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Zonder onderwerpscode: wereldeconomie, ontwikkelingsproblematiek

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The author investigates the effects of preferential trade agreements (PTAs) on bilateral trade flows using a comprehensive database of PTAs in force and a detailed matrix of world trade. He shows that total trade between PTA partners is a poor proxy for preferential trade (trade in tariff lines where preferences are likely to matter): while the former amounted to one-third of global trade in 2000-02, the latter was between one-sixth and one-tenth of world trade. His gravity model estimates indicate that using total rather than preferential trade to assess the impact of PTAs leads to a significant downward bias in the PTA coefficient. The author finds that product exclusions and long phase-in periods significantly limit preferential trade, and their removal could more than double trade in tariff lines above 3 percent of most-favored-nation (MFN) duties. He also shows that the effects of PTAs on trade vary by type of agreement and are increasing in the incomes of PTA partners.

Bilateral Trade --- Economic Theory and Research --- Emerging Markets --- Free Trade --- Free Trade Area --- Global Trade --- Gravity Equation --- Gravity Estimates --- Gravity Framework --- Gravity Model --- Gravity Models --- International Economics & Trade --- Law and Development --- Macroeconomics and Economic Growth --- Preferential Trade --- Preferential Trade Agreements --- Private Sector Development --- Public Sector Development --- Tariff --- Trade Agreement --- Trade and Services --- Trade Creation --- Trade Diversion --- Trade Flows --- Trade Law --- Trade Policy --- Trade Variables --- World Trade --- World Trade Organization

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The author investigates the effects of preferential trade agreements (PTAs) on the net foreign direct investment (FDI) inflows of member countries using a comprehensive database of PTAs in a panel setting. He finds that PTA membership is associated with a positive change in net FDI inflows, and the FDI gains are increasing in the market size of the PTA partners and their proximity to the host country. The author identifies several different channels through which preferential trade liberalization may affect FDI, and confirms that both threshold effects (signing the agreement) and market size effects (joining a larger and faster-growing common market) are important determinants of net FDI inflows, although the latter seem to dominate. The estimated relationship is largely driven by North-South PTAs, and is most pronounced in the late 1990s and early 2000s, the period when the majority of "deep integration" PTAs had been advanced.

Barriers --- Common Market --- Competition --- Currencies and Exchange Rates --- Debt Markets --- Economic Theory and Research --- Emerging Markets --- Exchange --- Finance and Financial Sector Development --- Foreign Direct Investment --- Foreign Investment --- Free Trade --- Harmonization --- Income --- Intellectual Property --- Interest --- International Capital --- International Capital Flows --- International Economics & Trade --- Investment and Investment Climate --- Investment Climate --- Job Creation --- Law and Development --- Liberalization --- Macroeconomics and Economic Growth --- Market Access --- Private Sector Development --- Property Rights --- Public Sector Development --- Regional Trade --- Trade --- Trade and Regional Integration --- Trade Law --- Trade Policy --- World Trade

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This paper quantifies the likely benefits of trade and investment liberalization in a small, poor, open economy, using the accession of Honduras to the Dominican Republic-Central American Free Trade Agreement as a case study. The results show that bilateral trade liberalization with the United States is likely to have almost no effect on welfare in Honduras, while the reciprocal removal of protection vis-a-vis the rest of Central America would lead to significantly larger gains. Potential gains from increased net foreign direct investment inflows overwhelm those expected from trade reform alone, particularly if the new foreign direct investment generates productivity spillovers. However, if it is to replace Honduran investment rather than complement domestic capital formation, growth performance is unlikely to improve and may even suffer. The paper's results identify several areas for policy attention by Honduran policy makers to make the Dominican Republic-Central American Free Trade Agreement more development-friendly. These include carefully considering the budgetary implications of trade reform, widening social safety nets to counter the trends toward increasing income inequality, and sequencing the reforms to ensure a close alignment of Honduras' comparative advantage on the regional and global markets.

Bilateral trade --- Comparative advantage --- Currencies and Exchange Rates --- Debt Markets --- Economic implications --- Economic Theory and Research --- Emerging Markets --- Finance and Financial Sector Development --- Free Trade --- Income --- International Economics & Trade --- Macroeconomics and Economic Growth --- Open economy --- Private Sector Development --- Productivity --- Safety nets --- Trade liberalization --- Trade policy

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Econometric analysis has established a negative relationship between labor supply and remittances in Jamaica. The authors incorporate this ex-post evidence in a general equilibrium model to investigate economywide effects of increased remittance inflows. In this model, remittances reduce labor force participation by increasing the reservation wages of recipients. This exacerbates the real exchange rate appreciation, hurting Jamaica's export base and small manufacturing import-competing sector. Within the narrow margins of maneuver of a highly indebted government, the authors show that a revenue-neutral policy response of a simultaneous reduction in payroll taxes and increase in sales taxes can effectively counteract these potentially negative effects of remittances.

Currencies and Exchange Rates --- Debt Markets --- Economic Growth --- Economic Theory and Research --- Effects --- Emerging Markets --- Finance and Financial Sector Development --- Financial Literacy --- General Equilibrium --- High Unemployment --- Information --- Investment --- Labor --- Labor Costs --- Labor Demand --- Labor Force --- Labor Force Participation --- Labor Market --- Labor Market Flexibility --- Labor Markets --- Labor Policies --- Labor Supply --- Macroeconomics and Economic Growth --- Policies --- Prices --- Private Sector Development --- Real Wages --- Social Protections and Labor --- Unemployment Rate --- Unemployment Rates --- Wages