274 research outputs found

    A General Equilibrium Analysis of the Interplay between Foreign Direct Investment and Trade Adjustments

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    The theoretical literature on trade and foreign direct investment (FDI) indicates that they could be either substitutes or complements. The empirical evidence on U.S.-Japan and Asia-Pacific Economic Cooperation (APEC) countries suggests that trade and FDI exhibit a complementary relationship. In this paper, we employ a multi-region, multisectoral computable general equilibrium (CGE) model that incorporates FDI to evaluate the impact of APEC trade and investment liberalization on economic welfare and the interplay between FDI and trade adjustments.APEC liberalization, foreign direct investment, CGE model

    Deep Integration and Its Impacts on Nonmembers: EU Enlargement and East Asia

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    Ten countries-most completing their transition from socialist-based economies to market economies-became the EU members in 2004, two additional countries are slated to join the Union in 2007, and a few others are expected to become members at some future dates. Despite a relatively small economic size of the new member, acceding and candidate countries, this type of deep integration can have non-negligible effects on countries outside of the preferential zone as the reduction in barriers across partners leads to a re-orientation of trade. In this study, we evaluate the extent of trade adjustments and the economic impacts it will have on the East Asian economies using a dynamic computable general equilibrium (CGE) model. The overall macroeconomic effects on East Asia are small. There is some trade diversion, but there may be an opportunity to increase market penetration in some sectors of the expanding EU for which East Asia has a marked comparative advantage. This paper also assesses the relative importance of linking trade openness to productivity and lowering trade costs between the new member, acceding and candidate countries and the EU-15.EU enlargement, East Asia, CGE model

    Regional Integration, Sectoral Adjustments and Natural Groupings in East Asia

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    Although East Asian countries were relatively inactive in signing free trade agreements (FTAs) until the end of 1990s, a number of FTAs involving East Asian countries have been signed since the turn of the century. Because sectoral interests can exert significant influence on policy negotiations, the sectoral results would be particularly important for political economy considerations. The objective of this study is to compare welfare gains and sectoral adjustments resulting from various FTA scenarios in East Asia using a dynamic global computable general equilibrium (CGE) model. The RCA rankings of commodities with various FTA scenarios and those with the global trade liberalization are correlated to examine how gnaturalh each grouping would be. The results suggest that the ASEAN+3 FTA, with relatively large welfare gains and small structural adjustments, could be a facilitating intermediate step towards global free trade. Some of the smaller FTAs, such as the ASEAN-China and ASEAN-Korea FTAs, would result in large structural adjustments for ASEAN countries.Regional integration; FTA; RCA; East Asia; CGE model
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