short Introduction for Economic Modeling"

The main purpose of this paper is to clarify some important links between the Social Accounting Matrix and Fixed Price Multiplier(FPM) Models. The aim is expository. It is hoped that a brief but historically accurate background and description of SAM and SAM-based fixed price multiplier models will be helpful to the increasing number of researchers who are interested in using SAMs for both FPM and CGE modelling.