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Mr. Harm Zebregs
The share of emerging Asia in world trade has increased sharply over the past 25 years. A large part of this increase is the result of booming intraregional trade. This paper investigates the key factors behind the rapid increase in intraregional trade among economies in emerging Asia and its implications for the dependency of economies in the region on the business cycles in the EU, Japan, and the United States. The rise in intraregional trade is largely driven by rapidly growing intra-industry trade, which is a reflection of greater vertical specialization and the dispersion of production processes across borders. This has led to a sharp rise in trade in intermediate goods among economies in emerging Asia, but the EU, Japan, and the United States remain the main export markets for final goods.
Yongzheng Yang
Improving market access in industrial countries and retaining preferences have been Africa's two key objectives in the Doha Round trade negotiations. This paper argues that African negotiators may have overlooked the potential market access gains in developing countries, where trade barriers remain relatively high and demand for African imports has expanded substantially over the past decades. As reductions in most-favored-nation tariffs in industrial countries will inevitably lead to preference erosion, African countries need to ensure that the Doha Round leads to liberalization in all sectors by all World Trade Organization (WTO) members, so that the resulting gains will offset any losses. Such an outcome is more likely if African countries also offer to liberalize their own trade regimes and focus on reciprocal liberalization as a negotiation strategy rather on preferential and differential treatment.
Mr. Esteban Jadresic
This paper assesses the eventual replacement of the currencies of the GCC countries with a common currency. It concludes that a properly implemented currency union may contribute to enhance economic efficiency in the region, deepen regional integration, and develop its non-oil economy. However, it cautions that a currency union should be seen as only one component of a much broader integration effort. This should include the removal of the distortions that inhibit intraregional trade and investment, agreements on policy frameworks to ensure macroeconomic stability, and further political integration. The paper also addresses the choice of exchange rate arrangement for the unified currency.
Mr. Jorge I Canales Kriljenko, Padamja Khandelwal, and Mr. Alexander Lehmann
We assess the current barriers to trade in financial services in the six Central American countries seeking a free trade agreement with the United States (the CAFTA) and examine the relative merits of regional and multilateral liberalization. Even though there are few formal barriers, deficiencies in regulatory and competition standards and in the judicial systems still restrict the participation of foreign institutions in the financial systems in the region. A greater presence of such institutions could support other objectives of trade and investment liberalization, though it would require several adjustments in prudential supervision at national levels and greater cooperation between members of the CAFTA.
Mr. Clinton R. Shiells, Mr. John R Dodsworth, and Mr. Paul Henri Mathieu
This paper explores from a regional perspective the distorted nature of trade in energy products within the CIS countries. The persistence of pricing distortions, barter arrangements, and discriminatory access to pipelines, as well as failure to honor contracts, has disrupted and distorted energy exports to non-CIS countries, undermined energy sector reforms, and distorted investment decisions. The paper focuses on cross-border issues as an integral component of the wider problem of inefficient energy use within the CIS. Several policy recommendations are proposed, including measures to foster greater competition, reduce state involvement, and promote regional cooperation.
Amer Bisat
This paper discusses issues related to the gas arrears ‘crisis’ in Ukraine. It concludes that the problem, which can be traced to policy distortions, can be contained through an acceleration of structural reforms. The paper examines the nature of the contractual relations between Ukraine and its foreign suppliers; the role of the de facto government guarantee for gas import payments; the process of imposing financial discipline on non-payers; the nature of gas-related subsidy schemes; and the methods used in calculating domestic energy prices. An Appendix derives lessons from the Estonian case--an economy which, despite relatively similar initial conditions, avoided the emergence of energy payment difficulties. This is a Paper on Policy Analysis and Assessment and the author(s) would welcome any comments on the present text. Citations should refer to a Paper on Policy Analysis and Assessment of the International Monetary Fund, mentioning the author(s) and the date of issuance. The views expressed are those of the author(s) and do not necessarily represent those of the Fund.
Ms. Gabriela Inchauste
This paper aims to inform on the status of Poverty and Social Impact Analysis (PSIA) in IMF-supported programs, detailing the results presented in the recent review of PRGF-supported programs. The review showed that more needs to be done, both in undertaking PSIA when necessary, and in reporting the policy tradeoffs in program documents. Policy design should be continuously informed by the results of PSIA.
Mr. Stephen S. Golub
This paper reviews the macroeconomic and microeconomic dimensions of the United States-Japan conflict over trade. From a macroeconomic perspective, there is nothing surprising about Japan’s surpluses, given global trends in saving and investment. The current accounts of the United States and Japan have both responded to exchange rate changes in a normal fashion with about a two-year lag. Although not the source of the Japanese current-account surplus, a key issue in the debate is the nature of Japanese trade policy and its possible effects on trade patterns. Empirical studies attempting to determine whether Japan’s trade prices and quantities are abnormal have arrived at conflicting conclusions. This is a Paper on Policy Analysis and Assessment and the author(s) would welcome any comments on the present text. Citations should refer to a Paper on Policy Analysis and Assessment of the International Monetary Fund, mentioning the authors) and the date of issuance. The views expressed are those of the author(s) and do not necessarily represent those of the Fund.
Mr. Eduardo Borensztein
This paper discusses the broad orientation of the economic systems adopted in developing countries. While government-led development strategies were widely followed by developing countries since the 1950s and 1960s, a distinct trend towards the adoption of market-oriented systems has developed in the last decade. The paper reviews international trade policies, noting the move away from protectionism, and financial markets policies, where financial repression is also giving way to more liberal systems. The paper also discusses newer ideas supporting “industrial policies” or policies to promote certain export activities, that are partly inspired by the success of several East Asian economies, and observes that their application to other developing countries would not be promising.
Mr. Craig Beaumont and Li Cui
Australia has enjoyed fifteen years of uninterrupted economic expansion since 1992 despite shocks such as the Asian crisis in 1997-98 and the information technology bust in 2000-01. This resilient economic performance owes much to wide-ranging structural reforms and the improved frameworks for monetary and fiscal policies that were implemented after the Australian dollar was floated in 1983. In addition to gaining the expected macroeconomic benefits from exchange rate flexibility, the float appeared to help motivate and facilitate the subsequent reforms. Australia's experience with adapting to a floating currency may therefore be of broader interest.