The impacts of trade policy reforms on the Sri Lankan economy

This dissertation presents an analysis of the impacts of trade policy reforms in Sri Lanka. A Computable General Equilibrium (CGE) model is constructed with detailed description of the domestic production structure and foreign trade. The model is then used to investigate the effects of trade policy reforms on resource allocation and welfare.^ Prior to 1977, Sri Lanka maintained stringent control over its imports through rigid quantitative restrictions. A new economic policy reform package was introduced in 1977, and it shifted Sri Lanka's development strategy toward an export oriented policy regime. The shift of policy focus from a restrictive trade regime toward a more open trade regime is expected to have a significant impact on the volume of external trade, domestic production structure, allocation of resources, and social welfare.^ Simulations are carried out to assess the effects of three major policy reforms: (1) a devaluation of the Sri Lanka rupee, (2) a partial or a complete elimination of export duties, and (3) a devaluation-cum-removal of export duties.^ Simulation results indicate that the macroeconomic impact of a devaluation-cum-removal of export duties can be substantial. They also suggest that the resource-pull effects of a devaluation and a devaluation-cum-export duty removal policy are significant. However, the model shows that a devaluation combined with an export duty reduction is likely to be a superior strategy. ^

Essays on the political economy of trade policy and economic *development

This dissertation studies the political economy of trade policy in a developing country, namely Turkey, under different economic and political regimes. The research analyzes the effects of these different regimes on the import structure, the trade policy and the industrialization process in Turkey and derives implications for aggregate welfare. ^ In the second chapter, the effects of trade liberalization policies on import demand are examined. Using disaggregated industry-level data, import demand elasticities for various sectors have been computed, analyzed under different economic regimes, and compared with those of developed countries. The results are statistically significant and reliable, and conform to the predictions of economic theory. Estimation of these elasticities is also a necessary ingredient for the third chapter of the dissertation. ^ The third chapter examines the predictions of the state-of-the-art “Protection For Sale” model of Grossman and Helpman (1994). Employing advanced econometric methods and a unique data set, strong support is found for the fundamental predictions of the model in the context of Turkey. Specifically, the government is found to attach a much higher weight to social welfare than to political contributions. This weight is higher under the democratic regime than under the dictatorship, a result potentially of interest to all researchers in the area of political economy. ^ The fourth chapter looks at the effects of industry concentration and import price shocks on protection, promotion and the choice of policy instruments in Turkey. In this context, it examines and finds support for the predictions of some well-known models in the literature. ^

The United States and the politics of trade: the banana war with Europe and the Caribbean

This thesis examines the involvement of the United States in the decade-long trade dispute before the World Trade Organization (WTO) over the European Union's preferential banana regime. Washington's justification for bringing this case to the WTO comes from Section 301 of the U.S. trade act, which allows for disputes to be undertaken if U.S. "interests" are violated; however, this is the first case ever undertaken by the United States that does not directly threaten any American banana industry, nor affect any American jobs. Why, then, would the United States involve itself in this European-Caribbean-Latin American dispute? It is the contention of this thesis that the United States thrust itself headlong into this debate for two reasons: domestically, the United States Trade Representative came under pressure, via the White House and Congress, from Chiquita CEO Carl Lindner, who in the past decade donated more than $7.1 million to American politicians to take the case to the WTO. Internationally, the United States used the case as an opportunity to assert its power over Europe, with the Eastern Caribbean islands being caught in the economic crossfire. According to existing literature, in undertaking this case, the United States did as any nation would: it operated within both domestic and international levels, satisfying at each level key interests, with the overall goal of maintaining the nation's best interests.

The men behind the market: Merchants, the Atlantic slave trade, and the shaping of South Carolina plantation society, 1700–1756

The purpose of this dissertation is to examine the role played by merchants in the shaping of South Carolina plantation society in its early stages of development. In 1700 South Carolina was on the fringes of the British Empire. By mid-century the colony had become an integral part of the British Atlantic system. This dissertation addresses merchants' activity in the shaping of plantation society through their involvement in the Atlantic slave trade. Records of the British and South Carolina governments, and petitions from merchants on both sides of the Atlantic have been extremely valuable in understanding the complex and rapidly changing political affiliations of merchants on both sides of the Atlantic. These sources are valuable to this study since they illustrate the merchants' strategy of utilizing government policies to acquire the absolute best terms of trade. Records such as wills and inventories yielded valuable information on merchants' economic portfolios and provided valuable insight into their personal lives. The data shows that the integration of Colonial South Carolina into the global economy can be attributed to its merchant class, who actively sought out business opportunities in the global economy while working within the framework of British mercantilism.

Structure of international cooperation in trade, investment and environment

This dissertation analyzes the obstacles against further cooperation in international economic relations. The first essay explains the gradual nature of trade liberalization. I show that existence of asymmetric information between governments provides a sufficient reason for gradualism to exist. Governments prefer starting small to reduce the cost of partner’s betrayal when there is sufficient degree of information asymmetry regarding the partner’s type. Learning about partner’s incentive structure enhances expectations, encouraging governments to increase their current level of cooperation. Specifically, the uninformed government’s subjective belief for the trading partner being good is improved as the partner acts cooperatively. This updated belief, in turn, lowers the subjective probability of future betrayal, enabling further progress in cooperation. The second essay analyzes the relationship between two countries facing two policy dilemmas in an environment with two way goods and capital flows. When issues are independent and countries are symmetric, signing separate agreements for tariffs (Free Trade Agreements-FTA) and for taxes (Tax Treaties-TT) provides the identical level of enforcement as signing a linked agreement. However, linkage can still improve the joint welfare by transferring the slack enforcement power in a case of asymmetric issues or countries. I report non-results in two cases where the policy issues are interconnected due to technological spillover effect of FDI. Moreover, I show that linking the agreements actually reduces enforcement when agreements are linked under a limited punishment rule and policy variables are strategic substitutes. The third essay investigates the welfare/enforcement consequences of linking trade and environmental agreements. In the standard literature, linking the agreements generate non-trivial results only when there is structural relation between the issues. I focus on institutional design of the linkage and show that even if environmental aspects of international trade are negligible linking the agreements might still have some interesting welfare implications under current GATT Rules. Specifically, when traded goods are substitutes in consumption, linking the environmental agreement with trade agreement under the Withdrawal of Equivalent Concession Rule (Article XXVIII) will reduce the enforcement. However, enforcement in environmental issue increases when the same rule is implemented in the absence of linkage.

Determinants of resource development strategies in nonprofit organizations: An analysis of children, youth and family services

This study is an exploratory analysis of an operational measure for resource development strategies, and an exploratory analysis of internal organizational contingencies influencing choices of these strategies in charitable nonprofit organizations. The study provides conceptual guidance for advancing understanding about resource development in the nonprofit sector. The statistical findings are, however, inconclusive without further rigorous examination. A three category typology based on organization technology is initially presented to define the strategies. Three dimensions of internal organizational contingencies explored represent organization identity, professional staff, and boards of directors. Based on relevant literature and key informant interviews, an original survey was administered by mail to a national sample of nonprofit organizations. The survey collected data on indicators of the proposed strategy types and selected contingencies. Factor analysis extracted two of the initial categories in the typology. The Building Resource Development Infrastructure Strategy encompasses information technology, personnel, legal structures, and policies facilitating fund development. The Building Resource Development Infrastructure Strategy encompasses the mission, service niche, and type of service delivery forming the basis for seeking financial support. Linear regressions with each strategy type as the dependent variable identified distinct and common contingencies which may partly explain choices of strategies. Discriminant analysis suggests the potential predictive accuracy of the contingencies. Follow-up case studies with survey respondents provide additional criteria for operationalizing future measures of resource development strategies, and support and expand the analysis on contingencies. The typology offers a beginning framework for defining alternative approaches to resource development, and for exploring organization capacity specific to each approach. Contingencies that may be integral components of organization capacity are funding, leadership frame, background and experience, staff and volunteer effort, board member support, and relationships in the external environment. Based on these findings, management questions are offered for nonprofit organization stakeholders to consider in planning for resource development. Lessons learned in designing and conducting this study are also provided to enhance future related research. ^

An evaluation of exchange rate policy and economic adjustment in Nicaragua, 1993--1995

Since the late 1970's, but particularly since the mid-1980s, the economy of Nicaragua has had persistent and large macroeconomic imbalances, while GDP per-capita has declined to 1950s' levels. By the second half of the 1990s, huge fiscal deficits and a reduction of foreign financing resulted in record hyperinflation. The Sandinista government's (1979–1990) harsh stabilization program in 1988–89 had only modest and short-lived success. It was doomed by their inability to lower the public sector deficit due to the war, plus diminishing financial support from abroad. Hyperinflation stopped only after their 1990 electoral defeat ended the war and massive aid began to flow in. Five years later, macroeconomic stability is still very fragile. A sluggish recovery of export agriculture plus import liberalization, have impeded a reduction of huge trade and current account deficits. Facing the prospects of diminished aid flows, the government's strategy has hinged on the achievement of a real devaluation through a crawling-peg adjustment of the nominal rate. However, at the end of 1995 the situation of the external accounts was still critical, and the modest progress achieved was attributable to cyclical terms-of-trade improvement and changes in the political outlook of agricultural producers. Using a Computable General Equilibrium Model and a Social Accounting Matrix constructed for this dissertation, the importance of structural rigidities in production and demand in explaining such outcome is shown. It is shown that under the plausible structural assumptions incorporated in the model, the role of devaluation in the adjustment process is restricted by structural rigidities. Moreover, contrary to the premise of the orthodox economic thinking behind the economic program, it is the contractionary effect of devaluation more than its expenditure-switching effects that provide the basis for is use in solving the external sector's problems. A fixed nominal exchange rate is found to lead to adverse results. The broader conclusion that emerges from the study is that a new social compact and a rapid increase in infrastructure spending plus fiscal support for the traditional agro-export activities is at the center of a successful adjustment towards external viability in Nicaragua. ^

Non -traded goods, product differentiation and integration of factor markets

This research sought to determine the implications of a non-traded differentiated commodity produced with increasing returns to scale, for the welfare of countries that allowed free international migration. We developed two- and three-country Ricardian models in which labor was the only factor of production. The countries traded freely in homogeneous goods produced with constant returns to scale. Each also had a non-traded differentiated good sector where production took place using increasing returns to scale technology. Then we allowed for free international migration between two of the countries and observed what happened to welfare in both countries as indicated by their per capita utilities in the new equilibrium relative to their pre-migration utilities. ^ Preferences of consumers were represented by a two-tier utility function [Dixit and Stiglitz 1977]. As migration took place it impacted utility in two ways. The expanding country enjoyed the positive effect of increased product diversity in the non-traded good sector. However, it also suffered adverse terms-of-trade as its production cost declined. The converse was true for the contracting country. To determine the net impact on welfare we derived indirect per capita utility functions of the countries algebraically and graphically. Then we juxtaposed the graphs of the utility functions to obtain possible general equilibria. These we used to observe the welfare outcomes. ^ We found that the most likely outcomes were either that both countries gained, or one country lost while the other gained. We were, however, able to generate cases where both countries lost as a result of allowing free inter-country migration. This was most likely to happen when the shares of income spent on each country's export good differed significantly. In the three country world when we allowed two of the countries to engage in preferential trading arrangements while imposing a prohibitive tariff on imports from the third country welfare of the partner countries declined. When inter-union migration was permitted welfare declined even further. This we showed was due to the presence of the non-traded good sector. ^

Building Global Labor Solidarity Today: Learning from the KMU of the Philippines

New labor movements are currently emerging across the Global South. This is happening in countries as disparate as China, Egypt, and Iran. New developments are taking place within labor movements in places such as Colombia, Indonesia, Iraq, Mexico, Pakistan and Venezuela. Activists and leaders in these labor movements are seeking information from workers and unions around the world. However, many labor activists today know little or nothing about the last period of intense efforts to build international labor solidarity, the years 1978-2007. One of the key labor movements of this period, and which continues today, is the KMU Labor Center of the Philippines. It is this author’s contention that there is a lot unknown about the KMU that would help advance global labor solidarity today. This paper focuses specifically on the KMU’s development, and shares five things that have emerged from this author’s study of the KMU: a new type of trade unionism, new union organizations, an emphasis on rank and file education, building relations with sectoral organizations, and the need to build international labor solidarity.

Can Compensation Committees Effectively Mitigate the CEO Horizon Problem? The Role of Co-opted Directors

Extant research finds inconclusive evidence about the CEO horizon problem. One possibility is that compensation committees design CEO compensation in a way that discourages retiring CEOs from opportunistic earnings management and R&D reduction. However, compensation committees dominated by co-opted directors may not be as effective as those with fewer co-opted directors in mitigating the CEO horizon problem, because directors co-opted by the CEO tend to bias their decisions in favor of the CEO. I find that compensation committees dominated by co-opted directors are associated with higher CEO compensation packages. I document R&D reduction and accruals management in firms with retiring CEOs and compensation committees dominated by co-opted directors, and find that R&D reduction and income-increasing accruals are less discouraged by compensation committees dominated by co-opted directors when deciding CEO compensation. I also examine the effect of boards of directors and compensation committee characteristics on CEO compensation and on mitigating the CEO horizon problem. I find that CEO compensation positively associates with CEO power, director independence, and the percentage of busy directors, and negatively associates with board of directors and committee size and director ownership. Moreover, I find that retiring CEOs are more likely to reduce R&D expenditures when CEOs have more power, and director tenure is longer; retiring CEOs in firms with large boards of directors and compensation committees are less likely to manage accruals.

What Does Board Capital Really Bring to the Table? Exploring the Effect of Directors’ Human and Social Capital on Effective Governance During International Expansion

What constitutes effective corporate governance? Which director characteristics render boards effective at positively influencing firm-level performance outcomes? This dissertation examines these questions by taking a multilevel, multidisciplinary approach to corporate governance. I explore the individual-, team-, and firm- level factors that enable directors to serve effectively as strategic resources during international expansion. I argue that directors’ international experience improves their ability to serve as effective strategic consultants and resource providers to firms during the complex internationalization process. However, unlike prior research, which tends to assume that directors with the potential to provide important resources uniformly do so, I acknowledge contextual factors (i.e. board cohesiveness, strategic relevance of directors’ experience) that affect their propensity to actually influence outcomes. I explore these issues in three essays: one review essay and two empirical essays. In the first empirical essay, I integrate resource dependence theory with insights from social-psychological research to explore the influence of board capital on firms’ cross-border M&A performance. Using a sample of cross-border M&As completed by S&P 500 firms from 2004-2009, I find evidence that directors’ depth of international experience is associated with superior pre-deal outcomes. This suggests that boards’ deep, market-specific knowledge is valuable during the target selection phase. I further find that directors’ breadth of international experience is associated with superior post-deal performance, suggesting that these directors’ global mindset helps firms in the post-M&A integration phase. I also find that these relationships are positively moderated by board cohesiveness, measured by boards’ internal social ties. In the second empirical essay, I explore the boundary conditions of international board capital by examining how the characteristics of firms’ internationalization strategy moderate the relationship between board capital and firm performance. Using a panel of 377 S&P 500 firms observed from 2004-2011, I find that boards’ depth of international experience and social capital are more important during early stages of internationalization, when firms tend to lack market knowledge and legitimacy in the host markets. On the other hand, I find that breadth of international experience has a stronger relationship with performance when firms’ have higher scope of internationalization, when information-processing demands are higher.