Trade Adjustment Costs in Developing Countries: - World Bank ...

More documents

Recommendations

Info

Taking Advantage of Trade: The role of distortions 313difficulty is both via the obvious direct effect of limited port facilities whichcreates long delays in ships berthing as well as corruption or inefficient laborpractices, or more subtly via holdup problems. It is clear that farmers indeveloping countries are unlikely to get rich growing staples like wheat or rice.Rather, the money seems to be in making high value specialty products like freshflowers or exotic fruit for which the developed world is willing to pay what seemslike a fortune to the poor.So why does this not happen? One might argue that the reason is that thefarmers have no idea that this demand is out there and need to engage indiscovery. But this can be, at best, the smaller part of the story. Even if the farmersknew what to make, they would probably not make it. Why? All the productsmentioned above are perishable. This makes sellers open to the classic holdupproblem. Once the flowers are ready, or the fruit is ripe, the farmer cannotconsume it himself. Nor can he credibly hold on to it if the buyer tries to takeadvantage of its perishability to offer a low price ex post. This makes the farmerwary of getting into this business ex ante. After all, if the price of wheat is low,he can store it and eat it. At least he will not starve. But this is not the case if heis growing flowers. The situation would would be made worse by bad roads thatlimited the number of buyers coming to the village leading to markets that arevery thin. This will clearly exacerbate the holdup problem as it will be harder fora farmer to find an alternative buyer if he is held up by his original one.Why not contract on the price of the product ex ante? This will do little toalleviate the holdup problem if the courts are overloaded or corrupt so that it ishard to sue for breach of contract. In this manner, poor judicial systems andcorruption also make this holdup problem worse. As a way around such problems,innovative contracts arise. For example, in India, it used to be the norm thatmangoes were sold to the buyer after they were ripe. This left farmers open toholdup as discussed above. In recent times, a new contractual form has sprungup where farmers rent out the mango trees to the buyer once the flowers haveformed and a reliable estimate of yield is possible. The renter then takes care ofthe tree and all else for the season with full rights to the fruit. As the farmer getsthe payment up front, there is no holdup problem on his side which makes himwilling to make the long-term investments in trees needed to increase production.There may be inefficiencies here as the farmer may be better placed to monitorand protect the trees, but at least it helps solve the holdup problem.All of the above suggests that a broad interpretation of the theory of thesecond best calls for government to look actively for ways to deal with suchissues. Whether these ways involve creating cooperatives that offer fair pricesand distribution networks for perishable products, or building roads to distantplaces, or investing in port facilities and removing onerous regulations,removing these impediments is vital to accessing world markets and reaping thegains from globalization.Kala Krishna is Liberal Arts Research Professor in the Department of Economicsat The Pennsylvania State University.
314Kala KrishnaBIBLIOGRAPHYBanerjee, Abhijit and Andrew Newman (1993). Occupational Choice and the Process ofDevelopment. Journal of Political Economy, 101: 274–97Brecher, Richard (1974a). Optimal Commercial Policy for a Minimum Wage Economy.Journal of International Economics, 42: 139–49Brecher, Richard (1974b). Minimum Wage Rates and the Pure Theory of InternationalTrade. Quarterly Journal of Economics, 88(1): 98–116Brecher, Richard (1992). An Efficiency-Wage Model with Explicit Monitoring:Unemployment and Welfare in an Open Economy. Journal of International Economics,32(1): 179–91Chesnokova, Tatyana and Kala Krishna (2009). Skill Acquisition, Credit Constraints, andTrade, International Review of Economics & Finance special issue on Research in trade:Where do we go from here? 18(2): 2009Chesnokova, Tatyana (2007). Immiserizing Deindustrialization: A Dynamic Trade Modelwith Credit Constraint. Journal of International Economics, 73: 407-420Demidova, Svetlana (2008). Productivity Improvements and Falling Trade Costs: Boon orBane?, International Economic Review. November 2008, 49(4): 1437–1462Davis, Donald (1998). Does European Unemployment Prop Up American Wages?: NationalLabor Markets and Global Trade. American Economic Review, 88(3): 478–94Dixit, Avinash and Victor Norman (1980). Theory of International Trade: A Dual, GeneralEquilibrium Approach. Cambridge University PressDixit, Avinash (1988). Optimal trade and industrial policies for the US automobile industry,in Empirical Methods in International Trade (Ed.) Robert Feenstra, Cambridge, MA: MITPress, 141–65Ethier, Wilfred (1982). Decreasing Costs in International Trade and Frank Graham’sArgument for Protection. Econometrica, 50(5): 1243–68Jefferson, G, (1999). Missing market in labor quality: The role of quality markets intransition,.William Davidson Institute Working Paper No. 260, University of MichiganKrishna, Kala (1990). Trade Policy with Imperfect Competition: A Selective Survey, withM. Thursby in New Developments in Trade Theory: Implications for AgriculturalResearch, Colin Carter et al. (eds.), Oxford: Westview Press, 1990: 9–35Krishna, Kala, Abhiroop Mukhopadhyay and Cemile Yavas 2005.Trade with Labor MarketDistortions and Heterogeneous Labor: Why Trade Can Hurt? in G S Heiduk and K-YWong (Eds.), WTO and World Trade: Challenges in a New Era, Heidelberg, Germany:Physica-Verlag, 2005Krishna, Kala (2007). Review of Dilip Mookherjee, The Crisis in GovernmentAccountability: Essays on Governance Reform and India’s Economic Performance.Journal of Economic Literature, 45: 211-214Krishna, Kala and Cemile Yavas (2005). When Trade Hurts: Consumption, Indivisibilitiesand Labor Market Distortions, with C Yavas. Journal of International Economics, 67(2):413–27Lipsey, R G and K Lancaster (1956). The General Theory of Second Best. Review ofEconomic Studies, 24: 11–32Melitz, Marc J (2003). The Impact of Trade on Intra-industry Reallocations and AggregateIndustry Productivity,. Econometrica 71(6): 1695-1725Sen, A, (1960). Choice of Technique. Oxford: Blackwell
Page 1 and 2:
THE WORLD BANKTrade Adjustment Cost
Page 3 and 4:
Trade Adjustment Costs in Developin
Page 6:
Trade Adjustment Costsin Developing
Page 9 and 10:
viiiContents10. Trade Adjustment an
Page 11 and 12:
List of Tables2.1 Simulated Adjustm
Page 13 and 14:
List of Figures2.1 Worker Flows 262
Page 16:
PrefaceThe process of globalization
Page 19 and 20:
2Bernard Hoekman and Guido Portopri
Page 21 and 22:
4Bernard Hoekman and Guido Portoequ
Page 23 and 24:
6Bernard Hoekman and Guido Portowou
Page 25 and 26:
8Bernard Hoekman and Guido Portoass
Page 27 and 28:
10Bernard Hoekman and Guido Portoco
Page 29 and 30:
12Bernard Hoekman and Guido PortoJa
Page 31 and 32:
14Bernard Hoekman and Guido Portoma
Page 33 and 34:
16Bernard Hoekman and Guido Portoju
Page 35 and 36:
18Bernard Hoekman and Guido Portoat
Page 37 and 38:
20Bernard Hoekman and Guido PortoRE
Page 40:
PART AADJUSTMENT COSTS
Page 43 and 44:
26Carl Davidson and Steven Matusz2.
Page 45 and 46:
28Carl Davidson and Steven Matuszne
Page 47 and 48:
30Carl Davidson and Steven Matuszwh
Page 49 and 50:
32Carl Davidson and Steven MatuszTa
Page 51 and 52:
34Carl Davidson and Steven MatuszSo
Page 53 and 54:
36Carl Davidson and Steven MatuszHi
Page 55 and 56:
38Erhan Artuç and John McLarenof i
Page 57 and 58:
40Erhan Artuç and John McLarenshoc
Page 59 and 60:
42Erhan Artuç and John McLaren1.3
Page 61 and 62:
44Erhan Artuç and John McLarenassu
Page 63 and 64:
46Erhan Artuç and John McLarenin A
Page 65 and 66:
48Erhan Artuç and John McLarenavai
Page 67 and 68:
50Erhan Artuç and John McLarencomp
Page 69 and 70:
52Erhan Artuç and John McLarenFigu
Page 71 and 72:
Page 73 and 74:
Page 76 and 77:
4Reallocation and Adjustment in the
Page 78 and 79:
Reallocation and Adjustment in the
Page 80 and 81:
Page 82 and 83:
Page 84 and 85:
Page 86 and 87:
Page 88 and 89:
5Trade Reforms in Natural-Resource-
Page 90 and 91:
Trade Reforms in Natural-Resource-A
Page 92 and 93:
Page 94 and 95:
Page 96 and 97:
Page 98 and 99:
Page 100 and 101:
Page 102 and 103:
Page 104:
Page 107 and 108:
90Olivier Cadot, Laure Dutoit and M
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
100Olivier Cadot, Laure Dutoit and
Page 120 and 121:
7Trade Reform, Employment Allocatio
Page 122 and 123:
Trade Reform, Employment Allocation
Page 124 and 125:
Page 126 and 127:
Page 128 and 129:
Page 130 and 131:
Page 132 and 133:
Page 134 and 135:
Page 136 and 137:
Page 138 and 139:
Page 140 and 141:
Page 142 and 143:
Page 144 and 145:
Page 146 and 147:
Page 148 and 149:
Page 150 and 151:
Page 152 and 153:
Page 154 and 155:
Page 156 and 157:
Page 158:
Page 161 and 162:
144Gordon H HansonOn the theory sid
Page 163 and 164:
146Gordon H Hansonberg et al. (2008
Page 165 and 166:
148Gordon H HansonThe expansion of
Page 167 and 168:
150Gordon H Hansonshares and factor
Page 169 and 170:
152Gordon H HansonGoldberg, Pinelop
Page 172 and 173:
9Production Offshoring andLabor Mar
Page 174 and 175:
Production Offshoring and Labor Mar
Page 176 and 177:
Page 178 and 179:
Page 180 and 181:
Page 182 and 183:
Page 184 and 185:
Page 186:
Page 189 and 190:
172Pravin Krishna and Mine Zeynep S
Page 191 and 192:
Page 193 and 194:
Page 196 and 197:
11Trade, Child Labor, and Schooling
Page 198 and 199:
Trade, Child Labor, and Schooling i
Page 200 and 201:
Page 202 and 203:
Page 204 and 205:
Page 206 and 207:
Page 208 and 209:
Page 210 and 211:
Page 212:
Page 215 and 216:
198Gordon H Hanson3.0%2.8%2.6%2.4%2
Page 217 and 218:
200Gordon H HansonTable 12.2: Share
Page 219 and 220:
202Gordon H HansonWho benefits from
Page 221 and 222:
204Gordon H HansonAn older and larg
Page 223 and 224:
206Gordon H HansonTo date, the lite
Page 225 and 226:
208Gordon H Hansontion surplus was
Page 227 and 228:
210Gordon H HansonSome evidence sug
Page 229 and 230:
212Gordon H HansonBIBLIOGRAPHYAcost
Page 231 and 232:
214Gordon H HansonMishra, Prachi 20
Page 233 and 234:
216James Harrigan• China had been
Page 235 and 236:
218James Harrigan2.2 Price and quan
Page 237 and 238:
220James HarriganFigure 13.1a: Pric
Page 239 and 240:
222James Harrigan4. CONCLUSIONThe e
Page 241 and 242:
224Beata S Javorcikices, thus benef
Page 243 and 244:
226Beata S Javorcikfor plants which
Page 245 and 246:
228Beata S JavorcikAs the majority
Page 247 and 248:
230Beata S Javorcik5. DOES FDI LEAD
Page 249 and 250:
232Beata S Javorcikthough they do n
Page 251 and 252:
234Beata S Javorcik7. FUTURE RESEAR
Page 253 and 254:
236Beata S JavorcikMarkusen, James
Page 255 and 256:
238Chad P Bownthese theories has on
Page 257 and 258:
240Chad P Bownicy changes affect th
Page 259 and 260:
242Chad P Bownis, the policy-imposi
Page 261 and 262:
244Chad P Bownsignificant distortio
Page 263 and 264:
246Chad P Bownaccession period led
Page 265 and 266:
248Chad P Bown2002-03. 16 However,
Page 267 and 268:
250Chad P Bowntive adjustment impac
Page 270:
PART CFACTORS THATAFFECT TRADE
Page 273 and 274:
256David Hummelsative advantage for
Page 275 and 276:
258David Hummelsprices shift demand
Page 277 and 278:
260David HummelsThe second form of
Page 279 and 280: 262David Hummelsdogenous to how pro
Page 282 and 283: 17The Duration of Trade Relationshi
Page 284 and 285: The Duration of Trade Relationships
Page 300 and 301: 18Openness and Export Dynamics:New
Page 302 and 303: Openness and Export Dynamics: New r
Page 310 and 311: 19Market Penetration Costs andInter
Page 312 and 313: Market Penetration Cost and Interna
Page 320 and 321: 20Taking Advantage of Trade:The rol
Page 322 and 323: Taking Advantage of Trade: The role
Page 332 and 333: 21Credit Constraints and the Adjust
Page 334 and 335: Credit Constraints and the Adjustme
Page 346: Credit Constraints and the Adjustme
Page 349 and 350: 332Miet Maertens and Jo Swinnenmeas
Page 351 and 352: 334Miet Maertens and Jo Swinnenverg
Page 353 and 354: 336Miet Maertens and Jo Swinnenacti
Page 355 and 356: 338Miet Maertens and Jo Swinnenfirm
Page 357 and 358: 340Miet Maertens and Jo SwinnenBIBL
Page 359 and 360: 342Miet Maertens and Jo SwinnenRear
Page 362 and 363: 23Notes on American Adjustment Poli
Page 364 and 365: Notes on American Adjustment Polici
Page 376: Notes on American Adjustment Polici
Page 379 and 380: 362Johan F M Swinnen and Kristine V
Page 381 and 382:
364Johan F M Swinnen and Kristine V
Page 383 and 384:
Page 385 and 386:
Page 387 and 388:
Page 389 and 390:
Page 391 and 392:
Page 393 and 394:
Page 395 and 396:
Page 397 and 398:
Page 399:
This book summarizes the state of k
show all

Trade Adjustment Costs in Developing Countries: - World Bank ...

Create successful ePaper yourself

Delete template?

Save as template?