Environment, Welfare and Gains from Trade: A North-South Model in General Equilibrium

The effects of environment on trade and welfare are analyzed in a modified Heckscher-Ohlin framework using a quasi-homothetic preferences to account for differences in countries' expenditure shares on health. Three types of pollution, local-disembodied, global-disembodied and embodied, result as a by-product of inputs used in production. For each case, the Walrasian, Pareto optimal and the Regulators' problem are analyzed. The optimal tax is shown to improve each country's welfare if the country is small in the world market. Otherwise, changes in the terms of trade may cause one country to be made better off at the expense of the other. Interdependence for the global-disembodied case is explored using a one-shot Nash game. For the embodied pollution, taxing the polluting input only can cause a decline in welfare when the polluting input is intensively used. Instead, a tax on the polluting input in combination with a subsidy to the non-polluting input is optimal. In general, the results suggest compensatory payments may be required to encourage abatement policies. Contrary to other approaches, an abatement policy does not necessarily decrease a country's comparative advantage, i.e., reduce exports of the polluting sector.International Relations/Trade,

The Effect of Sequencing Trade and Water Market Reform on Interest Groups in Irrigated Agriculture: An Intertemporal Economy-Wide Analysis of the Moroccan Case

Many of the import competing sectors in Moroccan agriculture are protected while water in irrigated agriculture is priced below its marginal value product. Establishing a water market in this pre-trade reform environment can be welfare decreasing. Further, as the shadow price of water is sensitive to the crops protected by trade policy, farmers growing crops protected pre-trade reform can be made worse off post reform. The resulting decline in rents to sector resources is a source of interest group conflict that can slow the overall reform process. Using an intertemporal general equilibrium model, the paper analyzes the economy-wide effects of the linkages between trade reform and the reform of water markets in irrigated agriculture. We find a strong investment and growth response to the trade reform, and a reallocation of resources to the production of fruit and vegetable crops, for which Morocco has a strong comparative advantage. Trade reform is found to actually create an opportunity to introduce water pricing reforms. Creating a water user-rights market post trade reform not only compensates partially for the decline in rents to protected crops, but also raises the efficiency of water allocation and hence benefits the economy as a whole.Water Markets, Trade Reform. Dynamic General Equilibrium, O41, International Relations/Trade, Resource /Energy Economics and Policy, F13, Q15, Q25,

A Dynamic CGE Model of R&D Based Growth in the U.S. Economy: An Experiment Using the New Growth Theory

International Development, Research and Development/Tech Change/Emerging Technologies,

Hall-petch relationship and strain rate sensitivity of nanocrystalline Mg - 5wt% A1 alloy

This study investigated the grain size dependence of mechanical properties and deformation mechanisms of microcrystalline (mc) and nanocrystalline (nc: grain size below 100 nm) Mg-5wt% Al alloys. The Hall-Petch relationship was investigated by both instrumented indentation tests and compression tests. The test results from the indentation tests and compression tests match well with each other. The breakdown of Hall-Petch relationship and the elevated strain rate sensitivity (SRS) of present Mg-5wt% Al alloys when the grain size was reduced below 58nm indicated the more significant role of GB mediated mechanisms in plastic deformation process. However, the relatively smaller SRS values compared to GB sliding and coble creep process suggested the plastic deformation in the current study is still dislocation mediated mechanism dominant

A GLOBAL ANALYSIS OF AGRICULTURAL TRADE REFORM IN WTO MEMBER COUNTRIES

The effect on production, trade and well-being from the granting of market access, removing export subsidies, and eliminating trade-distorting forms of direct support to farmers in WTO member countries is analyzed from a world-wide general equilibrium perspective using the most recently available data. The results suggest that removing trade barriers, subsidies and support will cause aggregate world prices of agricultural commodities to rise by over 11 percent relative to an index of all other prices. Agricultural support and protection in the developed countries is found to be the major cause of low agricultural prices, and implicitly, a tax on net agricultural exporters in developing countries. Livestock product prices are likely to increase the most from the reform of agricultural policies. Reform increase world trade in agricultural commodities, but the level of total agricultural production is left almost unchanged. In the short to medium term, some net agricultural importing countries are likely to suffer a welfare loss due to an adverse change in their terms of trade that reform causes. However, in the longer-run, reform of agricultural policies is found to benefit almost all countries and developing countries in particular due to the change reform induces in their pattern of investment, growth in capital stock, and to growth in their total factor productivity.International Relations/Trade,

WHAT IS THE CAUSE OF GROWTH IN REGIONAL TRADE: TRADE LIBERALIZATION OR RTA'S? THE CASE OF AGRICULTURE

This paper delves into the debate on the proliferation of regional trade arrangements by focusing on bilateral agricultural trade data over the 1962-1995 period for countries that currently are members of NAFTA, Mercosur, the EU and APEC. Agricultural is chosen because it has historically been protected by developed and dis-protected by developing nations, while in the case of the EU, its Common Agricultural Policy was the major policy jointly managed and funded by member countries. We suggest that the literature has tended to focus on factors explaining the level of trade, and neglected factors affecting growth in trade. While neighborhood characteristics affect neighborhood trade, they also appear to affect the policy regimes of neighboring countries. The shift to more outward oriented regimes is thus likely to induce a dynamic in trade among neighboring countries requiring several years to stabilize. As neighborhood trade grows, it is natural to form trade arrangements so as to harmonize policies and to remove other barriers. If this is the case, then we should expect the growth in intra regional trade to exceed growth in extra-regional trade, and these patterns should occur before the formation of regional trade arrangements. Our results support this explanation.International trade, Regional trade arrangements, Agricultural trade, International Relations/Trade,

How Fiscal (Mis)-Management May Impede Trade Reform: Lessons From an Intertemporal, Multi-Sector General Equilibrium Model for Turkey

We utilize a multi-sector general equilibrium model based on intertemporally optimizing agents to study issues of trade liberalization and fiscal adjustments in the context of the Turkish economy. A key feature of the model is its explicit recognition of the distortionary consequences of excessive borrowing requirements of the public sector through increased domestic interest costs. The model results suggest that the postponement of adjustment to growing public debt and fiscal imbalances could be detrimental; and that in the absence of coordinated fiscal reforms, the welfare gains expected from trade liberalization may significantly be negated.International Relations/Trade,

Economic growth and distribution of income: A growth model to fit Ghanaian data

Income distribution, economic growth, Development strategies,

Promoting Sustainable Pro-Poor Growth in Rwandan Agriculture: What are the Policy Options?

In 2000, as part of its strategy for growth and poverty reduction, the Government of Rwanda set a goal to increase per capita income from US$230 to US$900 and halve the incidence of poverty by 2020. Two years after those targets were established Rwanda's first Poverty Reduction Strategy Paper (PRSP) projected that GDP growth in the range of 6 to 7 percent would be needed over the long term for those targets to be realized. The principal sources of growth in the short to medium term were to be the agriculture and manufacturing sectors, with agricultural projected to start at 5.2 percent and accelerate over the period due to productivity improvements. Manufacturing growth was projected to rise sharply to 11.5 percent, based on the expansion of manufacturing capacity in agro-processing, and then slow to a more sustainable level of 7 percent. Between 1995 and 2005, real GDP grew at an average annual rate of 10 percent as the economy recovered from the effects of the 1994 genocide. Real GDP growth is now slowing, however. Between 2001 and 2005, average annual GDP growth averaged only 5.2 percent. If growth continues below 6 percent, this will be insufficient to reach Government's development targets. Government therefore needs to quickly put in place policies to accelerate growth. Transforming the agriculture sector will be a critical element of any growth strategy. Agriculture accounts for 35-40 percent of GDP, and employs around 80 percent of the population. It is also the main source of foreign exchange, and is the primary source of inputs for the manufacturing sector. Yet agricultural growth has been disappointing. Between 2001 and 2005, agricultural growth averaged 4.2 percent per year, below the target range of 5 to 8 percent set out in the PRSP. In recognition of the need to stimulate further sustained growth in agriculture, the government is now poised to identify and prioritize the key interventions. This paper aims to assist government in prioritizing the key measures by examining how the level of agricultural growth needed to achieve the government's policy objectives can be achieved. Some in Rwanda advocate the promotion of export crops, both traditional export crops (e.g., coffee, tea, pyrethrum, hides and skins) and non-traditional export crops (e.g., cut flowers, fruits, vegetables, essential oils, vanilla, silk, macadamia). Others argue that agricultural growth can best be stimulated in the short- to medium-term by increasing productivity in food staples, both crops and livestock. This debate mirrors those ongoing in many other developing countries, in sub-Saharan Africa and elsewhere. An economy-wide, multi-market model (REMM) was developed to test the likely payoffs to alternative agricultural development strategies. The REMM is disaggregated to the sub-national (provincial) level and includes 30 agricultural sectors (commodities) and two aggregate non-agricultural sectors. Eight household types are identified within each province according to size of landholding and gender of household head. The economy-wide model is linked to a micro-simulation model that includes all households sampled in a nationally representative survey (19992001 Household Living Condition Survey). The macro-micro linkage framework permits assessment of the likely impacts of alternative policy scenarios on growth, incomes and poverty, and food security at national, sub-national, and household group levels. The model was first used to simulate a base run scenario representing the "business as usual" option, under which agricultural and non-agricultural growth are assumed to continue along current trends. Alternative growth scenarios were later evaluated relative to this baseline. The modelling results show that business as usual is not an option if Rwanda is to meet its national development targets, including the Millennium Development Goals (MDGs) and the targets agreed to under the New Economic Partnership for Africa's Development (NEPAD). The base run scenario highlights that a continuation of current policies will bring about a modest reduction in the national poverty rate, but the absolute number of people living below the poverty line will increase because of population growth. Food self-sufficiency at the national level will be eroded in the face of demographic pressure and rising food imports. The simulations conducted using the REMM indicate that rapid and sustainable growth in Rwanda's agricultural sector is achievable only if the productivity, profitability, and competitiveness of agriculture is improved. Therefore, the priority measures identified focus on increasing investments in land and water resources, strengthening extension, promoting the performance of both domestic and export markets. Key to this will be strengthening support to producer organizations. The simulations produced a number of insights to inform policy design: - Agriculture has the potential to be a leading engine of growth for Rwanda's economy over the short to medium term - Within agriculture, the main drivers of growth will be food staples, including livestock. - Staple-led growth is more pro-poor than export-led growth. - Growth in staples will reduce the nation's food deficit, but it will not eliminate imports of all commodities. - Growth in agricultural exports will help to reduce the total trade deficit, but it will not be able to eliminate it completely. - Agricultural growth will contribute to the attainment of the first MDG of halving poverty by 2015, but agricultural growth alone will not to be sufficient. These findings from Rwanda are relevant for the many other developing countries, in sub-Saharan Africa and also in other regions, in which policy makers are struggling to unlock the power of agriculture to serve as a driver of growth and poverty reduction. In recent years, much attention has focused on boosting agricultural growth by promoting the development of high-value export crops. The REMM simulation results serve as a reminder that in agrarian economies in which a large proportion of rural households continue to engage in production of food staples destined for home consumption, investments aimed at raising the productivity of food staples are likely to have a much greater impact in the short to medium term in fostering broad-based, pro-poor growth.Environmental Economics and Policy, International Development,

An Anatomy of Moroccan Agricultural Trade

Morocco is engaged in a number of economic reforms to better position the country's integration into world markets. Her agricultural sector is particularly important as its trade, GDP, and employment share are relatively large. We analyze Morocco's agricultural trade growth trends over the past 40 years (1962 - 2004) using SITC 4-digit bilateral agricultural trade data. The data are analyzed using the trend and cycles decomposition (TCD) approach and measurement of trade growth at the intensive and extensive margin. We find a high concentration of agriculture trade in both commodities and trading partners. Morocco has also lost export shares in EU to other EU countries in her top exporting commodities. Another finding suggests that agricultural export growth for Morocco was at the intensive rather than extensive margin. This posts a great challenge for Morocco if she is to expand trade at the extensive margin.International Relations/Trade,