Agricultural trade reforms in the Doha Round: a developing country perspective

This paper examines the reform outcome of the Uruguay Round relating to trade in agriculture, the nature of the unfinished reform agenda and policy choices for the Doha Round, with special emphasis on the position of developing in trade negotiations. A key policy inference is that, to be effective, agricultural trade liberalisation should involve simultaneous reforms of the trade regime and domestic production support mechanisms. Concerted international initiatives to provide financial and institutional support for economic adjustment and social safety programs can play an important role in making such comprehensive reforms politically palatable and feasible. While overloading the WTO with matters that fall beyond its purview may be counterproductive, there is certainly a case for a coordinated effort involving the WTO and international development finance institutions. Developing countries should eschew excessive reliance on ‘special and differential treatments’ and instead strive to make use of multilateral liberalisation commitments to lock in much-needed structural reforms in domestic agriculture

Malaysian Trade Policy and the 2001 WTO Trade Policy Review

The purpose of this paper is two-fold; to examine developments in trade and investment policy regimes in Malaysia following the on-set of the financial crisis, using the Trade Policy Review Malaysia 2001 of the WTO as a reference point; and to evaluate the Review in terms of the objectives of the WTO Trade Policy Review Mechanism as set out in the Marrakesh Agreement. It is found that, by and large Malaysia has managed to come out of the crisis without compromising on its long-standing commitment to maintaining a relatively open trade and investment policy regime by the regional standards. However, there are some disturbing post-crisis developments, which deserve scrutiny in a future Review. These include increase in the degree of dispersion of tariff rates because of high tariff peaks relating to a few product lines, increased reliance on non-automatic import licensing to regulate imports of a significant number of products which directly compete with domestic production by public sector enterprises, and unexplained delays in meeting commitments under the General Agreement on Trade in Services (GATS

The International Allocation of R&D Activity by US Multinationals: The East Asian Experience in Comparative Perspective

This paper examines patterns and determinants of overseas R&D expenditure of MNEs, with emphasis on the East Asian experience, using a new panel dataset relating to US-based manufacturing MNEs over the period 1990-2001. It is found that inter-country differences in R&D intensity of operation of US MNE affiliates are fundamentally determined by the domestic market size, overall R&D capability and cost of hiring R&D personnel. The impact of domestic market orientation of affiliates on R&D propensity varies among countries depending on their stage of global economic integration. Intellectual property protection seems to matter largely for mature economies with complementary endowments. There is no evidence to suggest that financial incentives have a significant impact on inter-country differences in R&D intensity when controlled for other relevant variables. Nor is there a statistically significant relationship between the size of the capital stock of MNEs and R&D intensity of their operation across countries. Overall, our findings serve as a caution against paying too much attention by host country governments on turning MNEs affiliates into technology creators as part of their foreign direct investment policy.

Trade policy reforms and the structure of protection in Vietnam

This paper examines the current state of the trade policy regime in Vietnam against the backdrop of market-oriented policy reforms undertaken over the past one-anda-half decades. The core of the paper is an in-depth analysis of the structure of protection, focussing on both incentives for import-competing production the bias in the incentive structure against export production compared to import-competing production. It is found that, despite notable reform efforts, the structure of protection in Vietnam is still out of line with that of the major trading nations in the region, in terms of the level and the inter-industry dispersion of nominal and effective protection rates. There is a clear ani-export bias in the incentive structure, even though the degree of the bias has considerably declined over the years. There is no evidence to justify the existing protection structure on grounds of infant industry protection or employment generation

East Asia in World Trade: The Decoupling Fallacy, Crisis, and Policy Challenges

This paper examines the export experience of China and other East Asian economies in the aftermaths of the global financial crisis against the backdrop of pre-crisis trade patterns. The analysis is motivated by the ‘decoupling’ thesis, which was a popular theme in the Asian policy circles in the lead-up to the onset of the recent financial crisis, and aims to probe three key issues: Was the East Asian trade integration story that underpinned the decoupling thesis simply a statistical artifact or the massive export contraction caused by an overreaction of traders to the global economic crisis and/or by the drying up of trade credit, which overpowered the cushion provided by intra-regional trade? What are the new policy challenges faced by the East Asian economies? Is there room for an integrated policy response that marks a clear departure from the pre-crisis policy stance favoring export-oriented growth? The findings caution against a possible policy backlash against openness to foreign trade arising from the new-found enthusiasm for rebalancing growth, and make a strong case for a long-term commitment to non-discriminatory multilateral and unilateral trade liberalization.global financial crisis, global production sharing, production networks, China

Global Production Sharing, Trade Patterns, and Determinants of Trade Flows in East Asia

Global production sharing—the breakup of a production process into vertically separated stages that are carried out in different countries—has become one of the defining characteristics of world trade over the past few decades. Any analysis of trade patterns or its determinants that ignores this phenomenon, and the trade in parts and components that it generates, is likely to result in erroneous conclusions. This study examines the extent and pattern of these flows, focusing on East Asia, and probes its implications for the analysis of the determinants of trade flows. World trade in parts and components increased from about 18.9% to 22.3% of total exports between 1992/93 and 2005/06. Most of this growth emanates from East Asia, with its share in total world exports increasing from 27% to 39% over the same period. There was a notable decline in Japan’s share toward the end of this period, but this was more than offset by the rising importance of the People's Republic of China (PRC). In East Asia, most of this trade is in electronics. The econometric analysis reveals that parts and components are remarkably less sensitive to changes in relative prices; as a result, the sensitivity of aggregate trade flows to relative price changes diminishes as its share increases. This implies that exchange rate policy may be less effective in balance of payments adjustment, in countries where component trade is high and growing.Global production sharing; product fragmentation trade; determinants of trade flows; exchange rate policy

Production Networks and Trade Patterns in East Asia: Regionalization or Globalization?

This paper examines the implications of global production sharing for economic integration in East Asia, with emphasis on the behavior of trade flows in the wake of the 2008 global economic crisis. While trade in parts and components and final assembly within production networks (“network trade”) has generally grown faster than total world trade in manufacturing, the degree of dependence of East Asia on this new form of international specialization is proportionately larger than elsewhere in the world. Network trade has certainly strengthened economic interdependence among countries in the region, with the People’s Republic of China (PRC) playing a pivotal role as the premier center of final assembly. However, contrary to the popular belief, this has not lessened the dependence of the export dynamism of these countries on the global economy. The rise of global production sharing has strengthened the case for a global, rather than regional, approach to trade and investment policymaking.production sharing; trade patterns; East Asia; PRC

Distortions to Agricultural Incentives in Malaysia

Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,

Capital inflows and the real exchange rate: a comparative study of Asia and Latin America

The nexus of real exchange rate (RER) and capital inflows is examined through a comparative analysis of the experiences of emerging market economies in Asian and Latin America during the period 1985-2000. It is found that the degree of appreciation in RER associated with capital inflow is uniformly much higher in Latin American countries compared to their Asian counterparts, despite the fact that the latter experienced far greater foreign capital inflows relative to the size of the economy. The econometric evidence suggests that both the composition of capital flows and differences in the degree of response of RER to capital flows matter in explaining these contrasting experiences. While RER appreciation is a phenomenon predominantly associated with other (non-FDI) forms of capital inflows (OCFW), a given level of OCFW brings about a far greater degree of appreciation of the real exchange rate in Latin America where the importance of these flows in total capital inflow is also far greater. On the policy front, Asian countries seem to have used fiscal contraction and nominal exchange rate adjustment more effectively to cushion the RER against the appreciation pressure of capital inflows. There is, however, no evidence to suggest that sterilized intervention can generate a lasting impact on the real exchange rate

Foreign investment in a least developed country: the Nepalese experience

This paper aims to contribute to the literature on the developmental role of foreign direct investment through an examination of the Nepalese experience during the period 1988-2001. Despite significant liberalisation of the foreign investment regime and the introduction of attractive investment incentives, Nepals achievements during this period, both in terms of the volume of FDI and its developmental impact, failed to mach the national expectations. Nepal obviously has intrinsic disadvantages arising from its geography and other typographical characteristics in attracting FDI. However, comparative international experience suggests that her lackluster achievements as a host to foreign investors cannot be explained in terms of these factors alone. Policies that underpin the overall investment climate also seem to matter. Mere liberalisation of the investment regime and introducing financial incentives are not a substitute for an all-encompassing effort to improve the investment climate