Browse by: "I"

This paper analyses the effects of the internationalisation of financial markets on the conduct of macroeconomic policy and the allocation of capital. It first examines the increased integration between domestic and external (or "Euro") financial markets and the recent tendency towards convergence of real interest rates among financially open countries. After briefly touching on the macro policy consequences of financial internationalisation, the paper then deals with long-term implications for the international allocation of capital, with special emphasis on the existence of tax distortions. Using estimated tax wedges for business investment and the supply block of the INTERLINK system, it shows that, under integrated financial markets, the existing tax distortions could generate a large imbalance in the net external asset position which involves a significant welfare cost ...

This paper presents a new system for the consistent determination of import and export prices of manufactured products for use in the world trade block of the OECD INTERLINK model. It uses a system design which directly couples the bilateral determinants of export prices with the bilateral determinants of import prices. The results, however, will be obtained without the need for specific bilateral information other than the bilateral exchange rate. The model allows for price discrimination between different markets for the same exporter and features less than full pass-through of exchange rate movements into import prices ...

This paper presents the specification of an investment-income model for 23 OECD countries and six non-OECD regions. The basic structure of the model -- an effective rate of return applied to the stock of foreign assets and liabilities -- is relatively simple and straightforward. A central distinction is made between dollar and non-dollar denominated foreign assets and liabilities and matrices giving estimates of the currency composition of these stocks are reported. Estimation and simulation results for the investment-income model are presented ...

This paper presents a model of longer term interactions in the international markets for cereals, soybeans and meat, and draws policy conclusions for developing countries. The model is comparative static in nature and, largely, partial equilibrium, incorporating constant elasticity demand and supply functions. It is an extension of earlier similar models: commodity interdependence is modelled explicitly and long-run effects, of productivity growth on domestic production and of income growth on demand, are incorporated. Moreover, demand for feed, as derived from livestock production, is separated from food demand.

The focus is on policy analysis and on developing countries. The results are somewhat surprising. First, real prices of wheat and coarse grains would continue to fall under liberalisation assumptions. Second, developing countries' agricultural policies emerge as more important (in relation to OECD countries' policies) than expected, and as ...

Subsidisation of industrial activities distorts the allocation of scarce resources, is a burden on government finances and generates friction in international trade. This paper draws on a wide range of data sources to examine industrial subsidisation in OECD countries. The sectoral distribution of subsidies and the relative importance of the different instruments of subsidisation are highlighted. The final section of the paper evaluates, to the extent possible, the economic effects of subsidy policy ...

During the past decade, the formulation of fiscal policy has been increasingly founded on medium-term considerations associated with public debt and economic efficiency. In this regard, this paper, and the ones by Olivier Blanchard and Edward Gramlich in the same Working Paper Series, considers the implications of this development for the overall appraisal of fiscal policy in OECD countries. The paper begins with a review of the existing measure of discretionary change in budget positions and proposes refinements to it. The paper then introduces and illustrates several new indicators designed to help assess the sustainability of policies in the short- and medium-run and their first-round impacts on aggregate demand ...

This paper deals with the problem of definition and measurement of the efficiency of agricultural production. Using an agronomical simulation model, it makes comparisons of wheat, maize, sunflower and soybean production in different regions of France, Argentina and the United States.

The ability of a country to defend its position as an exporter of a specific agricultural product or to maintain local production of a product in deficit, facing the competition of imports, is shown to depend on three factors: 1) the efficiency of agricultural production; 2) the efficiency of an internal transportation, stockage and trading system; and 3) the level of protection for agriculture introduced by different national policies. The first two factors are usually considered as defining the comparative advantage of a country on the considered product.

In the international context of today, it is important for many developing countries to know their relative position in terms of ...

The strategies of Japanese electronics firms have major implications for the electronics industries of the East Asian NIEs as well as the ASEAN (Association of Southeast Asian Nations) member countries. Japan's electronics industry has been undergoing a drastic restructuring in recent years, precipitated to a large extent by the strong revaluation of the yen. A marked shift is occurring away from consumer electronics to industrial electronics and electronic components (in particular, semiconductors). At the same time, within the consumer electronics industry, firms have focused their domestic production on the highest value-added segments of the market. Labor-intensive production processes and products which are not sharply differentiated by quality or special performance features are being shifted to the low wage ASEAN countries.

An elaborate intra-regional division of labor is taking shape. Subsidiaries of Japanese firms established elsewhere in Asia still rely heavily on ...

A recent study by David Aschauer suggested a novel explanation for the slowdown of private-sector total factor productivity (TFP) in the United States in the early 1970s. He argues that it is due to the roughly contemporaneous slowdown in the rate of investment in public-sector infrastructure. Using data for eleven OECD countries, this note provides only mixed support for Aschauer's hypothesis. With series starting in the 1960s for most countries, regression analysis found a significant effect of infrastructure on TFP in about half the countries. A longer-term perspective was also examined for the United States. On the basis of data going back to the end of the 19th century, it appears that there was no relationship between infrastructure and TFP until after World War II ...

This paper is one of four in this Working Paper Series, focusing on financial liberalisation, along with those of Kupiec, Miller and Weller, and Driscoll. It examines the extent to which international financial markets have become more integrated over the past decade. The finding that financial markets are almost fully integrated, in contrast to goods markets which are not, has important implications for real interest rate differentials, real exchange rate behaviour and external adjustment. In particular, the reduced importance of external imbalance and the increased role of real interest rates in real exchange rate determination can be associated with more prolonged misalignments ...

This paper examines the future of capital income taxation in a world of capital mobility. It first explores the motivation for personal and corporate income taxation in an open economy and argues that policymakers should view these taxes as having quite different impacts on the economy. The paper then suggests that some forces (e.g. capital flight) will encourage governments to shift away from capital income taxation while others (e.g. tax exportation) will have the opposite effect ...

All the world’s cocoa is grown in developing countries — more than half in West Africa — essentially for export. Except in Brazil, Malaysia and Indonesia, it is grown by smallholders. In the international cocoa market, prices rose steeply in 1977 but have been in almost constant decline since and production surpluses have persisted.

For producers, the impact of the structural adjustment and liberalisation process has been mixed. While prices have remained low on the international market, producers have generally received a higher share of the international market price. On the other hand, input prices have increased and subsidies for fertiliser or improved planting material have either been reduced or eliminated. Under these conditions, poor producers then use even fewer purchased inputs.

Structural adjustment has had a negative impact on cocoa research, particularly in public research institutions in Brazil and in Africa. In Malaysia the situation is different as the ...

Despite the increased capital mobility that has accompanied the trend towards liberalisation and international integration of financial markets, differences remain in financing costs and, in particular, the cost of capital, that similar businesses face in different countries. These differences have attracted considerable attention as important factors influencing international investment and productivity growth. A number of reviewed empirical studies suggest that Japan and Germany enjoyed a considerable advantage with regard to the cost of equity and, more broadly, the cost of capital compared to the United States and the United Kingdom in the 1980s. This was due to higher leverage, a much lower cost of equity in Japan and a lower cost of German firms' debt to banks. Many studies have argued that closer bank-customer relationships, and more stable prices and growth rates in Japan and Germany have tended to lower their cost of capital. More recent studies which cover the period ...

This paper presents the results of a survey of micro-enterprises undertaken in Ecuador and Jamaica. The purpose was to understand the relationships between these countries' institutional and legal regulations, the degree of compliance by firms and the impact of compliance on their performance (particularly growth). This enquiry was complemented with case studies of issues related to compliance with regulations.

Initially, the paper sets out to analyse the characteristics of the microenterprises surveyed and their type of insertion into product and factor markets. Afterwards, it describes the differences observed in the regulatory frameworks of the two countries, and explains the differences in the degree of compliance with the law on the part of small firms. The final part of the paper determines statistically the relative importance of the factors that influence firm registration and identifies their effects on the growth of micro-enterprises.

The initial process of registration ...

The environmental implications of international trade have come under intensified scrutiny in recent years, particularly with expanded interest in multilateralism, regionalism, and other negotiated trade regimes. The transfer of environmental effects, both positive and negative, is embodied in most trade patterns, particularly those which reflect technological hierarchy or other stratification by degree of economic modernization. Despite the emotional reaction these issues often arouse, the question of whether and to whom these transfers are beneficial or detrimental is a very complex one. In this paper, we use applied general equilibrium analysis to examine a well-established trade relationship between two diverse economies, Japan and Indonesia. Historically, it appears that their bilateral trade has conferred asymmetric environmental effects on the two countries, effecting a net transfer of some environmental costs from the former to the latter. In the light of this negative ...

The practice of environmental regulation and assessment in developing countries faces many special challenges. Apart from popular misconceptions about negative links between environmentalism and economic growth, there are numerous practical limitations to appraising environmental conditions and implementing policies that conserve or improve them. These include weak institutional capacity or discipline, high monitoring and administrative costs for individual programs, and limited local engineering information.

Institutional constraints mean that first-best policies like direct pollution monitoring and regulation may not be feasible. Even market-based systems like tradable pollution permits usually require initial assessment and monitoring which is too costly or complex to be supported locally. Detailed data on pollution do exist for OECD countries, however, and this paper attempts to render this information more usable to environmental analysts in countries where direct sampling has not ...

A growing number of international initiatives are being undertaken to stimulate the development of agricultural biotechnology applications in developing countries. These initiatives, which include a wide range of biotechnology research, information and advisory activities, are supported by bilateral and multilateral agencies, private foundations and, to some extent, by commercial firms.

This study, based on the results of a survey conducted by the Intermediary Biotechnology Service (IBS) at The Hague, attempts to analyse the nature and scope of these initiatives and their potential impact. The study concludes by outlining a number of planning, execution and policy conditions which need to be met, both by donor agencies and by developing countries, if the potential impact of these international initiatives is to be fully realised ...

This paper examines the effects of the production of major innovations and patents on various measures of corporate performance. The analysis draws on panel data for 440 UK firms over the period 1972-1982. The observed direct effects of innovations on performance are relatively small. The paper also shows that little evidence can be found on innovation spillovers, associated with the production of either innovations or patents elsewhere in each firm's two-digit industry, raising performance. The benefits from innovation are more likely to be indirect, namely for user industries. However, innovative firms seem to be less susceptible to cyclical pressures than non-innovative firms. Firms in a competitive environment also seem more likely to engage in innovative activities than other firms ...