On the Evolution of the Spatial Economy with Multi-unit/Multi-plant Firms: The Impact of IT Development

This paper examines how the decline of communication costs between management and production facilities within firms and the decrease in trade costs of manufactured goods affect the spatial organization of a two-region economy with multi-unit/multi-plant firms. The development of information technology decreases the costs of communication and trade costs. Thus, the fragmentation of firms is promoted. Our result indicates that, with decreasing communication costs, firms producing low trade-cost products (such as consumer electronics) tend to concentrate their manufacturing plants in low wage countries. In contrast, firms producing high trade-cost products (such as automobiles) tend to have multiple plants serving to segmented markets, even in the absence of wage differentials.

Industrial Networks between China and the Countries of the Asia-Pacific Region

This paper investigates the changes in the structures of industrial networks that have occurred in the Asia-Pacific region in line with the rapid growth of the Chinese economy. Analyses using international input-output tables revealed that during the 1990s, there was a significant increase in the dependence of Asian countries’ manufacturing industries, such as textiles and electronics, on China’s industries, though industries in Japan and the United States remain important as the main suppliers of industries in Asian countries.

Diversified boundaries of the firm

We analyze diversification of boundaries of local firms in developing countries under the economic globalization. The globalization has an aspect of homogenization of the world economy, but also has another aspect of diversification through international economic activities. Focusing on boundary-level of the firm, this article shows that the diversification from a comparison with boundaries of foreign firms in developed countries is brought by a disadvantage of technology deficit and a home advantage as local firms.

Toward an inclusive and a little bit ethical world trading system : listening to the voices of the people in LDCs

Many specialists in international trade have started saying that the era of a mega FTA is approaching. If the three poles of the global economy, namely East Asia, EU and the United States, form mega FTAs, most of the volume of global trade will be covered. That may be fine, but there will be many countries left out of the mega FTA, most of which will be the least developed countries (LDCs). Since the inception of the Doha Development Agenda (DDA) negotiations in 2001, the WTO and its member countries have tried to include LDCs in the world trading system through various means, including DFQF and AfT. Although these means have some positive impact on the economic development of LDCs, most of the LDCs will never feel comfortable with the current world trading system. To overcome the stalemate in the DDA and to create an inclusive world trading system, we need more commitment from both LDCs and non-LDCs. To surmount the prolonged stalemate in the DDA, we should understand how ordinary people in LDCs feel and think about the current world trading system. Those voices have seldom been listened to, even by the decision makers of their own countries. So as to understand the situation of the people in LDCs, IDE-JETRO carried out several research projects using macro, meso and micro approaches. For the micro level, we collected and analyzed statements from ordinary people concerning their opinions about the world trading system. The interviewees are ordinary people such as street vendors, farmers and factory workers. We asked about where they buy and sell daily necessities, their perception of imported goods, export promotion and free trade at large, etc. These ‘voices of the people’ surveys were conducted in Madagascar and Cambodia during 2013. Based on this research, and especially the findings from the ‘voices of the people’ surveys, we propose a ‘DDA-MDGs hybrid’ strategy to conclude DDA negotiations and develop a more inclusive and a little bit more ethical world trading system. Our proposal may be summarized in the following three points. (1) Aid for Trade (AfT) ver. 2 Currently AfT is mainly focused on coordinating several aid projects related to LDCs’ capacity building. However, this is inadequate; for the proposed ‘DDA-MDGs hybrid’, a super AfT is needed. The WTO, other development agencies and LDC governments will not only coordinate but also plan together aid projects for trade capacity building. AfT ver. 2 includes infrastructure projects either gran aid, ODA loans and private investment. This is in accordance with the post-MDGs argument which emphasizes the role of the private sector. (2) Ethical Attitude Reciprocity is a principle of multilateral agreement, and it has been a core promise since GATT. However, for designing an inclusive system, special and differential treatment (S&D) is still needed for disadvantaged members. To compromise full reciprocity and less than full reciprocity, an ethical attitude on the part of every member is needed in which every member refrains from insisting on the full rights and demands of its own country. As used herein, the term ‘ethical’ implies more consideration for LDCs, and it is almost identical to S&D but with a more positive attitude from developed countries (super S&D). (3) Collect Voices of the People In order to grasp the real situation of the people, the voices of the people on free trade will continue to be collected in other LDCs, and the findings and leanings will be fed back to the WTO negotiation space.

Shedding light on the shadow economy : a nighttime light approach

Measuring the shadow economy is inherently difficult, but critical for understanding economic development. Using census data on formal and informal sectors in Cambodia, we document that 96.6% of non-farm establishments do not formally register with the government, and their sales accounted for 76.6% of total sales in 2011. We estimate a relationship between nighttime light and sales across regions separately for formal and informal firms for 2011, and estimate their past sales from changes in nighttime light for 1993-2010. Both formal and informal firms increased their estimated sales, and the share of informal sales increased from 68.8% in 1993 to 76.6% in 2011, suggesting that the informal sector increased quantitatively in both absolute and relative terms throughout the economic development of the Cambodian economy.

The Feasibility of Cuban Market Economy: A Comparison with Vietnam

In spite of the difficulties incurred by its people, Cuba has maintained a centrally planned economy with single party system. On the contrary, Vietnam has introduced a market economy under communist rule, and succeeded in generally improving living standards. The factors that contributed to the introduction of Vietnamese-style reforms are (1) severe economic crisis, (2) demonstration effects from neighboring countries, (3) poor social policy, (4) initiatives by ex-conservative leader/s, and (5) weak state capacity. The conditions to sustain high economic growth are (1) social sectors familiar with capitalist economics, (2) abundant labor forces with relatively low labor cost, and (3) investment by exiles. This paper analyzes to what extent Cuba meets these conditions.

Cuba's social policy after the disintegration of the Soviet Union -- social development as legitimacy of regime and its economy effectiveness

Since the disintegration of the Soviet Union, Cuba has experienced a severe economic crisis, and the country's social policy has played an important role in showing the people a raison-d'etre for the revolution. This role has become even stronger in recent years, as internal and external actors demand political reforms and economic liberalization. This article first examines the Cuban government's use of social development to counter the demands for changes. It then looks at the extent that government social policy contributes economically to improving the Cuban living standard. The article demonstrates empirically how the leadership emphasizes their social accomplishments whenever demands for change come, and then shows that after the suspension of Soviet aid, Cuban social policy has been able to provide services mainly by relying on human capital and reducing quality materially because of the shortage of foreign reserves. This has limited the economic effectiveness of the services.

Democratization and Financial Reform in Taiwan: The Political Economy of Bad-Loan Creation

This study shows that many bad loans now burdening Taiwan's financial institutions are interrelated with the society's democratization which started in the late 1980s. Democratization made the local factions and business groups more independent from the Kuomintang government. They acquired more political influence than under the authoritarian regime. These changes induced them to manage their owned financial institutions more arbitrarily and to intervene more frequently in the state-affiliated financial institutions. Moreover they interfered in financial reform and compelled the government to allow many more new banks than it had originally planned. As a result the financial system became more competitive and the qualities of loans deteriorated. Some local factions and business groups exacerbated the situation by establishing banks in order to funnel funds to themselves, sometimes illegally. Thus many bad loans were created as the side effect of democratization.

Migration and Wellbeing at the Lower Echelons of the Economy: A Study of Delhi Slums

This paper based on a primary survey of households (2004-05) in the slum clusters of Delhi examines whether migrants are likely to experience upward mobility in their place of destination or alternatively, if they merely transfer their poverty from rural areas to large cities. First, a simple bifurcation of population in terms of poor and non-poor sub-groups is examined along with the incidence of poverty across different categories of occupations and non-workers. Then, an explanation of the variations in per capita expenditure across households is provided, and a binomial logit model (poor/non-poor) is developed identifying the variables which raise (or reduce) the probability of being non-poor (or poor). Next, an estimate of the wellbeing (deprivation) index is derived from factor analysis of a large number of variables including demographic and economic aspects of households. Empirical findings suggest that while duration of migration and the wellbeing index do not have a definite relationship, migrant households who have been in the city for a very long time have a higher wellbeing index on average than those who migrated in the last ten years. This tends to support the view that migrants do not merely transfer rural poverty to urban areas, and further that population mobility yields improvement in the living standard, if only in the very long term. Implementation of "employment-cum-shelter" support schemes in the urban areas may contribute to their wellbeing.

Transformation of the Rice Marketing System and Myanmar's Transition to a Market Economy

Creating a rice marketing system has been one of the central policy issues in Myanmar's move to a market economy since the end of the 1980s. Two liberalizations of rice marketing were implemented in 1987 and 2003. This paper examines the essential aspects of the liberalizations and the subsequent transformation of Myanmar's rice marketing sector. It attempts to bring into clearer focus the rationale of the government's rice marketing reforms which is to maintain a stable supply of rice at a low price to consumers. Under this rationale, however, the state rice marketing sector continued to lose efficiency while the private sector was allowed to develop on condition that it did not jeopardize the rationale of stable supply at low price. The paper concludes that the prospect for the future development of the private rice marketing sector is dim since a change in the rice market's rationale is unlikely. Private rice exporting is unlikely to be permitted, while the domestic market is approaching the saturation point. Thus, there is little momentum for the private rice sector to undertake any substantial expansion of investment.

Changes in the foreign trade structure of the Russian Far East under the process of transition toward a market economy

Under the process of transition toward a market economy, the economic connections of the Russian Far East (RFE) with external regions changed from a division of labor among the regions of the USSR (Russia) to an international division of labor. This happened due to factors including the liberalization of the trade system away from a state monopoly, the presence of rich natural resources and of developed industries related to these resources, the advantage of geographically proximity to Asia-Pacific countries, and the political and economic division of the once unified national economic space during the process of transition. The economic connections of RFE with external economies changed radically under the transition toward the market economy. First, the value of foreign trade increased dramatically and the importance of foreign trade for the RFE economy increased enormously. Second, however, different territories of RFE traveled along different trajectories, due to factors involving their industrial structure and geographical conditions. Third, in recent years connections with China, in the areas of both exports and imports, have grown. Fourth, the share within exports of "fuel, mineral resources and metal" increased radically from the end of the 1990s, and the share of "machine, facilities and transportation means" increased from 2002 year within imports. Under this situation, especially since 2002, there has been a major change in the structure of foreign trade.