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

354J David Richardson7. CONCRETE POLICY IMPLICATIONS: WIDER MANDATE,NEW ACTORSAmerican Trade Adjustment Assistance has already expanded its scale, as describedabove. There is an urgent need now to reshape it, and to expand its scopeand its constituency. In scope, traditional adjustment assistance needs to expandto cover ‘structural’ dislocation in addition to traditionally narrow trade-relatedversions of structural dislocation. 20 The distinction between structural and cyclicaldislocation is well-established in macro and labor economics, and could becodified into eligibility criteria that are at least as persuasive as in current TAAdecision-making. One nuance that might help to bind criteria for awarding workerssuch adjustment assistance is that their structural dislocation should be linkedto global integration (that is, integrated integration, in the parlance of this paper),thereby maintaining continuity with the historic TAA program (for example, outsourcing,even domestically, would be covered; natural catastrophes like floodsand fires would not). A structural expansion of scope would match the reality ofthe twenty-first century’s multiple integrated forms of integration. It would alsoshift structural adjustment assistance in a healthy no-fault direction from an ineffectiveand politically volatile blame-trade mindset.The detail of structural adjustment assistance—SAA, say—could build on TAAwith minor modifications. Rules for petitioning and training and reemploymentorientedincome support (including wage and benefits insurance) could be verysimilar to those currently used. Effective design would require serious—mandatedand funded—monitoring and evaluation of results and cost-effectiveness, includinglongitudinal surveys of program participants. Effective design would alsoabjure some suggested TAA reforms that have never yet formally been implemented,and industry certifications for example, in which SAA petitions from anentire sector or occupational group were accepted and processed. In the twentyfirstcentury world this would be wastefully ineffective. Within every sector andoccupation are high-performing workers and firms who need and deserve thechance to move up and expand at the expense of others; smart adjustment assistancetargets these others, not the universe, and helps them move toward thehigh-performance skills and practices of the successful micro-units.In constituency, traditional adjustment assistance needs to expand its constituency—stakeholders—toinclude natural and new American institutions.Among the natural constituents are labor unions and community colleges, bothof which are beginning to turn from their normal audiences toward benefits management,skills-upgrading, and job-search training. Among new constituentsshould be not-for-profit social service firms 21 and even for-profit businessesthemselves, because of the empirically proven value of on-the-job training com-20 This expansion of scope reflects a growing consensus in the research community. See Brainardet al. (2005); Mann (2006); Aldonis et al. (2007); Lawrence (2008); and Kletzer et al. (2007).21 In the late 1990s, Australia contracted out its job-matching and other services to its long-termunemployed. The so-called Job Network still exists and has been modeled by Oslington (2005), butproject evaluations and empirical assessments remain to be accomplished.