Papers
Received in
2004
Trick or Treat? Development Opportunities and Challenges in WTO Negotiations on Industrial Tariffs
S. Fernandez de Cordoba, UNCTAD
S. Laird, UNCTAD, U. of
Nottingham
D. Vanzetti, UNCTAD
Abstract: Negotiations on industrial tariffs in the current WTO work programme have turned out
to be surpisingly difficult. On the one hand, developing countries, particularly in Africa, are
concerned about the potential negative effect on their industrial development of developed
country efforts to push them into deep cuts in applied tariffs: after the disillusion of the
Uruguay Round, promises of welfare gains seem like buying one of Akerloff's lemons. On the
other hand, a number of the more complex formula proposals for tariff-cutting make it
difficult for participants to evaluate how what they have to do compared with what they hope
to receive. The developing countries may achieve greater exports and welfare gains from the
more ambitious proposals, but computations show that these also imply greater imports,
lower tariff revenues, some labour market adjustments and reduced output in some politically
sensitive sectors. Some way of assisting the developing countries in coping with these
adjustments is required to take advantage of the opportunities presented by the negotiations.
Proposals for Bank-Fund "facilities" to aleady indebted countries to meet new WTO
obligations may not be the highest development priority.
Keywords: WTO negotiations, trade, industrial tariffs, development, special and differential.
Download paper; Contact address: santiago.fernandez.de.cordoba@unctad.org
Foreign Direct Investment and Productivity
Spillovers in Swedish Manufacturing
P. Karpaty, Orebro University
L. Lundberg, FIEF
Abstract: Based on a panel of data for Swedish manufacturing firms in 1990-2000, this paper finds strong evidence for the existence of positive spillover effects from inward FDI. The presence of foreign ownership in the same industry and region seems to enhance the total factor productivity of domestic firms. Moreover, the size of these FDI spillover effects seems to depend both on the nationality of the foreign MNF as well as on the absorptive capacity of the domestic firm, measured by its own R&D. It appears that this positive relationship between foreign presence and productivity cannot be explained as a consequence of reverse causality, i.e that FDI is attracted to highly productive regions and industries.
Keywords: Multinational firms, Productivity Spillovers, Foreign Direct Investment.
Download paper; Contact address: patrik.karpaty@esi.oru.se
Welfare versus Market Access:
The implications of Tariff Structure for Tariff Reform
J.E. Anderson, Boston College
J.P. Neary, University College Dublin
Abstract: We show that the effects of tariff changes on welfare and import volume can be fully characterised by their effects on the generalised mean and variance of the tariff distribution. Using these tools, we derive new results for welfare- and market-access-improving tariff changes, which imply two "cones of liberalisation" in price space. Because welfare is negatively but import volume positively related to the generalised variance, the cones do not intersect, which poses a dilemma for trade policy reform. Finally, we show that generalised and trade-weighted moments are mutually proportional when the trade expenditure function is CES.
Keywords: Concertina rule; Market access; Piecemeal policy reform; Tariff moments; Uniform tariff reductions.
Download paper; Contact address: peter.neary@ucd.ie
Cross-Border
Mergers as Instruments of Comparative Advantage
J.P. Neary, University College Dublin
Abstract: A two-country model of oligopoly in general equilibrium
is used to show how changes in market structure accompany the process
of trade and capital market liberalisation. The model predicts that
bilateral mergers in which low-cost firms buy out higher-cost foreign
rivals are profitable under Cournot competition. With symmetric
countries, welfare may rise or fall, though the distribution of income
always shifts towards profits. The model implies that trade
liberalisation can trigger international merger waves, in the process
encouraging countries to specialise and trade more in accordance with
comparative advantage.
Keywords: Comparative advantage; cross-border mergers; GOLE (General Oligopolistic Equilibrium); market integration; merger waves.
Download paper; Contact address: peter.neary@ucd.ie