Trade, Development and Political Economy: Essays in Honour of Anne O. Krueger PDF
Preview Trade, Development and Political Economy: Essays in Honour of Anne O. Krueger
Trade, Development and Political Economy Essays in Honour of Anne O. Krueger Edited by Deepak Lal and Richard H. Snape lal/snape/94889/crc 31/1/01 10:44 am Page 1 Trade, Development and Political Economy This page intentionally left blank lal/snape/94889/crc 31/1/01 10:44 am Page 3 Trade, Development and Political Economy Essays in Honour of Anne O. Krueger Edited by Deepak Lal James S. Coleman Professor of International Development Studies UCLA Los Angeles USA and Richard H. Snape Deputy Chairman Australian Productivity Commission Melbourne, and Emeritus Professor Monash University Australia lal/snape/94889/crc 31/1/01 10:44 am Page 4 Editorial matter and selection © Deepak Lal and Richard H.Snape 2001 Text © Palgrave Publishers Ltd 2001 All rights reserved.No reproduction,copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced,copied or transmitted save with written permission or in accordance with the provisions of the Copyright,Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency,90 Tottenham Court Road,London W1P 0LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright,Designs and Patents Act 1988. First published 2001 by PALGRAVE Houndmills,Basingstoke,Hampshire RG21 6XS and 175 Fifth Avenue,New York,N.Y.10010 Companies and representatives throughout the world PALGRAVEis the new global academic imprint of St.Martin’s Press LLC Scholarly and Reference Division and Palgrave Publishers Ltd (formerly Macmillan Press Ltd). ISBN 0–333–79034–0 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Trade,development,and political economy :essays in honour of Anne O.Krueger / edited by Deepak Lal and Richard H.Snape. p.cm. Includes bibliographical references and index. ISBN 0–333–79034–0 1.International trade.2.Commercial policy.3.Economic development.4.International economic relations. I.Krueger,Anne O.II.Lal,Deepak.III.Snape,Richard H. HF1379 .T722 2001 382—dc21 00–066557 10 9 8 7 6 5 4 3 2 1 10 09 08 07 06 05 04 03 02 01 Printed and bound in Great Britain by Antony Rowe Ltd,Chippenham,Wiltshire Contents List of Tables x List of Figures xi List of Abbreviations and Acronyms xii Acknowledgements xiv Notes on the Contributors xv Introduction xvii Part I Trade 1 Outward-Orientation and Development: Are Revisionists Right? 3 T. N. Srinivasan and Jagdish Bhagwati Introduction 3 Openness, growth and welfare 7 Export promotion (EP) and import substitution (IS) strategies: empirical arguments and evidence 13 Cross-country regressions: the RHS warriors engaged in mutual assured destruction 19 Notes 23 References 24 2 Trade Policy and the Exchange Rate Regime 27 W. Max Corden The theoretical framework 28 The literature 29 The historical experience 31 Is a revival of protectionism likely? 33 Do floating rates stimulate protection? 35 Conclusion 37 Notes 38 References 39 3 Some Insights from Real Exchange-Rate Analysis 40 Arnold C. Harberger The demand and supply of foreign currency 41 v vi Contents The real exchange rate as the key equilibrating variable for a country’s international trade and payments 43 Converting foreign currency from nominal to real units 45 Defining real-exchange-rate equilibrium 50 Specifying demand functions in international trade 52 Is foreign borrowing an adjustment mechanism? 54 Notes 56 4 Limiting Moral Hazard and Reducing Risk in International Capital Flows: The Choice of an Exchange-Rate Regime 57 Ronald I. McKinnon The exchange rate as nominal anchor: the regulatory dilemma 58 Modelling the super risk premium 63 ‘Good’ fixes versus ‘bad’ fixes versus floating 66 The restoration rule and the long-run confidence problem 68 Lengthening the term structure of finance: general lessons 72 Note 76 References 76 5 Developing-Countries’ Trade Policies in the 1990s: Back to the Future 78 Sarath Rajapatirana Introduction 78 Developing-countries’ trade trends 79 Factors that led to the policy reforms 81 Reform trends in the 1990s in a twenty-country sample 84 Main issues arising from the trade reforms in the 1990s and a future agenda 90 Conclusions 93 Notes 94 References 94 6 Developing-Country Issues for WTO Multilateral Trade Negotiations 96 Constantine Michalopoulos Introduction 96 The built-in agenda for negotiations and reviews 97 Other potential subjects for negotiations 103 Strategic options 114 Contents vii Conclusions 116 Notes 117 References 118 7 Assessing the Promise of a Preferential Trade Agreement 121 Michael Michaely Introduction 121 Clarification of criteria and indication for measurement 123 The intensity of trade flows 128 Indices of compatibility 130 Concluding remarks 135 Notes 136 References 139 8 Reciprocity in Trade Agreements 141 Richard H. Snape Introduction 141 The GATT/WTO multilateral multi-product approach 143 International air services 146 Liberalization under product-specific bilateral reciprocity 148 Sectoral reciprocity in other sectors 150 Some lessons 153 Notes 155 References 156 Part II Development 19 Economic Development from an Open Economy Perspective 159 Ronald Findlay and Ronald W. Jones A critique of early development theory 161 Development as a logistic progress 162 Foreign investment, technology transfer and fragmentation of global production 168 Note 171 References 171 10 War, Peace and Growth 174 Sebastian Edwards Introduction 174 viii Contents The sources of growth in El Salvador since the peace agreement 175 Foreign savings, current account sustainability and growth 182 Concluding remarks 191 Notes 192 References 192 11 Space and Growth: a Thünen–Schumpeter Perspective 194 Herbert Giersch An IOU for Anne 194 The conceptual framework 195 Notes 210 References 212 12 The Virtuous Circle: Savings, Distribution and Growth Interactions in India 213 Deepak Lal and I. Natarajan Introduction 213 Savings–growth interactions 214 Savings and growth: India 1951–95 218 Savings, distribution and growth in India 220 Conclusion 225 Notes 225 References 227 Part III Political Economy 13 Congressional Voting on International Economic Bills in the 1990s 231 Robert E. Baldwin and Meredith Crowley Introduction 231 Econometric model and data 233 Findings 238 Conclusions 248 Notes 249 References 250 14 Financial Crisis in East Asia: Underlying and Precipitating Factors 251 Malcolm Gillis Introduction 251 Contents ix Onset of acute crisis 253 Antecedents to crisis 257 What is to be done? 263 Notes 265 References 266 15 The Evolution of Dual Economies in East Asia 268 Helen Hughes Introduction 268 The evolution of dual economies 270 Policies and institutions that created crony capitalism 272 The international dimension 280 Conclusions 282 References 282 16 Does the US Foreign Economic Assistance Program Have a Future? 285 Vernon W. Ruttan Six visions 285 Lessons from sector development assistance 287 Lessons from assistance for policy reform 290 Towards renewed commitment? 293 Bulding on United States capacity 297 Self-containment 300 A new world order? 301 Notes 302 References 302 Index 304
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