The Princeton Encyclopedia of the World Economy

7Summits......Page 1
COVER......Page 2
Copyright......Page 6
Contents......Page 7
Introduction......Page 9
Alphabetical List of Entries......Page 15
Topical List of Entries......Page 21
Directory of Contributors......Page 27
Principle of Absolute Advantage......Page 45
Absolute Advantage, Income, and Wages......Page 46
Affordability......Page 47
Incentives for Drug Development......Page 49
The Yaoundé Conventions......Page 50
From Yaounde´ to the ACP......Page 51
African Union......Page 52
Economic Integration......Page 53
Governance and the African Peer Review Mechanism......Page 55
agglomeration and foreign direct investment......Page 56
Agreement on Agriculture......Page 59
History......Page 63
The Agreement’s Key Provisions......Page 65
TRIPS-Related Developments at the WTO......Page 66
Multilateralism, Bilateralism, and the Future of TRIPS......Page 68
agricultural trade negotiations......Page 69
agriculture......Page 72
Agriculture in Global Trade......Page 73
Agriculture and the World Trade Organization......Page 75
Food, Agriculture, and International Development......Page 76
The New Agricultural Economy in Developing Countries......Page 77
The Role of Agriculture in the World Economy......Page 78
aid, bilateral......Page 79
Controversies......Page 80
History and Origins......Page 81
Food Aid Policy Debates......Page 82
aid, humanitarian......Page 83
De.ning Characteristics......Page 84
Humanitarian Policy Debates......Page 85
Early Foreign Aid......Page 86
Foreign Aid during the Cold War......Page 87
Poverty Reduction and Recent Development Models......Page 88
Types of Aid and Harmonization......Page 89
Levels of Aid, Aid Quality, and Evaluation......Page 90
Private Initiatives and New Donors......Page 92
A New Way Forward......Page 93
The Incentives of Donors and Aid Agencies......Page 95
The Interaction between Donors and Country Recipients......Page 96
The Delivery of Aid in the Recipient Countries......Page 97
The Market for Aid......Page 98
aid, military......Page 99
Military Spending in Low-Income Countries......Page 100
air transportation......Page 101
Airports......Page 103
Air Navigation Systems Providers......Page 104
Andean Community......Page 105
Governance......Page 106
Andean Customs Union and Free Trade Zone......Page 107
anti-dumping......Page 108
Administration of Anti-dumping Rules......Page 109
Anti-dumping in Practice......Page 111
anti-globalization......Page 112
Origins......Page 113
Who’s Who?......Page 114
Main Concerns......Page 115
Hegemonic Shifts......Page 116
The Future of Anti-globalization......Page 117
The Notion of ‘‘Applied’’......Page 118
Overview of Model Structure......Page 119
Standard Framework......Page 120
Other Extensions......Page 121
Adaptation and Technology Transfer......Page 123
Appropriate Technology, Efficiency, and Spillovers......Page 124
Asia Pacific Economic Cooperation (APEC)......Page 125
Strengths and Weaknesses......Page 126
Adjustment in the Swan Diagram......Page 128
Effective Market Classification......Page 129
Allowing for Shocks......Page 130
Economic Cooperation......Page 131
ASEAN Economic Community......Page 132
asymmetric information......Page 133
Asymmetric Information and Financial Crises......Page 134
Lender of Last Resort......Page 135
Measures to Limit Moral Hazard......Page 136
Debt Restructuring and Burden Sharing......Page 139
Crisis Management: Finding the Right Balance......Page 141
bailouts......Page 142
Debate Surrounding IMF Crisis Lending......Page 143
Has IMF Crisis Lending Been Successful?......Page 145
Uses......Page 146
Accounts......Page 147
Double-Entry Bookkeeping......Page 149
The Effects of Monetary and Fiscal Policies on the Balance of Payments......Page 150
Key Balance Sheet Concepts......Page 151
Taxonomy of Balance Sheet Risks......Page 153
Operationalizing and Extending the BSA......Page 154
Balassa-Samuelson effect......Page 155
The Theory of Balassa-Samuelson......Page 156
band, basket, and crawl (BBC)......Page 157
Baskets......Page 158
Crawl......Page 159
Why a BBC System?......Page 160
The BIS after World War II......Page 161
The BIS after Bretton Woods......Page 162
Bank of Japan......Page 163
Conduct of Monetary Policy......Page 164
banking crisis......Page 165
Causes of Banking Crises......Page 166
Twin Crisis in Emerging Markets......Page 167
Basel Convention......Page 168
Challenges for Enforcement......Page 169
beggar-thy-neighbor policies......Page 170
black market premium......Page 171
Bonn Summit......Page 173
brain drain......Page 175
Impacts on the Source Country......Page 176
Brain Drain as a Serious Issue for Developing Countries......Page 177
Policy Recommendations......Page 178
brain gain......Page 180
National Origin and Brain Waste......Page 182
Factors Contributing to Differences in Brain Waste......Page 183
Destination Country Labor Markets......Page 184
Bretton Woods system......Page 185
Creation of the Bretton Woods Institutions......Page 186
Dollar Standard......Page 187
bubbles......Page 189
Canonical View......Page 193
Dynamics of Growth and Capital Accumulation in an Open Economy......Page 194
Recent Experience......Page 195
capital controls......Page 196
Classifying Restraints on Capital Movements......Page 197
Data on Capital Controls......Page 199
Measuring Capital Flight......Page 200
Policy Responses to Capital Flight......Page 201
capital flows to developing countries......Page 202
Countercyclical Prudential Regulation and Supervision......Page 203
Implications......Page 205
Quantity-Based Measures......Page 207
Regulatory, Institutional, and Other Measures......Page 209
carry trade......Page 210
Market Efficiency......Page 211
Carry Trades and Asia......Page 212
Integration Efforts in the 1950s and 1960s......Page 213
A Revival of Integration Efforts in the 1990s......Page 214
Challenges and Opportunities......Page 216
Agreement Highlights......Page 217
What Is Child Labor?......Page 218
The Child Labor Decision......Page 219
The End of Child Labor?......Page 220
History of the Concept......Page 221
Governance of Global Chains......Page 222
Future Research and Complementary Approaches......Page 224
commodity-price pegging......Page 226
Other Commodity-Based Proposals......Page 227
The Features of the CAP at the Time of Inception......Page 228
The Evolution of the CAP......Page 229
CAP Reform in 2003 and Thereafter......Page 230
The Future of the CAP......Page 231
Carrots and Ministates......Page 232
Explaining Currency Domains......Page 233
The Adoption of the Euro......Page 234
common market......Page 235
Origin and Background......Page 238
Key Elements and Procedures......Page 239
Impact on Member States......Page 240
Relation with External Actors......Page 241
comparative advantage......Page 242
18th-Century Views on the Causes of Specialization......Page 243
Ricardo’s Example of Comparative Advantage......Page 244
Classical Perspectives on Comparative Advantage after Ricardo......Page 245
Neoclassical Perspectives on Comparative Advantage......Page 246
Comparative Advantage and the New Trade Theory......Page 247
Comparative Advantage: An Enduring Legacy......Page 248
competition policy......Page 249
Acquiring a Competitive Advantage......Page 252
National Competitive Advantage......Page 253
Clustering and Sustainability......Page 254
Competitiveness......Page 255
Conflicted Virtue in East Asia......Page 257
Effects of Conflicted Virtue......Page 258
Defining Contagion......Page 259
Causes and Channels of Contagion......Page 260
Examples of Crisis Contagion......Page 261
Policy Implications......Page 262
Convention on Biological Diversity......Page 263
Listing of Species......Page 266
Enforcement......Page 267
Capital Account Convertibility and Growth......Page 268
Theory versus Reality......Page 269
corporate governance......Page 271
Corporate Governance Systems......Page 272
Typology of Legal Strategies for Protecting Investors......Page 273
Good Corporate Governance......Page 274
Types of Corruption......Page 276
Causes......Page 277
Consequences......Page 278
Anticorruption Strategies......Page 279
Economic Consequences of CVD Laws......Page 280
Countervailing Duties from 1890 to the Present......Page 281
The Future of CVD Laws......Page 283
currency board arrangement (CBA)......Page 284
Debating the Pros and Cons......Page 285
Types of Money......Page 287
Private Issue of Outside Money......Page 288
currency crisis......Page 289
First-Generation Crises: Fundamental Disequilibriums......Page 290
Second-Generation Crises: The Role of Expectations......Page 291
Financial Sector Weakness......Page 293
The Political Economy of Currency Crises......Page 294
Crisis Prevention and Management......Page 295
Dollarization......Page 298
customs unions......Page 300
Country Experiences with Deflation......Page 305
Prevention May Be Easier Than Cure......Page 306
democracy and development......Page 307
Democracy Promotes Development......Page 308
Development Promotes Democracy......Page 310
The Econometric Literature......Page 311
dependency theory......Page 313
External versus Internal Limits to Development......Page 314
Financial Dependency and the Original Sin......Page 315
deposit insurance......Page 316
The Safety Net for the Banking System......Page 317
Deposit Insurance, Risk Taking, and Banking Crises......Page 318
Deposit Insurance in Cross-Border Banking......Page 319
Economic Development......Page 321
Human Development......Page 322
Social Development......Page 323
digital divide......Page 325
discipline......Page 328
Exchange-Rate-Based Stabilization......Page 329
Discipline from International Financial Markets......Page 330
Origins of Agricultural Protection......Page 331
Policy Developments since the 1950s......Page 332
Methodology for Estimating Distortions to Incentives......Page 333
New Global Estimates of Distortions, 1955– 2004......Page 335
Doha Round......Page 337
Major Players and Issues......Page 339
Progress and Prospects......Page 341
The Dollar as Facilitator of International Exchange......Page 343
The Dollar as Nominal Anchor......Page 345
domestic content requirements......Page 346
Impact of Content Requirements......Page 347
dominant currency......Page 349
The U.S. Dollar and the Euro as Dominant Currencies......Page 350
Benefits of Currency Dominance......Page 351
dual exchange rate......Page 352
dumping......Page 353
Basic Components of an EWS......Page 355
The ‘‘Signals’’ Approach......Page 356
The Structural Approach......Page 357
Origin and Background......Page 358
Impact on Member States......Page 360
Relation with External Actors......Page 361
Population, Demographic Change, and International Migration......Page 362
Physical Capital Accumulation and Foreign Direct Investment......Page 363
Technological Change, Human Capital, and Brain Drain......Page 364
Land, Agriculture, and Geography......Page 365
Natural Resources and the Dutch Disease......Page 366
International Trade and Commercial Policy......Page 367
Financial Development and International Financial Markets......Page 368
Foreign Aid and Development......Page 369
Macroeconomic Policies......Page 370
economies of scale......Page 376
National, Aggregative Economies of Scale External to the Firm......Page 377
Disaggregative Economies of Scale......Page 378
International Economies of Scale......Page 379
Applications of Scale Economies......Page 380
Nominal versus Real......Page 381
Asset and Liability Weights......Page 382
Modeling of the Concept......Page 383
Theoretical Criticisms......Page 384
electronic commerce......Page 385
The Economic Significance of Electronic Commerce......Page 386
The Role of the WTO......Page 387
The Role of Electronic Commerce in the Modern World Economy......Page 389
Purchasing Power Parity (PPP) Reconsidered......Page 390
Behavioral Equilibrium Exchange Rate......Page 391
New Open Economy Macroeconomic Class of Models......Page 392
Other Approaches......Page 393
euro......Page 394
Euro as an International Currency......Page 395
Eurocurrencies......Page 396
Interest Rates......Page 397
Size of Market......Page 398
Objectives and Tasks of the ECB......Page 399
Enlargement......Page 400
Exchange Rate Mechanism......Page 401
Delors Report and Beyond......Page 403
European Union......Page 404
Origins......Page 405
Development of the EC......Page 406
The Overreaching EU......Page 408
Prospects......Page 409
evolution of development thinking......Page 410
Primacy of Markets......Page 412
Growth Theory and Development Thinking......Page 414
No Single Model for Development......Page 415
exchange market pressure......Page 417
Practical Issues......Page 418
exchange rate forecasting......Page 419
Nonstructural Analysis......Page 420
exchange rate pass-through......Page 421
What Determines Exchange Rate Pass-Through?......Page 422
Policy Relevance......Page 423
Floating Rate Regimes......Page 424
National Legal Tender, Monetary Unions, and Currency Boards......Page 425
Exchange Rate Regimes, Monetary Policy, and International Capital Controls......Page 426
Optimal Exchange Rate Regimes and Regime Collapses......Page 427
exchange rate volatility......Page 428
Intraregime Volatility: Dornbusch Overshooting Model......Page 429
Intraregime Volatility: NOEM......Page 430
Interregime Volatility......Page 431
exchange rate weapon......Page 433
Adjustment Conflict and Causal Mechanism......Page 434
Critiques......Page 435
Exchange Rate Levels......Page 437
Exchange Rate Volatility......Page 438
exorbitant privilege......Page 440
Internal and External Balances......Page 442
Effects of Expenditure Switching Policies......Page 443
export processing zones......Page 444
EPZs and Host Country Development......Page 445
China’s New Role in the Global EPZ Industry......Page 446
Policy Implications......Page 447
The Case against Export Promotion......Page 448
Export Opportunities and Mechanisms for Export Development......Page 449
expropriation risk......Page 451
Global Firm Organization and Modes of FDI......Page 453
Evidence on FEDs and FDI......Page 455
fair trade......Page 456
Fair Trade History......Page 457
Impacts, Debate, and Paradox......Page 458
Why Is Floating So Fearsome?......Page 460
Significance......Page 461
Federal Reserve Board......Page 462
Conduct of Monetary Policy......Page 463
International Responsibilities......Page 464
Interpreting the Feldstein-Horioka Results......Page 465
Persistence of the ‘‘Puzzle’’......Page 466
Other Home Biases......Page 467
Financial Crises and Financial Integration......Page 468
Financial Opening and Financial Crises: The Evidence......Page 469
Internally Oriented Controls and Liberalization......Page 472
Waves of Financial Liberalization......Page 473
financial repression......Page 474
Rationale for and Types of Financial Repression......Page 475
Impacts of Financial Repression......Page 476
International Trade in Financial Services......Page 477
Liberalization in the GATS......Page 479
Three Pillars of Liberalization......Page 480
Trade Liberalization and Sound Financial Systems......Page 482
Firm-Level versus Plant-Level Fixed Costs......Page 483
Empirical Assessment......Page 484
footloose production......Page 485
Implications of Footloose Production......Page 486
foreign direct investment (FDI)......Page 488
Troubling Statistics......Page 489
The International Business Approach......Page 490
Early Trade-Theory Models......Page 491
Empirical Evidence......Page 492
The Way Forward......Page 493
foreign direct investment and exit of local .rms......Page 494
Comparison of Exit in Foreign and Local Firms......Page 495
Impact of FDI on Exit of Local Firms......Page 496
Policy Implications......Page 497
How Does FDI Affect Home-Country Exports?......Page 498
How Does FDI Affect Host-Country Exports?......Page 499
foreign direct investment and innovation, imitation......Page 500
How Innovation Affects FDI......Page 501
How Imitation Affects FDI......Page 502
International Technology Transfer and the Role of FDI......Page 504
Policy Implications......Page 505
The Role of International Institutions......Page 506
foreign direct investment and labor markets......Page 508
FDI and the Host-Economy Labor Market......Page 509
FDI and the Source-Economy Labor Market......Page 511
FDI’s Effect on the Source Country’s Tax Revenues......Page 514
Policy Implications......Page 515
foreign direct investment: the OLI framework......Page 516
Location......Page 517
Cross-Border Mergers......Page 519
The OLI Framework: An Overall Assessment......Page 520
foreign direct investment under monopolistic competition......Page 521
Theory......Page 522
Policy Issues......Page 523
Empirical and Theoretical Points of Departure......Page 525
Models of International Oligopoly......Page 526
Resource Allocation Implications......Page 529
Types of Restrictions and Measurement......Page 530
Policy Reform......Page 531
Effectiveness of Foreign Exchange Intervention......Page 532
Practice of Foreign Exchange Intervention......Page 533
Research Challenges......Page 534
Entry Modes......Page 535
Location......Page 536
Timing of Entry......Page 537
Interdependencies......Page 538
Explaining the Forward Premium Puzzle......Page 539
Reasons behind the Puzzle......Page 540
fragmentation......Page 542
Foreign Direct Investment......Page 543
Productivity, Employment, and Wages......Page 544
Fragmentation and Interdependence......Page 545
free trade area......Page 546
Stepping Stones, Stumbling Blocks, or Building Blocks?......Page 547
Free Trade Area of the Americas (FTAA)......Page 549
gains from trade......Page 553
Definitions of the Gains from Trade......Page 554
18th-Century Perspectives on the Gains from Trade......Page 555
David Ricardo’s Twofold Gains from Trade......Page 556
John Stuart Mill: Splitting the Gains from Trade......Page 557
Neoclassical Depiction of the Gains from Trade......Page 558
The Heckscher-Ohlin-Samuelson Theory and Beyond......Page 559
Female Employment in Export Manufacturing......Page 562
Wage Discrimination......Page 563
Women as the World’s Flexible Work Force......Page 564
Origins of the GATT......Page 565
Basic Principles......Page 566
Negotiating Rounds......Page 568
The Uruguay Round......Page 569
What Became of the GATT?......Page 570
The Scope of the GATS......Page 572
The Rules of the GATS......Page 573
Doha Agenda and Beyond......Page 575
Mission, Funding, and Change......Page 576
Tackling Global Environmental Dilemmas and Achieving Results......Page 577
Inadequate U.S. Savings......Page 580
Structural Imbalances in Europe and Japan......Page 582
Dismal Poverty and Growing Global Inequality......Page 583
Concepts, Methods, and Data......Page 586
The Evolution of Global Inequality and Poverty......Page 589
Inequality in Other Dimensions......Page 591
global public goods......Page 594
The Provision Path of Global Public Goods......Page 595
Policy Implications and Challenges......Page 597
The Current Stage of the Debate on Global Public Goods......Page 598
globalization......Page 599
Earlier Examples of Economic Globalization......Page 600
Learning from These Earlier Eras of Globalization......Page 601
Studying the Current Period of Globalization......Page 602
Globalization and Identity......Page 603
Challenges Ahead in the Study of Globalization......Page 604
Basic Principles......Page 605
Basic Facts......Page 606
The Gold Standard in the Interwar Period......Page 607
government procurement......Page 609
Alternative Speci.cations......Page 611
Theoretical Considerations......Page 612
Assessment......Page 613
Group of Seven/Eight (G7/G8)......Page 614
Assumptions of the Theory......Page 616
The Benchmark Case of a Closed Economy......Page 617
Slow Convergence with International Capital Flows......Page 618
The East-Asian Miracles......Page 619
growth in open economies, Schumpeterian models......Page 620
Economic Openness and Growth......Page 622
Government Interventions......Page 623
Gulf Cooperation Council......Page 624
Income, Inequality, and Health......Page 631
Health, Growth, and the Location of Economic Activity......Page 632
Health Risks Associated with the Movements of Goods and People......Page 633
The Setting and Principal Results......Page 635
Deriving the Theorems......Page 636
Trade and Wages......Page 639
Investment Strategy......Page 641
Investment Issues......Page 642
Role of Hedge Funds......Page 643
Incentives to Hedge......Page 644
Epidemiology and Demographics......Page 645
International Response......Page 646
UNAIDS and the Global Fund......Page 647
home country bias......Page 648
Possible Explanations of Home Country Bias......Page 649
Home Country Bias in Macroeconomics......Page 650
Sudden Stops and Output Contractions......Page 651
Importance of Financing via Foreign Direct Investment......Page 652
illegal drugs trade......Page 655
Evolution of Drug Markets and Variable Characteristics of Suppliers......Page 656
import substitution industrialization......Page 658
ISI Policy Instruments......Page 659
Experience with ISI......Page 660
impossible trinity......Page 663
The Vanishing Middle?......Page 664
Can a Country Escape the Impossible Trinity?......Page 665
infant industry argument......Page 666
Alternative Assumptions......Page 668
Markov versus Non-Markov Strategies......Page 669
in.ation targeting......Page 670
Review of the ICT Literature......Page 672
Investment in ICT and Its Diffusion......Page 673
The Effects of ICT on Economic Growth......Page 675
New Economy and the Productivity Paradox......Page 676
The Role of ICT in the World Economy......Page 677
Infrastructure Broadly Defined......Page 679
Corruption......Page 680
Remaining Questions......Page 681
intangible assets......Page 682
Transferability of Goodwill Assets......Page 683
Intangible Assets and Spillovers to Foreign Economies......Page 684
National and International Dimensions of Intellectual Property Rights......Page 685
The International Debate Regarding Intellectual Property Rights......Page 687
Other Controversial Issues......Page 688
Future Concerns......Page 689
Effect of IPRs on Technology Transfer and Innovation......Page 690
Effect of IPRs on Imports, FDI, and Licensing......Page 691
Con.icts between Developed and Developing Countries over IPRs......Page 692
interest parity conditions......Page 693
Covered Interest Parity Assessed......Page 694
The Empirical Evidence for Uncovered Interest Parity......Page 695
Real Interest Parity Measured......Page 696
internalization theory......Page 697
The Internalization Decision and Opportunistic Behavior......Page 698
Property Rights Approach and the Holdup Problem......Page 699
Areas Needing More Research......Page 701
Ambitious Proposals......Page 703
Modest Reforms......Page 704
international financial centers......Page 706
Growth and Evolution of IFCs......Page 707
Consequences of Growth of IFCs......Page 708
international income convergence......Page 709
Convergence and the Solow Model......Page 710
Convergence among Interdependent Economies......Page 711
Colonialism......Page 713
The Governance Agenda in International Development......Page 714
Why Institutions Are Difficult to Transfer......Page 715
Future Directions......Page 716
The Rise of Bilateral Investment Treaties (BITs)......Page 717
U.S. Free Trade Agreements (FTAs)......Page 718
European Union Agreements......Page 719
Multilateral Initiatives......Page 720
Effects on Investment......Page 721
Dispute Settlement: Rising Case Load and Rising Awards......Page 722
Flaws in the System of Property Rights Enforcement......Page 723
The ILO’s Tools......Page 725
international liquidity......Page 727
Governance......Page 730
Surveillance......Page 731
Lending......Page 732
Criticisms......Page 733
Lending Procedures......Page 734
Analytical Tools......Page 735
Compliance and Recurring Usage......Page 736
International Monetary Fund surveillance......Page 737
Limitations......Page 738
History......Page 739
Rationale for Coordination......Page 741
The Gains from Coordination......Page 742
Coordination Substitutes: Avoiding Con.icts over Shared or Linked Targets......Page 743
Interinstitutional and Rule-Based Coordination......Page 744
Going Forward......Page 745
international reserves......Page 746
International Reserves and Self-Insurance......Page 747
International Reserves: Precaution versus Mercantilism......Page 748
intrafirm trade......Page 750
intraindustry trade......Page 752
Data Aggregation......Page 753
Empirical Characteristics of Intraindustry Trade......Page 754
Causes of the J-Curve......Page 757
joint ventures......Page 758
Profit-Maximizing Joint Ventures......Page 759
Host-Country Policy......Page 760
Model Description......Page 763
Firm Location, Foreign Af.liate Production, and International Trade......Page 764
FDI Liberalization, Factor Prices, and Welfare......Page 765
Extension......Page 766
Kyoto Protocol......Page 767
Labor Standards and International Trade Negotiations......Page 769
Enforcement and Issue Linkage......Page 770
Latin American debt crisis......Page 771
From Boom to Bust......Page 772
Crisis Resolution and Reform......Page 773
Two Views of the LOLR......Page 775
The IMF as International Lender of Last Resort......Page 776
linkages, backward and forward......Page 777
Intersectoral Linkages......Page 778
Inter.rm Linkages......Page 779
Policy Implications......Page 780
Conventional Monetary Policy Ineffectiveness......Page 781
Overcoming a Liquidity Trap......Page 782
Standard Assumptions......Page 783
Host-Country Policies......Page 784
Technology and Agglomeration Economies......Page 785
Firm Strategy......Page 786
New Location Theory: Random Chance and Time......Page 787
Policy Applications......Page 788
Components of the Louvre Accord......Page 790
Germany and Japan......Page 791
Maastricht Convergence Criteria......Page 793
market access......Page 794
The Impact of Regional Economic Integration......Page 795
Empirical Evidence and the Gravity Equation......Page 797
Policies to Attract FDI......Page 798
Marshall-Lerner condition......Page 799
Empirical Studies......Page 800
mercantilism......Page 801
Neomercantilism......Page 802
Mercosur......Page 803
mergers and acquisitions......Page 806
Recent History......Page 808
Types of Migration......Page 809
The Migration Decision......Page 811
Impacts on Destination Countries......Page 812
Policy Priorities......Page 813
migration governance......Page 814
Governance and Migration......Page 815
Top Down, Bottom Up......Page 816
Whither Migration Governance......Page 818
Millennium Development Goals......Page 819
MCI in Practice......Page 821
Role of Exchange Rate......Page 822
Constructing a Monetary Policy Rule......Page 823
Exchange Rate and Monetary Policy Rules......Page 824
Explaining Dominance......Page 826
Current Practical Approaches for Policymakers......Page 827
money laundering......Page 829
Combating Money Laundering......Page 830
Controllability of Money Supply......Page 831
Macroeconomic Implications of Money Supply Growth......Page 832
Money Supply in an Open Economy......Page 833
Models of Monopolistic Competition......Page 834
movement of natural persons......Page 838
multilateral environmental agreements......Page 839
The WEO Alternative......Page 840
The Years Ahead......Page 841
Pre-GATT Trade Negotiations......Page 843
Subjects and Modalities......Page 844
Results......Page 846
multilateralism......Page 848
multinational enterprises......Page 850
History of the MNE......Page 851
Typology of MNE Subsidiaries......Page 852
MNEs and Economic Development......Page 854
Political Economy, International Regulation, and MNE......Page 855
Benefits of Multiple Currencies......Page 857
Mundell-Fleming model......Page 858
Diagrammatic Representation......Page 859
Policy Shocks......Page 860
Coining of the Expression......Page 862
Location Decision......Page 865
Cumulative Causation......Page 866
Multilocation Economies......Page 867
The Baseline NOEM Model......Page 869
Extensions of the Original NOEM Model......Page 870
Reasons for Developing New Trade Theory......Page 873
Explaining Intraindustry Trade......Page 874
Topics in New Trade Theory......Page 875
nondiscrimination......Page 877
Nondiscrimination in the Form of Most-FavoredNation Treatment......Page 878
Nondiscrimination in the Form of National Treatment......Page 881
De.nitions and Classifications......Page 884
The Role of NGOs in the United States and the World Economy......Page 885
Challenges to NGOs......Page 886
Taxlike Nontariff Trade Measures......Page 887
Quantitative Measures......Page 888
Government Procurement Practices......Page 889
NTMs in International Trade Agreements and Negotiations......Page 890
Theories of Trade and Nontraded Goods......Page 892
Welfare Analysis and Nontraded Goods......Page 894
North American Free Trade Agreement (NAFTA)......Page 895
What Is NAFTA?......Page 896
The NAFTA Experience to Date......Page 897
The Data......Page 899
North-South Trade Models......Page 900
North-South Trade and Wages......Page 902
Growth and Activities of OFCs......Page 905
Concerns about OFCs......Page 906
The Partial Equilibrium Approach......Page 907
General Equilibrium and Oligopoly......Page 908
The Gains from Trade......Page 911
Variants of OCA Theory......Page 913
Testing OCA Theory......Page 914
Organisation for Economic Co-operation and Development (OECD)......Page 916
Organization, Output, and Analytical Perspectives......Page 917
OECD and National Economic and Social Policy......Page 918
Evolution of OPEC......Page 919
OPEC’s Future Prospects......Page 920
Economic Impact of Original Sin......Page 923
Reasons behind Original Sin......Page 924
outsourcing/offshoring......Page 925
Effect of Outsourcing on Wages: Evidence from the 1980s......Page 926
Outsourcing versus Technological Change......Page 927
Trade Costs and Outsourcing across Firms......Page 928
Regional Variation in Wage Inequality in the United States......Page 929
Offshoring’s Impact on the Service Sector......Page 930
parallel imports......Page 933
A Perfect Substitutes Model......Page 935
Imperfect Substitutes Model......Page 936
Peso Problems and Forecasts......Page 938
Models......Page 939
petrodollars, recycling of......Page 940
Oil Shock of 1973......Page 941
Avoiding Beggar-Thy-Neighbor Policies......Page 942
Oil Demand......Page 943
Reserves and Resources......Page 944
Investment......Page 945
Government Regulation......Page 946
Drug Discovery Process......Page 947
Industry Structure......Page 949
Outlook......Page 950
Plaza Accord......Page 951
Coordinated Action to Correct the Global Imbalances......Page 952
political economy of policy reform......Page 953
Implementing Reforms......Page 954
Big Bang versus Gradualism......Page 955
Costs and Benefits of Gradual Reform......Page 958
Empirical Evidence......Page 959
Early Steps in the Political-Economy Analysis of Trade Policy......Page 960
Political Preference and Minimally Institutional Political Economy......Page 962
Frontiers of Research on the Political Economy of Protection......Page 965
Thinking about ‘‘Good’’ Trade Policy......Page 966
pollution haven hypothesis......Page 968
Competitiveness and the Pollution Haven Effect: Empirical Evidence......Page 969
Pollution Haven Hypothesis: Theory......Page 970
Consumption-Generated Pollution......Page 971
Natural Capital and Pollution Havens......Page 972
Patterns of Poverty......Page 973
Strategies to Tackle Global Poverty......Page 976
Future Poverty Trends......Page 977
Prebisch-Singer Critique......Page 978
Agricultural Subsidies and Developed-Country Trade Barriers......Page 979
Limited Dynamic Bene.ts for Primary Product Exporters......Page 980
protectionism......Page 982
Theoretical Framework......Page 983
Empirical Validation......Page 984
Policy Implications......Page 985
Basics of Evaluating PPP......Page 986
Real Exchange Rate Persistence......Page 987
Economic Factors......Page 988
Interand Intracountry Analysis......Page 989
quantity theory of money......Page 991
Criticisms of Quantity Theory......Page 992
quotas......Page 993
Administration of Import and Export Quotas......Page 994
Economic Impact of Export Quotas......Page 995
Comparison of Quotas to Tariffs......Page 996
Theoretical Approaches......Page 999
Measuring the Real Exchange Rate......Page 1000
Lending for Development......Page 1001
Stepping Up to the Future......Page 1002
Economic Analysis......Page 1005
remittances......Page 1007
De.nition and Measurement of International Remittances......Page 1008
Impacts of Remittances......Page 1010
reserve currency......Page 1012
Origin and Mathematical Formulation......Page 1015
Extensions......Page 1016
Ricardian model......Page 1017
The Simple Ricardian Model......Page 1018
Extensions of the Simple Ricardian Model......Page 1021
The Role of the Ricardian Model in Understanding the World Economy......Page 1023
Defining ROOs......Page 1024
Effects of ROOs......Page 1025
Rybczynski theorem......Page 1026
The Legal Foundation for Safeguards and Its Evolution in the WTO......Page 1027
The Economic Function of Safeguards......Page 1028
Legal Issues......Page 1030
Economic and Political Effects of Sanctions......Page 1031
Empirical Findings on Sanctions......Page 1032
sanitary and phytosanitary measures......Page 1033
International Trade Rules......Page 1034
Prospects for Regulatory Reform of SPS Measures......Page 1035
Hyperinflation......Page 1036
Reducing Reliance on Seigniorage Revenue......Page 1037
sequencing of financial sector reform......Page 1038
Key Policy Insights......Page 1039
shipping......Page 1040
Structure of the Shipping Industry......Page 1041
Economics of the Industry......Page 1042
Regulating Shipping Markets......Page 1043
Smithsonian Agreement......Page 1044
smuggling......Page 1045
Recent Trends in Smuggling......Page 1046
Smuggling and Legitimate Economic Actors......Page 1047
Forces Increasing the Demand for Social Policy Initiatives......Page 1048
Forces Inhibiting Governments from Supplying Social Policies......Page 1049
Forces for Downward Harmonization to Occur......Page 1050
Forces for Sustained Divergence......Page 1051
Evidence: Harmonization or Sustained Divergence......Page 1052
South-South trade......Page 1053
The Gravity Puzzle......Page 1054
sovereign risk......Page 1056
Causes and Consequences of Default Risk......Page 1057
sovereign wealth funds......Page 1059
special and differential treatment......Page 1061
special drawing rights......Page 1063
Role of SDRs......Page 1064
specific-factors model......Page 1065
speculation......Page 1070
Sources of Spillovers......Page 1073
steel......Page 1074
Technology, Costs, and the Location of Production......Page 1075
The Role of Trade Policies......Page 1076
Changing Competitive Conditions......Page 1077
Costs of Sterilization......Page 1079
The Efficacy of Sterilized Intervention Operations......Page 1080
Empirical Evidence......Page 1081
structural adjustment......Page 1083
Empirical Assessment of the Effects of SAPs......Page 1084
The End of Structural Adjustment......Page 1086
subsidies and financial incentives to foreign direct investment......Page 1087
Types of Incentives......Page 1088
The Impact of Incentives on FDI......Page 1090
The Costs of Incentives......Page 1091
Analytics......Page 1093
Adjustment to Shocks......Page 1095
tariff-cutting formulas......Page 1097
Progressivity......Page 1098
Flexibility......Page 1099
Generalization and Simplicity......Page 1100
Measuring Tariff Escalation......Page 1101
Effects of Tariff Escalation......Page 1102
Magnitude of Current Tariff Escalation......Page 1103
Trade Liberalization Effects of Reducing Tariffs versus Expanding Quotas......Page 1104
TRQ Administration......Page 1106
tariffs......Page 1107
Types of Tariffs......Page 1108
Arguments in Favor of Tariffs......Page 1109
Recent History......Page 1110
technical barriers to trade......Page 1111
Cross-Country Openness Growth Regressions......Page 1114
International Technology Diffusion via Imports and FDI......Page 1115
technology licensing......Page 1116
Licensing and Other Product Market Strategies......Page 1117
Licensing and Innovation......Page 1118
Licensing to Create Competition......Page 1119
Future Research......Page 1120
Theory of Technology Spillovers......Page 1121
Empirical Analysis of International Technology Spillovers......Page 1122
Policy Considerations......Page 1124
temporary movement of natural persons......Page 1125
Origins......Page 1126
Significance for the World Economy......Page 1127
terms of trade......Page 1128
textiles and clothing......Page 1130
International Trade Regime......Page 1131
World Trade in Textiles and Clothing......Page 1133
time inconsistency problem......Page 1135
Political Macroeconomics......Page 1136
Tobin tax......Page 1137
The Debate over the Tobin Tax......Page 1138
The Impact of Trade on Income Levels......Page 1140
The Impact of Trade on Economic Growth......Page 1141
The Impact of Trade on Poverty......Page 1143
The Impact of Trade on Labor in Developing Countries......Page 1144
Recent Trends......Page 1147
Effects of Trade on the Environment......Page 1148
Factor Endowment Hypothesis......Page 1149
The Role of Government......Page 1150
Theory......Page 1152
Evidence: Developed Countries......Page 1154
Trade and Skill Formation......Page 1155
Horizontal FDI......Page 1156
Mergers and Acquisitions......Page 1157
Other Trade Costs and FDI......Page 1158
Policy Implications......Page 1159
Cross-Country Comparisons and Performance......Page 1160
The Gains to Trade from Cutting Costs and Red Tape......Page 1161
The Agenda Ahead......Page 1162
The Emerging Pattern of Trade......Page 1163
What Restricts Services Trade?......Page 1164
What Are the Consequences of Liberalization?......Page 1165
How Is Liberalization Best Implemented?......Page 1166
Trends and Lessons from Reviews......Page 1167
Coverage of the TPRM......Page 1168
trade-related capacity building......Page 1170
History of Agreements and Treaties......Page 1173
transfer pricing......Page 1175
transfer problem......Page 1177
transition economies......Page 1179
Initial Conditions or Policy Reforms?......Page 1180
Country Patterns of Transition......Page 1181
Developing the Private Sector......Page 1182
The Political Economy of Transition......Page 1183
Triffin dilemma......Page 1185
Post–Bretton Woods: Flexible Exchange Rates......Page 1186
New Triffin Dilemma......Page 1187
Accounting and Theoretical Relations......Page 1188
Arguments That the Twin Deficits Do Not Matter......Page 1189
Theoretical Frameworks......Page 1193
Empirical Studies......Page 1194
United Nations Conference on Trade and Development......Page 1195
Post-NIEO Development......Page 1196
Impact of the World Trade Organization......Page 1197
Uruguay Round......Page 1198
The Negotiations: 1986–93......Page 1199
Key Issue Areas......Page 1200
The WTO......Page 1203
vehicle currency......Page 1205
vertical versus horizontal foreign direct investment......Page 1207
Export-Platform FDI......Page 1209
voluntary export restraints......Page 1211
The Set of Policies......Page 1213
The Extent of Policy Reform......Page 1214
Assessment......Page 1215
West African Economic and Monetary Union......Page 1217
World Bank......Page 1218
Criticisms......Page 1219
The Bank as a ‘‘Bundled’’ Institution......Page 1221
World Economic Forum......Page 1224
History......Page 1226
Activities, Governance, and Mandate......Page 1227
Recent Challenges......Page 1228
World Trade Organization......Page 1229
Basic Principles......Page 1230
Administering the Agreements and Other Day-to-Day Activities......Page 1231
Other Challenges Facing the WTO......Page 1232
The WTO’s Contribution......Page 1233
World Trade Organization, accession to......Page 1235
The Process of WTO Accession......Page 1236
The ‘‘Price’’ of WTO Accession......Page 1237
The Empirical Studies of the Impact of WTO Accession......Page 1238
World Trade Organization dispute settlement......Page 1240
The Panel Process......Page 1241
The Appellate Process......Page 1243
Adoption and Implementation of Reports......Page 1244
Remedies......Page 1245
INDEX......Page 1247