State-Owned Enterprise Behaviour Responses to Trade Reforms: Some Analytics and Numerical Simulation Results Using Chinese Data

We note the absence of prior literature on analytical structures to be used for China and other economies with extensive SOEs when evaluating behavioural responses of SOEs to trade policy and other changes. This is despite both the large empirical literature discussing the productivity effects of Chinese SOE enterprise reform, and wider policy discussion of the potential impacts of various reform initiatives. We present two simple analytical formulations of SOE behaviour in response to trade policy change with the aim of investigating how traditional competitive models of enterprise behaviour can mislead when used in policy debate. One formulation centres on SOE managerial control. In this enterprise managers are politically appointed, expect any non performing loans to be recapitalized by state banks andhence capital is centrally allocated by credit rationing. The managers are assured to maximize the size of the enterprise rather than profits since this yields maximal networking benefits to managers. This implies labour is priced at its average rather than its marginal product, and with a competitive non-manufacturing (agricultural) industry free trade is not optimal policy. The other assumes worker control of SOEs and that workers satisfice in their supply of effort to the enterprise given both fixed wage rates and enterprise employment and otherwise shirk or pursue second jobs. In this formulation the enterprise meets their budget constraint and covers costs. With leisure in the preferences of enterprise members, their leisure consumption will be implied by the satisfying behaviour of the enterprise and will be non optimal. In both model variants, implications for trade policy are different from those of a standard competitive model, and computations using models calibrated to 2003 Chinese data suggest the differences can be large.

Trade Liberalization in a Joint Spatial Inter-Temporal Trade Model

This paper considers liberalization of trade in both inter-temporal intermediation services and goods in a joint spatial-inter-temporal trade model. Joint multi-commodity spatial intertemporal models are not (to our knowledge) used in the trade literature as general comparative statics results are unavailable and (in the presence of incomplete markets) existence can also be an issue. Here we use numerical simulation methods. We first consider world with service trade autarky in which there is no domestic intermediation service provision, and service trade liberalization involves costless inter-temporal intermediation provided by foreign service providers. This simple treatment allows us to model service trade liberalization as removing period by period budget constraints for domestic consumers. In such a world, if nonzero tariffs apply to spatial trade we present an example showing how service trade liberalization can be welfare worsening. One implication is that negotiations on services in the WTO General Agreement on Trade in Services (GATS) need not be welfare improving if there are also ongoing tariff negotiations. We then expand the model to capture a more complex world where costly intermediation services can be provided by both within-country and foreign providers. We again illustrate how services liberalization can be welfare worsening. We finally discuss whether welfare worsening service trade liberalization is likely in a real-world situation of highly restricted services trade and considerably more open goods trade, and when services trade are around 1/3 of total goods and services trade as is often claimed from available global service trade data.

Metrics Capturing the Degree to which Individual Economies are Globalized

We discuss metrics of globalization for individual economies as distance measures between fully integrated and trade restricted equilibria in economies initially operating under less than full integration with the global economy. Such metrics can be used to construct country globalization metrics reflecting the distance of economies from full global integration due to trade barriers, barriers to factor flows, barriers to international financial intermediation, solved technological diffusion and other economy specific features yielding less than full integration into the global economy. Many distance metrics present themselves and none are wholly satisfactory since they each behave differently across various displacements from integration. Distance measures can, for instance, be small in goods space but large in price space. We present alternative measures constructed for eight OECD economies and comment in a concluding section on other measures used elsewhere in the literature such as trade / GDP ratios.globalisation, globalization, trade, globalisation metrics, globalization metrics

Trade Retaliation in a Monetary-Trade Model

We explore how outcomes of trade policy retaliation (Nash tariff games) are affected when trade simultaneously takes places geographically across countries and through time via financial intermediation. In such models deficits and surpluses in goods trade are endogenously determined, and retaliatory trade policy towards goods can affect these and monetary trade models show different retaliatory trade outcomes from conventional goods only models. We use a general equilibrium goods trade model which also captures trade through time in the form of inside money as used in macro literature on one good overlapping generations models. In this model the deficit or surplus of any country in goods trade is endogenous determined. Optimal trade policy differs from that in a conventional goods only trade model in that countries which run trade deficits in goods will have more strategic power through tariff policy (and surplus countries less) than in models with balanced trade. We calibrate such a model to China’s trade with the rest of the world and explore two country tariff games using 2005 data. Results show the significant impacts on Nash outcomes of endogenizing the Chinese trade surplus in the model in this way.inside money, general equilibrium, Nash equilibrium, numerical analysis, tariff rate

The Higher Educational Transformation of China and Its Global Implications

This paper documents the major transformation of higher education that has been underway in China since 1999 and evaluates its potential global impacts. Reflecting China's commitment to continued high growth through quality upgrading and the production of ideas and intellectual property as set out in both the 10th (2001-2005) and 11th (2006-2010) five-year plans, this transformation focuses on major new resource commitments to tertiary education and also embodies significant changes in organizational form. This focus on tertiary education differentiates the Chinese case from other countries who earlier at similar stages of development instead stressed primary and secondary education. The number of undergraduate and graduate students in China has been grown at approximately 30% per year since 1999, and the number of graduates at all levels of higher education in China has approximately quadrupled in the last 6 years. The size of entering classes of new students and total student enrollments have risen even faster, and have approximately quintupled. Prior to 1999 increases in these areas were much smaller. Much of the increased spending is focused on elite universities, and new academic contracts differ sharply from earlier ones with no tenure and annual publication quotas often used. All of these changes have already had large impacts on China's higher educational system and are beginning to be felt by the wider global educational structure. We suggest that even more major impacts will follow in the years to come and there are implications for global trade both directly in ideas, and in idea derived products. These changes, for now, seem relatively poorly documented in literature.

Pessimistic Portfolio Choice with One Safe and One Risky Asset and Right Monotone Probability Difference Order

As is well known, a first-order dominant deterioration in risk does not necessarily cause a risk-averse investor to reduce his holdings of that deteriorated asset under the expected utility framework, even in the simplest portfolio setting with one safe asset and one risky asset. The purpose of this paper is to derive conditions on shifts in the distribution of the risky asset under which the counterintuitive conclusion above can be overthrown under the rank-dependent expected utility framework, a more general and prominent alternative of the expected utility. Two new criterions of changes in risk, named the monotone probability difference (MPD) and the right monotone probability difference (RMPD) order, are proposed, which is a particular case of the first stochastic dominance. The relationship among MPD, RMPD, and the other two important stochastic orders, monotone likelihood ratio (MLR) and monotone probability ratio (MPR), is examined. A desired comparative statics result is obtained when a shift in the distribution of the risky asset satisfies the RMPD criterion

Temperature-dependent exciton-related transition energies mediated by carrier concentrations in unintentionally Al-doped ZnO films

The authors reported on a carrier-concentration mediation of exciton-related radiative transition energies in Al-doped ZnO films utilizing temperature-dependent (TD) photoluminescence and TD Hall-effect characterizations. The transition energies of free and donor bound excitons consistently change with the measured TD carrier concentrations. Such a carrier-concentration mediation effect can be well described from the view of heavy-doping-induced free-carrier screening and band gap renormalization effects. This study gives an important development to the currently known optical properties of ZnO materials.This research is supported by the State Key Program for Basic Research of China under Grant No. 2011CB302003, National Natural Science Foundation of China (Nos. 61025020, 60990312, and 61274058), Basic Research Program of Jiangsu Province (BK2011437), and the Priority Academic Program Development of Jiangsu Higher Education Institutions

Thermal pretreatment of sapphire substrates prior to ZnO buffer layer growth

The properties of ZnO buffer layers grown via metal-organic chemical vapor deposition (MOCVD) on sapphire substrates after various thermal pretreatments are systematically investigated. High-temperature pretreatments lead to significant modifications of the sapphire surface, which result in enhanced growth nucleation and a consequent improvement of the surface morphology and quality of the ZnO layers. The evolution of the surface morphology as seen by atomic force microscopy indicates an obvious growth mode transition from three-dimensional to quasi-two-dimensional as the pretreatment temperature increases. A minimum surface roughness is obtained when the pretreatment temperature reaches 1150 °C, implying that a high-temperature pretreatment at 1150 °C or above may lead to a conversion of the surface polarity from O-face to Zn-face, similar to processes in GaN material growth via MOCVD. By analyzing the evolution of the film properties as a function of pretreatment temperature, the optimal condition has been determined to be at 1150 °C. This study indicates that a high-temperature pretreatment is crucial to grow high-quality ZnO on sapphire substrates by MOCVD.This research was supported by the State Key Program for Basic Research of China under Grant No. 2011CB302003, National Natural Science Foundation of China (Nos. 61025020, 60990312, and 61274058), Basic Research Program of Jiangsu Province (BK2011437), and the Priority Academic Program Development of Jiangsu Higher Education Institutions