Adrian Wood

Modeling the effects of trade on women at work and at home

This working paper documents the construction of a 1993-94 Social Accounting Matrix (SAM) for Bangladesh. The SAM distinguishes 10 agricultural sectors —including two different kinds of rice technology — and 19 manufacturing sectors, out of 43 sectors in total. It also differentiates between twelve socio-economic groups, allowing detailed analysis of household welfare and poverty. The SAM has ten factors of production: one type of capital, one type of land and eight different types of labor which are disaggregated by both level of education and gender. The innovative feature of the SAM is that it separates out female and male labor value-added for each educational level and in eachsector of the economy, providing a base for gender-sensitive analyses of policy changes. The SAM is estimated with a cross-entropy approach, which makes efficient use of all available data in a framework that incorporates prior information and constraints.

Exporting manufactures: Human resources, natural resources, and trade policy

Whether a countrys exports consist mainly of manufactures or mainly of primary products depends fundamentally on the skills of its labour force, relative to the extent of its natural resources. This proposition, derived from a modified version of Heckscher-Ohlin theory, is supported by a strong cross-country correlation between the manufactured/primary export ratio and the skill/land ratio. Cross-country variation in trade policies is now only a minor cause of variation in the manufactured/primary export ratio.

Skill, Trade and International Inequality

Heckscher-Ohlin trade theory suggests that greater openness tends to enlarge intercountry differences in stocks of skill (or human capital), which new growth theory suggests would cause intercountry divergence of per capita incomes. Econometric analysis of data on about ninety countries during 1960-90 confirms that greater openness tends to cause divergence of secondary and tertiary enrollment rates between more-educated and less-educated countries and also between land-scarce and land-abundant countries. These findings may have implications for the optimal choice of trade policies by poor countries. Copyright 1999 by Royal Economic Society.

North‐South trade and female labour in manufacturing: An asymmetry

A simple method of measuring the impact of North‐South trade on the female intensity of manufacturing is applied to data for developed and developing countries. The results confirm that growth of exports has increased the relative demand for female labour in the South. However, there does not appear to have been a general counterpart reduction in the relative demand for female labour in Northern manufacturing, even among blue‐collar workers. There are several possible reasons for the apparent conflict between these findings and other evidence that in Northern manufacturing females have been disproportionately displaced by trade with the South.

Export-oriented industrialization through primary processing?

Abstract Recent research suggests that East Asias manufactured export success is not replicable in other developing countries, with lower skill/land ratios. This conclusion, however, is based on a narrow definition of manufactured exports. The present paper asks whether the chances of export-oriented industrialization in countries with low skill/land ratios seem better when the definition of manufactures is broadened to include processed primary products. The answer from its crosscountry econometric analysis is “yes” for countries with moderately skilled labor forces (as in Latin America), but “no” for countries where levels of skill are low (as in Africa).

Globalization and wage inequalities: A synthesis of three theories

Globalization and Wage Inequalities: A Synthesis of Three Theories. — The theoretical insights of Heckscher and Ohlin, Feenstra and Hanson, and Tang and Wood provide a plausible explanation of the effects of globalization on wage inequalities in developed and developing countries. In combination, these three theories can explain, among other things, why inequality has fallen in some developing countries but risen in others. Improved travel and communications facilities raise the relative wages of highly skilled Northern workers, but in both the North and the South have mixed effects on wage gaps between medium-skilled and unskilled workers, sometimes reinforcing and sometimes offsetting the effects of falling barriers to trade.

Could Africa Be Like America

Although there are important lessons for Africa from the experience of East Asia, the sectoral and spatial structures of an increasingly prosperous Africa will be more like those of the Americas. Because it is land-abundant, as is America, Africa will always have a larger primary sector and a smaller manufacturing sector than the land-scarce regions of Asia and Europe. Moreover, because much of its land is far from the sea, which raises internal transport costs, a prosperous Africa will be like America also in having a relatively unpopulated interior, based on agriculture and mining, with urban industrial concentrations on its coasts. Africa could surpass the current income level of South America, although it may never quite catch up with North America because of its tropical climate and its division into many countries, which obstructs internal movement of goods, ideas and people. What is mainly needed to raise Africa from poverty to prosperity are improvements in governance which will reduce the risks of investment and encourage the return of flight capital, physical and human. Similar improvements in governance are needed in all poor countries, but the policy priorities of land-abundant Africa differ from those of land-scarce Asia in three areas. First, it is even more crucial for Africa to apply knowledge to nature by promoting scientific research, education and training in agriculture and mining. Second, to overcome the problems of internal spatial dispersion, Africa must spend more on transport and communications and facilitate movement of people, especially from the interior to the coasts. Third, Africa must ensure widely distributed access to land and education, so that high levels of inequality do not slow growth and perpetuate poverty.

Give Heckscher and Ohlin a chance

Give Heckscher and Ohlin a Chance! — This paper argues that criticism of the empirical inaccuracy of Heckscher-Ohlin theory has been much exaggerated. Most tests have mis-specified the theory, particularly in their treatment of capital, a factor of production which is internationally mobile and therefore generally does not influence the pattern of trade. The argument is illustrated by a review of empirical studies of North-South trade in manufactures, which is well explained by a skill-only Heckscher-Ohlin model.ZusammenfassungGebt Heckscher und Ohlin eine Chance! – Der Verfasser ist der Ansicht, daß das Heckscher-Ohlin-Theorem mit der Wirklichkeit besser übereinstimmt, als viele Kritiker behaupten. In den meisten Tests wurde nämlich die Theorie falsch spezifiziert, insbesondere im Fall des Produktionsfaktors Kapital, der international mobil ist und deshalb im allgemeinen die Struktur des Außenhandels nicht beeinflußt. Belegt wird dieses Argument durch eine Reihe empirischer Untersuchungen des Nord-Süd-Warenhandels, der durch ein Heckscher-Ohlin-Modell ohne Kapital gut erklärt wird.

Looking Ahead Optimally in Allocating Aid

Summary The Collier-Dollar approach to aid allocation among countries has been less than fully embraced by donors--even those focused on poverty reduction--partly because it conflicts with the approach to aid allocation implied by the Millennium Development Goals. These two approaches are shown to be special cases of a more general model of aid allocation, in which donors care about future as well as current poverty. This model is illustratively applied to data for developing regions. Adding a poverty decline adjustment to the allocation formulae used by donors could resolve the conflict between the two approaches.

Why Does Zimbabwe Export Manufactures and Uganda Not? Econometrics Meets History

Uganda and Zimbabwe are predicted on the basis of their human and natural resources, to have similar shares of manufactures in their exports However, Uganda falls a long way short of the predicted share, while Zimbabwe greatly exceeds it. Ugandas manufactured export share is unusually small mainly because of high transport costs, due to its distance from the sea and inadequate infrastructure. Zimbabwes manufactured export share is unusually big mainly because its comparative advantage in manufacturing was enhanced by the know-how brought in by European settlers and a long-term policy of promoting the sector.