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. ^

Pivot or periphery? Xinjiang's regional development and Chinese-Central Asian relations at the century's end

Xinjiang, once described by Owen Lattimore as the "pivot of Asia", has played a strategically important role in China's national defense and security. Historically linked on the famous Silk Road with Central Asia, Xinjiang was crucial to East-West economic and cultural exchanges. During the period of Russian/Soviet expansion into Central Asia and Sino-Soviet rivalry, China's need for Xinjiang's defense and territorial integrity became paramount, and consequently Xinjiang's economy was relegated to the periphery.^ The demise of the Soviet Union--which resulted in the independence of five Central Asian states--and China's reform suggest dramatic new possibilities for Xinjiang's regional development as well as interregional cooperation. As China has begun to shift regional emphasis to the interior, Xinjiang's economic development will be accelerated. With the growth of Sino/Xinjiang-Central Asian relations, Xinjiang's importance will not only be borne out in terms of defense and security, but more significantly in terms of trade and economics. At the century's end and the beginning of the 21st century, Xinjiang will likely move away from the periphery and play an increasingly pivotal role in the economy. ^

Trade, justice, and the politics of difference: Small developing states in the World Trade Organization

The purpose of this research project was to investigate two distinct types of research questions – one theoretical, the other empirical: (1) What would justice mean in the context of the international trade regime? (2.Using the small developing states of the Commonwealth Caribbean as a case study, what do Commonwealth Caribbean trade negotiators mean when they appeal to justice? Regarding the first question, Iris Young's framework which focuses on the achievement of social justice in a domestic context by acknowledging social differences such as those based on race and gender, was adopted and its relevance argued in the international context of interstate trade negotiation so as to validate the notion of (size, location, and governance capacity) difference in this latter context. The point of departure is that while states are typically treated as equals in international law – as are individuals in liberal political theory – there are significant differences between states which warrant different treatment in the international arena. The study found that this re-formulation of justice which takes account of such differences between states, allows for more adequate policy responses than those offered by the presumption of equal treatment. Regarding the second question, this theoretical perspective was used to analyze the understandings of justice from which Commonwealth Caribbean trade negotiators proceed. Interpretive and ethnographic methods, including participant observation, interviews, field notes, and textual analysis, were employed to analyze their understandings of justice. The study found that these negotiators perceive such justice as being justice to difference because of the distinct characteristics of small developing states which combine to constrain their participation in the international trading system; based on this perception, they seek rules and outcomes in the multilateral trade regime which are sensitive to such different characteristics; and while these issues were examined in a specific region, its findings are relevant for other regions consisting of small developing states, such as those in the ACP group.

Why and how multinational corporations influence the trade negotiation process in Latin America

This thesis examines two research questions: (1) Why do Multinational Enterprises (MNEs) try to influence trade negotiations in the Latin American context? and (2) How do MNEs influence the trade negotiation process in Latin America? The results show that the MNE's main reasons for participation are: (1) to gain market access and, specifically, to reduce tariff and non-tariff barriers; (2) to create a beneficial regulatory environment for the MNE; and (3) to set the rules of the game by influencing the business environment in which its industry or its specific company is required to operate. The main approaches reported by the interviewees as to how MNEs participate are: (1) the MNE directly lobbies domestic government officials, principally the United States Trade Representative office; (2) a business, trade or industry association lobbies domestic government officials on the MNE's behalf; and (3) the MNE lobbies Congress.

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.

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 World Trade Organization, competition policy, and developing countries: A cross -country examination of domestic policy actions

This dissertation addresses the following research question: in a particular policy area, why do countries that display unanimity in their international policy behavior diverge from each other in their domestic policy actions? I address this question in the context of the divergent domestic competition policy actions undertaken by developing countries during the period 1996-2007, after these countries had quite conspicuously displayed near-unanimity in opposing this policy measure at the World Trade Organization (WTO). This divergence is puzzling because (a) it does not align with their near-unanimous behavior at the WTO over competition policy and (b) it is at variance with the objectives of their international opposition to this policy at the WTO. Using an interdisciplinary approach, this dissertation examines the factors responsible for this divergence in the domestic competition policy actions of developing countries. ^ The theoretical structure employed in this study is the classic second-image-reversed framework in international relations theory that focuses on the domestic developments in various countries following an international development. Methodologically, I employ both quantitative and qualitative methods of analysis to ascertain the nature of the relationship between the dependent variable and the eight explanatory variables that were identified from existing literature. The data on some of the key variables used in this dissertation was uniquely created over a multi-year period through extensive online research and represents the most comprehensive and updated dataset currently available. ^ The quantitative results obtained from logistic regression using data on 131 countries point toward the significant role played by international organizations in engineering change in this policy area in developing countries. The qualitative analysis consisting of three country case studies illuminate the channels of influence of the explanatory variables and highlight the role of domestic-level factors in these three carefully selected countries. After integrating the findings from the quantitative and qualitative analyses, I conclude that a mix of international- and domestic-level variables explains the divergence in domestic competition policy actions among developing countries. My findings also confirm the argument of the second-image-reversed framework that, given an international development or situation, the policy choices that states make can differ from each other and are mediated by domestic-level factors. ^

The Japanese History Textbook Controversy Amid Post-War Sino-Japanese Relations

The relations between China and Japan are strained and continue to foster negative emotions partly because of China’s grievances about Japan’s actions during World War II and the allegedly false historiographical accounts found in Japanese history textbooks. This study will utilize historical analysis of the events leading up to the Nanjing Massacre in December of 1937, examine the Japanese Ministry of Education’s (MEXT) critical and contentious role in the selection of textbooks, used for primary and secondary schools, and will also juxtapose the controversial 2001 Atarashii rekishi kyōkasho with current Japanese history textbooks. The study will also include a syntactical analysis of key terms through my own original translations of multiple Japanese history textbooks, which are currently used in the Japanese school curriculum, to reveal that the textbook publishers, MEXT, and regulation councils are involved in adjusting the content causing the information to reveal various degrees of whitewashing.