International Trade and the Natural Resource 'Curse' in Southeast Asia: Does China's Growth Threaten Regional Development

China's growth, along with its increasing integration with world markets through WTO accession, abolition of Multifiber Arrangement (MFA) quotas, and reduced trade barriers with ASEAN, is expected to have significant effects on the structure of regional production and trade. Through bilateral trade growth as well as through competition with China in global markets, Southeast Asia's resource-abundant economies will become more intensive in natural resource-based exports and much less so in low-end, labor-intensive manufacturing such as garments. Both these effects will tend to increase demand for natural resources, one through a direct product market effect, the other by driving down the price of a complementary input, low-skill labor. A question that then arises is how these trends will interact with the other major phenomenon currently sweeping through Southeast Asia, namely decentralization. With reduced national government power and little or no accountability at the local level, the potential for disastrous rates of resource exploitation is high. If sufficiently severe, the combination of increased demand for natural resources and diminished constraints on their could expose the region to reduced rates of economic growth, a variant of the "natural resource curse" argument, which maintains that resource-abundant economies grow more slowly than others.

Tax Reform and the Environment in Developing Economies: Is a Double Dividend Possible

We reconsider some analytical arguments on the double dividend, focusing on the small open developing economy case. Compared with the large, mature industrial economies usually considered, such economies differ in several respects, including the structure of tax revenues, commodity pricing and sectoral factor intensities. While a double dividend from environmentallymotivated taxes is not assured, the range of conditions for its existence seems broader than usually implied. Empirically, the scope for achieving both environmental improvements and diminished excess burden in developing economies may be greater as a side-effect of the reform of existing taxes than from imposition of explicit environmental taxes.

Development and the Upland Resource Base: Economic and Policy Context, and Lessons from a Philippine Watershed

Economic growth and environmental damage are associated, but the relationship is neither linear nor even monotonic. The nature of the growth-environment link depends on the changing composition of production and consumption and on growth-related changes in techniques and environmental policies. The definition and enforcement of property rights over natural resources and environmental quality is another important element. Moreover, environmental and economic policies interact: in effect, every economic policy that affects resource allocation is a de facto environmental measure. In increasingly commercialized and decentralized economies, the responsibility for environmental management and the design and implementation of environmental policy are shifting from central government to communities and local administrations. This is especially true of Asia's uplands, where market-driven pressures for agricultural expansion and intensification collide with an increasingly urgent need to manage the natural resource base and minimize local and external environmental damages associated with growth. This paper provides a brief survey of these issues as a way of introducing the papers in this special issue of the Philippine Journal of Development on the local management of agricultural and natural resources and the environment. It concludes with some remarks on the experience of the SANREM-CRSP/Southeat Asia, a research and outreach project aimed at enabling better resource and environmental management decisions by upland communities in the Philippines, and the sponsor of these papers.natural resources and environment, environmental management, uplands, economy-environment linkage

Export Boom, Employment Bust? The Paradox of Indonesia\u27s Displaced Workers, 2000-2014

In Indonesia, an export boom and rapid, sustained gross domestic product (GDP) growth in the decade after 2000 was accompanied by real earnings that were flat on average, and even declined for many workers. Conventional models of growth and trade predict that labor productivity rises as an economy develops; that this should not be observed during a period of high GDP growth is a puzzle that merits careful investigation. In this paper we explore these seemingly paradoxical trends using several waves of a panel of individual employment data. Economic growth is rarely balanced in a sectoral sense, and the nature of the structural change experienced by Indonesia is also strongly associated with lower competitiveness in sectors in which formal employment rates are high, causing some degree of involuntary labor movement from formal to informal modes of employment. We explore this econometrically and find that the earnings of workers displaced from formal to informal jobs are significantly lower than those of workers who remain in the formal market. The fact of this displacement, and its implications for individual earnings, undercuts conventional thinking about the welfare gains from a sustained growth experience. Our findings add, perhaps for the first time, a developing country dimension to the existing job displacement literature. They also shed some light on the causes of Indonesia’s unprecedented increase in inequality during the same growth period

ECONOMIC BOOM, FINANCIAL BUST, AND THE FATE OF THAI AGRICULTURE: WAS GROWTH IN THE 1990S TOO FAST?

Thailand's economic boom since 1987 resulted in absolute agricultural employment and land use declines. Both were caused by rapid wage growth due to nonagricultural investment. Irreversible land use changes and rapid agricultural mechanization have followed. Following the 1987 financial crisis, agriculture may no longer be able to absorb excess labor or dramatically increase output as in the past.Labor and Human Capital, Land Economics/Use, Productivity Analysis,

TRADE LIBERALIZATION, RESOURCE DEGRADATION AND INDUSTRIAL POLLUTION IN DEVELOPING COUNTRIES: AN INTEGRATED ANALYSIS

“Environmental damage” is in reality many different types of phenomena, each with a unique set of causes and characteristics. We present an analytical model identifying intersectoral and interregional links of economy and environment and explore consequences of trade policy and world price changes. The model contains explicit spatial and institutional features relevant to developing economies. We show that similar trade or policy shocks can have different effects, depending on initial economic structure, trade orientation and policies. Further, when there is more than one sectoral source of environmental damage, a policy or price shock may have unexpected environmental and welfare results.Trade policy, pollution, deforestation, developing countries

Prospects for Skills-Based Export Growth in a Labour-Abundant, Resource-Rich Economy: Indonesia in Comparative Perspective

In an integrated global economy, specialisation in trade is an increasingly prominent strategy. A labour-abundant, resource-rich economy like Indonesia faces stiff competition for labourintensive manufactures; meanwhile, rapid growth in demand for resources from China and India exposes it to the 'curse' of resource wealth. This diminishes prospects for more diversified growth based on renewable resources like human capital. Using an international panel data set we explore the influence of resource wealth, foreign direct investment, and human capital on the share of skill-intensive products in total exports. FDI and human capital increase this share; resource wealth diminishes it. We use the results to compare Indonesia with Thailand and Malaysia. Indonesia's reliance on skill-intensive exports would have been higher had it achieved higher levels of FDI and skills. Indonesia's performance in accumulating these endowments, and its relative resource abundance, impede diversification in production and trade. Finally, we discuss policy lessons and options.

Trade Reforms, Deforestation and Industrial Pollution in Developing Countries: One Size Does Not Fit All

Many developing countries possess comparative advantage both in natural resources and in labor-intensive industries, and experience both industrial pollution and natural resource degradation. We present a model that incorporates these stylized facts together with key spatial features and property rights failures typical of developing economies. We explore consequences of anticipated domestic and global trade policy and world price changes. Similar exogenous or policy shocks are seen to have contrasting effects, depending on initial economic structure, trade orientation and policy regime. Further, when there is more than one sectoral source of environmental damage, a policy or price change may have unexpected environmental and welfare results. Nevertheless, in many empirically important cases, reducing protection for capital intensive manufactures is likely to improve both income and environmental quality, a point that we illustrate by reference to some Asian case studies. These results stand in contrast to those obtained in much of the current analytical literature.

Trade And Inequality With Limited Labor Mobility: Theory And Evidence From China

Does globalization increase inequality in developing countries, and ifso, how? In a theoretical model of a regionally heterogeneous economy, we show how different regional rates of technical progress due to trade and FDI interact with constraints to unskilled labor mobility. As favored regions benefit more from trade, their growing demand for skills drains skilled workers from disadvantaged areas, and average incomes in the former grow faster than in the latter. Moreover, this unbalanced regional growth may also raise inequality within each region. It could even reduce absolute income per capita in the less favored region. We test these predictions with Chinese data from the Open Door era. Results confirm that different regional growth rates have increased both interregional andintraregional inequality. Moreover, growth of skills-based export industries in coastal regions is associated, other things equal, with lower incomes for the poor in inland provinces.

Food Insecurity and Its Determinants in Asia and the Pacific

In Asian-Pacific developing countries, the prevalence of food insecurity has diminished dramatically in the past generation. Despite this, many millions continue to suffer from persistent or periodic food insecurity. The causes of food insecurity are both structural and market-related, including influences of public policy on market operations. The most vulnerable populations are those that simultaneously experience both these forms of insecurity. The places they inhabit tend to have poor-quality land, are exposed to climatic and other environmental risks, or both. These same populations either have relatively weak links with the non-food economy, in which higher wages and better income-earning opportunities make food self-sufficiency less important, or are prevented from accessing opportunities in the non-food economy because of poor or misguided policies.