Upload
zulema
View
26
Download
0
Embed Size (px)
DESCRIPTION
YOUNG LEADERS TRAINING PROGRAM for Sustainable Development in Asia and the Pacific. 30 June-15 July 2006 Kangwon National University Chunchon, Korea. Introduction to Methodologies in Development and Trade Analysis. LECTURER. Prof Tran Van Hoa Director, Vietnam and ASEAN+ Research Program - PowerPoint PPT Presentation
Citation preview
YOUNG LEADERS TRAINING PROGRAM
for Sustainable Development in Asia and the Pacific
30 June-15 July 2006
Kangwon National University
Chunchon, Korea
Introduction to Methodologies in
Development and Trade Analysis
LECTURER
• Prof Tran Van Hoa• Director, Vietnam and ASEAN+ Research Program
• Centre for Strategic Economic Studies• Victoria University, Melbourne, Australia
• Honorary Professor• National Economics University, Vietnam
• National Advanced Training Institute (NATI)• Ministry of Trade, Vietnam
• Consultant/Mentor• AusAID-Cardno, Australia
• Email: [email protected]• Website: http://www.staff.vu.edu.au/CSESBL/
VARIOUS USES
– Research– Teaching– Training– Policy– National and International Networks
FAST CHANGING WORLD: CURRENT GLOBAL ISSUES
1 Issue 1: Global Economy
2 Issue 2: Global Knowledge
3 Issue 3: Global Commerce and Industry
4 Issue 4: Marching Globalisation
5 Issue 5: Need of Global Competitiveness
6 Issue 6: WTO and FTA Foundation: Global Pure Competitive Market
GLOBAL GOVERNANCE
Finance (IMF)
Commerce (GATT, GATS and WTO)
Justice (The Hague)
War and Peace (United Nations)
REGIONAL TRADE AND DEVELOPMENT ISSUES IN ASIA
Miracle (60-mid 90) and Crisis (97) Years in Asia
IMF Policy Failures in Asia Crises (Mexico to Indonesia)
Slow WTO Negotiations (Doha, agriculture)
Fast (post-98) Recovery of Crisis Economies in Asia
Benign Neglect of Crisis Asia from NAFTA and EU
Support from World’s 2nd Largest Economy
REGIONAL TRADE AND DEVELOPMENT ISSUES IN ASIA
Recent Economic Integration Developments:
Rise of Plurilateral FTA (LAFTA, 05) Rise of Bilateral FTA (AIFTA, AEFTA, 05) Emergence of New Asian Regionalism (ASEAN+3,
00) Emergence of East Asia Regionalism (EAS, 05) Emergence of South Asia Regionalism
SAARC (85), SAFTA (05)
ASIAN REGIONALISM AND FREE TRADE AGREEMENTS
• Asian Regionalism and FTAs are not new • (eg, East Asia proposed by Japan in 1940s)
• Proliferation of plurilateral and bilateral FTAs in Asia and Oceania in recent years.
ASIAN REGIONALISM AND FREE TRADE AGREEMENTS
• EXAMPLES
Current: AFTA, TAFTA, AUSFTA, JSFTA,
ASFTA, ASEAN+3,
Proposed:ASEAN+5, ASEAN+India,
ASEAN+EU, Australia+Emirates, Australia+China, Australia+Japan
ASIAN FREE TRADE AGREEMENTS
• The Foundation of Asian FTAs:
Proximity (Gravity)
Affinity in Consumption and Production
Political Compatibility
Strategic Regional Cooperation
ISSUES IN FTAS
• Mechanics of FTAs:
Liberalisation of trade, investment, services, business and tourism
• Benefits:
• Trade, economic, political in the medium & long term
ISSUES IN FTAS
• Challenges/Costs:
Country interests, NTMs, cultures, histories, religions, national, regional & global crises, current rising oil prices, global competition, exchange rates, etc
• Ideology vs Realism:
Research-based policy versus policy-based (biased) research
ROLE OF POLICY REFORM AND SHOCKS IN REGIONAL FTAS
• Gains from FTAs are affected positively by policy reforms & negatively by shocks
• EXAMPLES:
• South Korea economic reform• China investment policy• Tsunami in South East Asia• Gulf and Iraq wars
Cointegration/unit root taxonomy of policy reforms and shocks
GRADUAL SUDDENTemporary TemporaryLong lasting Long lasting
Examples: Doi MoiChina SOE reform Gulf War, SARS, avian
flu
ROLE OF NTMS IN REGIONAL FTAS
• Non-Tariff Barriers or Measures (NTMS)• 40% of LDC Exports Affected (UNCTAD)• % of Australia/Vietnam Trade Affected if NTMs
Prevail?• % of US/Vietnam Trade Affected if NTMs
Prevail?• % of Australia’s Exports/Investment to China
Affected if NTMs Prevail?
CHARACTERISING NTMS
• Lack of transparency• Poor intellectual property-rights enforcement• Quarantine• Customs procedures• Administrative import requirements• Burdensome regulations and standards, and
CHARACTERISING NTMS
• Restricted mobility of business people.
– Pervasive
– Currently Difficult to Quantify
– Politically Sensitive
– But Measurable?
HOW TO BEST MEASURE GAINS/LOSSES FROM FTAS AND WTO?
The Economic/Commerce Policy Scene
Policy Components:
Y: Target, X=Instruments
Expected Action:
Y X : Directional Causal Linkage
Lucas Critique: Y -> X and Y <- X
HOW TO BEST MEASURE GAINS/LOSSES FROM FTAS AND WTO?
Advanced Impact Methodologies
The Keynesian (1940)-SNA93 (1993)
Y = ΠX + V
The Johansen CGE/GTAP (1960)
dlogY = dlogX
HOW TO BEST MEASURE GAINS/LOSSES FROM FTAS AND WTO?
The Cross-Section Gravity Theory (1999)
The Panel Regression (Dollar, EJ, 2004)
The Generalised Gravity Theory (TVH, 2002)
Advanced Impact MethodologiesMORE DETAIL
• The Keynesian (1940)-SNA93 (1993)• • AY + BX = U, then with A 0• A-1AY + A-1BX = A-1U or• Y = -A-1BX + A-1U or• Y = ΠX + V Reduced Form•
Advanced Impact MethodologiesMORE DETAIL
• The Johansen CGE/GTAP (1960)•• dlogY = dlogX
• Using Euler-Gauss Algorithm to solve
Advanced Impact MethodologiesMORE DETAIL
• The Cross-Section Gravity Theory (Frankel & Romer, 1999)
•• logT = a1 + a2logY + a3logG + u• • The Panel Regression (Dollar, EJ, 2004)•• logT = a1 + a2LOG(Y) + a3LOG(G) + u
where LOG(Y)=Vector of Y, etc
Advanced Impact MethodologiesMORE DETAIL
• The Generalised Gravity Theory (TVH, 2002)
• • Y = Y(T,S) Arbitrary Function• T = T(Y,S,FDI,X,Z) Arbitrary Function
• Specifying No Specific Functional Form and Allowing Circular Causality and Temporal Shocks
• or Policy Change
Advanced Impact MethodologiesMORE DETAIL
• Using Planar Taylor Series Expansion
• dY = (Y/T) dT + (Y/S) dS• dY/Y = T(Y/T)(dT/TY) + S(Y/S)(dS/SY)• = E1 dT/T + E2 dS/S, or• Y% = E1 T% + E2 S% + U.
E1=Elasticity of Y on T, etc. And, similarly for T.
HOW TO BEST EMPIRICALLY MEASURE GAINS/LOSSES FROM FTAS AND WTO
WITH COMPREHENSIVE TRADE, POLICY CHANGE & SHOCKS?
• A trilogy of recent stories (research projects) in ASEAN+3 (China, Japan, Korea) FTA (2001) incorporating trade, investment, services, policy reform and shocks
• Case Study 1: China
CHINA TRADE WITH THE WORLD
Chart 1: China's Trade with the World
0
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
0.1
TA6Y
TJ P Y
TUSY
TEUY
TOZY
CHINA GAINS FROM MULTILATERAL FTA (WTO 2001): More Exports
China's Gains from WTO Membership
0
10
20
30
40
Year
Expo
rts a
nd Im
ports
/GDP
XY
IMY
GROWTH MODELLING EVALUATION:China Growth and China-Japan Trade
Chart 2B: Modelling China's Growth for Policy
0
2
4
6
8
10
12
14
16
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Year
YCNC
YCNJ P2H
GROWTH MODELLING EVALUATION:China Growth and China-ASEAN Trade
Chart 2C: Modelling China's Growth for Policy
0
2
4
6
8
10
12
14
16
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Year
YCNC
YCNA62H
HOW TO CARRY OUT A RESEARCH ON THE CAUSES OF TRADE IN ASEAN+3
• A Graphical Analysis
– Trade Causes Growth?– What Causes Trade?– Find the Causes of Trade– Alternative Approaches– Some Case Studies
Chart 2: Modelling China-Japan Trade
-20
-10
0
10
20
30
40
50
60
70
Year
TJ P YC
TJ P YCF
Chart 3: Modelling China-ASEAN Trade
-20
-10
0
10
20
30
40
50
60
Year
TA6YC
TA6YCF
Chart 4: Modelling China-EU Trade
-30
-20
-10
0
10
20
30
40
50
60
Year
TEUYC
TEUYCF
Chart 5: Modelling China-US Trade
-20
-10
0
10
20
30
40
50
Year
TUSYC
TUSYCF
Chart 6: Modelling China-Australia Trade
-40
-30
-20
-10
0
10
20
30
40
50
Year
TOZYC
TOZYCF
Reliability of Merchandise Trade Proxy inModels on China’s Trade with its Five Major Trading Partners
Openness (Exports+Imports)/GDP1981 to 2002
Model China-ASEAN China-Japan China-US China-EU China-Australia
CorrelationCoeff 0.98 0.98 0.96 0.97 0.94RMSE 3.83 3.6 3.23 4.15 6.42Mean Error 0.00 0.00 0.00 0.00 0.00Um 0.00 0.00 0.00 0.00 0.00Us 0.01 0.01 0.02 0.01 0.03Uc 0.99 0.99 0.98 0.99 0.97_____________________________________________________________________Notes. Ub+Us+Uc = 1. See Pindyck and Rubinfeld (1998) for further detail on these evaluation criteria. The estimates are based on TSP calculation.
SUBSTANTIVE EMPIRICAL (ECONOMETRIC) FINDINGS 1
• Table 1• Impact of Trade, Services, FDI, Policy Reform and Shocks on China’s Growth• Generalised Gravity Theory in Flexible Structural Form• 1981 to 2001
China-ASEAN China-Japan China-US• Variables OLS 2SLS 2SHI OLS 2SLS 2SHI OLS 2SLS 2SHI
__________________________________________________________________________________________• Constant 9.30** 9.24** 8.93** 9.74** 9.40** 8.23** 9.78** 9.41** 8.80**• Openness/GDP 0.03** 0.03** 0.03** 0.02@ 0.02@ 0.02@ 0.04@ 0.05@ 0.05@• Services/GDP 0.01 -0.01 -0.01 0.003 -0.003 -0.003 -0.004 -0.02 -0.02• FDI/GDP 0.04** 0.05** 0.04** 0.04** 0.05** 0.04** 0.04** 0.05** 0.04**• Stock Crash 871.12@ 1.18* 1.14* 1.44 1.68* 1.58* 1.13 1.43@ 1.34@• China Turmoil 89 -6.97** -6.96** -6.73** -7.42** -7.28** -6.83** -7.46** -7.29** -6.82**• Gulf War 91 4.90** 4.70** 4.54** 4.45** 3.92** 3.68** 4.83** 7.53** 4.17**• China Reform 93 2.15** 2.32** 2.24** 2.33** 2.75** 2.58** 2.15** 4.46** 2.21**• Asia Crisis 97 -2.84** -2.79** -2.69** -2.67** -2.56** -2.40** -2.75** 2.36* -2.50**• R2 0.97 0.73 0.99# 0.96 0.91 0.98# 0.96 0.95 0.98• F 43.07** 39.57** 4.80** 25.57** 21.88** 5.49** 25.84** 21.06** 5.13**• DW 1.71 1.77 1.32& 2.10 2.15 1.36& 2.19 2.17 1.32&
SUBSTANTIVE EMPIRICAL (ECONOMETRIC) FINDINGS 2
• China-EU China-Australia• Variables OLS 2SLS 2SHI OLS 2SLS 2SHI
_______________________________________________________________________________________________________• Constant 10.37** 10.10** 9 .35** 9.72** 9.61** 8.75**• Openness/GDP -0.009 -0.003 -0.003 0.01 -0.004 -0.004• Services/GDP 0.009 0.009 0.008 0002 0.003 0.003• FDI/GDP 0.04** 0.05** 0.04** 0.05** 0.06** 0.05**• Stock Crash 870.41 0.72 0.67 1.36 1.02 0.93• China Turmoil 89 -7.17** -7.25** -6.72** -7.59** -7.02** -6.40**• Gulf War 91 4.48** 4.35** 4.04** 4.56** 3.58** 3.26**• China Reform 93 2.66** 2.72** 2.55** 2.56** 3.35** 3.05**• Asia Crisis 97 -2.80** -2.75** -2.55** -2.76 -2.59** -2.36**• R Square 0.95 0.94 0.97# 0.95 0.93 0.97#• F 19.54** 18.64** 3.20** 19.88** 14.74 5.49** • DW 2.44 2.40 1.35& 2.24 2.42 1.21&
HOW TO MEASURE REGIONAL/SECTORAL GAINS/LOSSES
FROM FTAS?
• The Required Share Data
– Global– National– Regional– Sectoral, etc
REGIONAL/SECTORAL GAINS/LOSSES FROM FTAS?
• Modelling National Gains/Losses
• Modelling Regional/Sectoral Gains/Losses
Modelling More Disaggregated ActivitiesUrban and Regional Productivity/Wages
Income Inequality
Employment/Unemployment
Education and Jobs
IMPACT OF NTMS
• An Important Current Research Subject for WTO and FTA Impact
AUSTRALIA TRADE WITH THE WORLD AND ITS FUTURE & STRATEGY
Figure 1: Australia's Exports to the World
0
20
40
60
80
100
120
140
ALL EASTASIA
ASEAN NAFTA EU INDIA OTHER OECD APEC
Trading Blocs
$ B
illio
n
2002
2003
2004
Figure 2: Australia's Imports from the World
0
20
40
60
80
100
120
140
160
ALL EASTASIA
ASEAN NAFTA EU INDIA OTHER OECD APEC
Trading Blocs
$ B
illio
n
2002
2003
2004