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This compelling two-volume collection presents the major literary contributions to the economic analysis of the consequences of trade liberalization on growth, productivity, labor market outcomes and economic inequality. Examining the classical theories that stress gains from trade stemming from comparative advantage, the selection also comprises more recent theories of imperfect competition, where any potential gains from trade can stem from competitive effects or the international transmission of knowledge. Empirical contributions provide evidence regarding the explanatory power of these various theories, including work on the effects of trade openness on economic growth, wages, and income inequality, as well as evidence on the effects of trade on firm productivity, entry and exit. Prefaced by an original introduction from the editor, the collection will to be an invaluable research resource for academics, practitioners and those drawn to this fascinating topic.
This publication is a practitioner's guide for analyzing the distributional impact of reforms to trade, monetary and exchange rate policy, utility provision, agricultural markets, land policy and education. These six areas of policy reform are the ones most likely to have an impact on distribution and poverty. Such analysis helps in policy formulation and development and for implementing poverty reduction strategies in developing countries. Each chapter in this volume provides an overview and guidance on the specific issues arising in the analysis of the distributional impacts of policy and institutional reforms in selected sectors.
The authors consider how service liberalization differs from goods liberalization in terms of welfare, the level and composition of output, and factor prices within a developing economy, in this case Tunisia. Despite recent movements toward liberalization, Tunisian service sectors remain largely closed to foreign participation and are provided at high cost relative to many developing nations. The authors develop a computable general equilibrium (CGE) model of the Tunisian economy with multiple products and services and three trading partners. They model goods liberalization as the unilateral removal of product tariffs. Restraints on services trade involve both restrictions on cross-border supply (mode 1 in the GATS) and on foreign ownership through foreign direct investment (mode 3 in the GATS). The former are modeled as tariff-equivalent price wedges while the latter are comprised of both monopoly-rent distortions (arising from imperfect competition among domestic producers) and inefficiency costs (arising from a failure of domestic service providers to adopt least-cost practices). They find that goods-trade liberalization yields a gain in aggregate welfare and reorients production toward sectors of benchmark comparative advantage. However, a reduction of services barriers in a way that permits greater competition through foreign direct investment generates larger welfare gains. Service liberalization also requires lower adjustment costs, measured in terms of sectoral movement of workers, than does goods-trade liberalization. And it tends to increase economic activity in all sectors and raise the real returns to both capital and labor. The overall welfare gains of comprehensive service liberalization amount to more than 5 percent of initial consumption. The bulk of these gains come from opening markets for finance, business services, and telecommunications. Because these are key inputs into all sectors of the economy, their liberalization cuts costs and drives larger efficiency gains overall. The results point to the potential importance of deregulating services provision for economic development.
At a time when countries in the Middle East and North Africa (MENA) are joining the World Trade Organization, the lack of an economically sound analysis of trade policies in the region is especially notable. This volume remedies the situation by bringing together a distinguished group of applied trade economists to provide a broad view of the state of trade in and among the region's nations. The contributors provide original empirical analyses on key reform issues, and their work reflects deep knowledge of government concerns and policies. Part 1 sets the scene by comparing the performance of the MENA region with the rest of the world on a large number variables and indicators. Part 2 contains a number of CGE model-based analyses of trade policy reform options. Part 3 focuses on specific policy areas: standards as nontariff barriers and red tape, trade facilitation, an assessment of the impact of protecting intellectual property using partial equilibrium techniques, and a review of the existing Euro-Med agreements. Part 4 discusses how the region could benefit from WTO membership and from changing the existing regional integration schemes into arrangements that help promote a growth enhancing reform agenda. The volume will be essential reading for economists and policymakers working in and with the MENA nations, as well as officials at the multilateral and regional institutions. Contributors are A. Halis Akder, Benita Cox, Dean De Rosa, Hana'a Kheir El Din, Sherine El Ghoneim, Oleh Havrylyshyn, Bernard Hoekman, Denise Konan, Peter Kunzel, Will Martin, Keith Maskus, Mustapha Nabli, Thomas Rutherford, Elisabet Rutstrom, David Tarr, Subidey Togan, L. Alan Winters, Alexander Yeats, and Jamel Zarrouk. Bernard Hoekman is an Economist with the Development Research Group's Trade team of the World Bank. Jamel Zarrouk is an Economist with the Arab Monetary Fund.
This book examines the dynamics of open regionalism, the expansion of domestic markets from increased FDI and monetary stability, and the optimal mix of regional trade agreements.
The Economics discipline at the University of Adelaide has a distinguished 100 year history of which the University and the State of South Australia can be proud. Very few other departments, of any discipline in Australian universities, could claim to have a majority of its lecturer appointments rising to full Professor status over a period as long as 1901 to 1995. Nor would many other university departments be able to say they have had five of their graduates win Rhodes Scholarships in the past 12 years.
The author describes a specialized and less data-intensive version of the Integrated Macroeconomic Model for Poverty Analysis (IMMPA) developed by Agenor, Izquierdo, and Fofack (2003) and Agenor, Fernandes, Haddad, and van der Mensbrugghe (2002). The mini-IMMPA focuses only on the "real" side but it offers a more detailed treatment of the labor market (by accounting, for instance, for public education, employment subsidies, and job security provisions) and the tax structure. Simulations of a cut in payroll taxes on unskilled labor show the importance of accounting for the fiscal implications of labor market reforms when assessing their effects on unemployment and poverty.
Abstract: May 1999 - Preferential trade agreements that are limited to the elimination of tariffs for merchandise trade flows are of limited value at best and may be as easily welfare-reducing as welfare-enhancing. It is important that preferential trade agreements go beyond eliminating tariffs and quotas to eliminating regulatory and red tape costs and opening up service markets to foreign competition. Deep integration-explicit government actions to reduce the market-segmenting effect of domestic regulatory policies through coordination and cooperation-is becoming a major dimension of some regional integration agreements, led by the European Union. Health and safety regulations, competition laws, licensing and certification regimes, and administrative procedures such as customs clearance can affect trade (in ways analogous to nontariff barriers) even though their underlying intent may not be to discriminate against foreign suppliers of goods and services. Whether preferential trade agreements (PTAs) can be justified in a multilateral trading system depends on the extent to which formal intergovernmental agreements are technically necessary to achieve the deep integration needed to make markets more contestable. The more need for formal cooperation, the stronger the case for regional integration. Whether PTAs are justified regionally also depends on whether efforts to reduce market segmentation are applied on a nondiscriminatory basis. If innovations to reduce transaction or market access costs extend to both members and nonmembers of a PTA, regionalism as an instrument of trade and investment becomes more attractive. Using a standard competitive general equilibrium model of the Egyptian economy, Hoekman and Konan find that the static welfare impact of a deep free trade agreement is far greater than the impact that can be expected from a classic shallow agreement. Under some scenarios, welfare may increase by more than 10 percent of GDP, compared with close to zero under a shallow agreement. Given Egypt's highly diversified trading patterns, a shallow PTA with the European Union could be merely diversionary, leading to a small decline in welfare. Egypt already has duty-free access to the European Union for manufactures, so the loss in tariff revenues incurred would outweigh any new trade created. Large gains in welfare from the PTA are conditional on eliminating regulatory barriers and red tape-in which case welfare gains may be substantial: 4 to 20 percent growth in real GNP. This paper-a product of the Development Research Group-is part of a larger effort in the group to analyze regional integration agreements. The authors may be contacted at bhoekman@@worldbank.org or konan@@hawaii.edu.
"Many countries use duty drawbacks on exports, yet they have been given little attention in the literature and there is no consensus whether countries should embrace or abandon them. Ianchovichina asserts that the answer depends on a country's development priorities and economic conditions. An increase in the drawback has a positive impact on export competitiveness and employment, but could lead to exports with low domestic value added. The welfare effects of duty drawback reform are ambiguous. An increase in the drawback is more likely to be welfare improving if the economy is small with high input tariffs, low initial drawback, low administrative costs, and leakages in the tariff collection system. In China duty drawback removal after meeting WTO commitments will deepen domestic supply chains and improve welfare, but will hurt China's economic efficiency, export competitiveness, and real factor incomes. Further liberalization could mitigate these negative effects. This paper--a product of the Economic Policy Division, Poverty Reduction and Economic Management Network--is part of a larger effort in the network to study growth and competitiveness"--World Bank web site.