Peacebuilding in East Timor

This essay analyses some of the political, economic and social challenges of East Timer's transition to independence. It scrutinizes the ethical dimensions of building peace in a territory devastated by the combined effect of Indonesia's colonial occupation and the violent militia attacks of September 1999. The most difficult task ahead does not lie in the physical rebuilding of the territory-gargantuan as it may be-but in the more intricate and long-term rehabilitation of a traumatized society. The latter involves competing Timorese factions as well as a range of international actors, including the United Nations Transitional Authority, foreign governments, business institutions and various multilateral and bilateral donors. each having their own organizational leitmotifs and policy priorities. If not managed carefully, the reconstruction process could further exacerbate existing societal tensions and complicate the starch for peace and reconciliation. The essay identifies a number of crucial components necessary to counter such risks, including the need to promote popular participation in the rebuilding process. Without the legitimacy created by strong community involvement and grassroots participation in decision making, the task of national reconstruction may well become overwhelmed by conflict.

Australia, the United States and a 'China growing strong': managing conflict avoidance

How to deal with a rising China constitutes one of the most seminal challenges facing the ANZUS alliance since its inception a half a century ago. Australia must reconcile its geography and economic interests in Asia with its post-war strategic and historic cultural orientation towards the United States. It must succeed in this policy task without alienating either Beijing or Washington in the process. The extent to which this is achieved will shape Australia's national security posture for decades to come. Three specific components of the 'Sino-American-Australian' triangle are assessed here: the future of Taiwan, the American development of a National Missile Defence (NMD), and the interplay between Sino-American power balancing and multilateral security politics. The policy stakes for Australia and for the continued viability of ANZUS are high in all three policy areas as a new US Administration takes office in early 2001. The article concludes that Australia's best interest is served by applying deliberate modes of decisionmaking in its own relations with both China and the US and by facilitating consistent and systematic dialogue and consultations with both of those great powers on key strategic issues.

State Banks and Economic Development in China

State-owned banks remain dominant in China's financial sector despite over two decades of gradual financial liberalization. Their performance is typically evaluated using commercial banking criteria. The standard view is that because state banks have experienced declining profitability and capital adequacy, they have been a drain on past economic development and endanger future growth prospects. However, we argue that state banks have strong development bank characteristics and hence warrant different performance criteria. The analysis in this paper suggests that while thier commercial performance may have been poor, the overall impact of state banks on China's economic development appears to have been both positive and sustainable. Copyright © 2001 John Wiley & Sons, Ltd.

Knowledge and markets

An economy is a coordinated system of distributed knowledge. Economic evolution occurs as knowledge grows and the structure of the system changes. This paper is about the role of markets in this process. Traditionally, the theory of markets has not been a central feature of evolutionary economics. This seems to be due to the orthodox view of markets as information-processing mechanisms for finding equilibria. But in economic evolution markets are actually knowledge-structuring mechanisms. What then is the relation between knowledge, information, markets and mechanisms? I argue that an evolutionary theory of markets, in the manner of Loasby (1999), requires a clear formulation of these relations. I suggest that a conception of knowledge and markets in terms of a graphical theory of complex systems furnishes precisely this.

Estimating economic relationships subject to firm- and time-varying equality and inequality constraints

Applied econometricians often fail to impose economic regularity constraints in the exact form economic theory prescribes. We show how the Singular Value Decomposition (SVD) Theorem and Markov Chain Monte Carlo (MCMC) methods can be used to rigorously impose time- and firm-varying equality and inequality constraints. To illustrate the technique we estimate a system of translog input demand functions subject to all the constraints implied by economic theory, including observation-varying symmetry and concavity constraints. Results are presented in the form of characteristics of the estimated posterior distributions of functions of the parameters. Copyright (C) 2001 John Wiley Sons, Ltd.