Donald MacLaren

Distortions to Agricultural Incentives in Australia Since World War II

Australias lackluster economic growth performance in the first four decades following World War II was in part due to an anti-trade, anti-primary sector bias in government assistance policies. This paper provides new annual estimates of the extent of those biases since 1946 and their gradual phase-out during the past two decades. In doing so it reveals that the timing of the sector assistance cuts was such as sometimes to improve but sometimes to worsen the distortions to incentives faced by farmers. The changes increased the variation of assistance rates within agriculture during the 1950s and 1960s, reducing the welfare contribution of those programs in that period. Although the assistance pattern within agriculture appears not to have been strongly biased against exporters, its reform has coincided with a substantial increase in the export orientation of many farm industries. The overall pattern for Australia is contrasted with that revealed by comparable new estimates for other high-income countries.

Price or Quantity Competition?: Oligopolistic Structures in International Commodity Markets

International commodity markets may be characterized by price or quantity competition and by product differentiation. As an illustration, this paper presents a set of models of the Japanese market for imported beef. The models are evaluated using a non-nested econometric test. The one which best fits the data is a Stackelberg model with price leadership by Australia. This result provides evidence on the explicit nature of the game being played by exporters, unlike the applied conjectural variations approach which provides only an index of how competitive the market is. Copyright 1997 by Blackwell Publishing Ltd.

Measures of trade openness using CGE analysis

While a number of measures of openness have been used in empirical studies, none has a theoretical derivation. Using cge models of an economy, this paper derives a number of measures of opennesss which lie on the unit interval and have a welfare interpretation. One group of measure are transformations of the Uniform Tariff Equivalent which are zero for a closed economy and unity for a completely open economy, and have the property that national welfare increases monotonically with the measures of openess. An alternative measure is calculated as the ratio of the volume of trade in a restricted trade situation to that under the free trade situation. These measures are calculated for 8 regions of the world economy, using the GTAP model. We find close correspondence between all the cge measures but the ranking of countries according to these measures differs substantially from that of the actual trade ratios which are most commonly used in empirical studies.

Distortions to Agricultural Incentives in Australia and New Zealand

In 1990, Australia and New Zealand were ranked around 25th and 35th in terms of GNP per capita, having been the highest-income countries in the world one hundred years earlier. The poor performance over that long period contrasts markedly with that of the past 15 years, when these two economies out-performed most other high-income countries. This difference in growth performance is due to major economic policy reforms during the past two to three decades. We provide new evidence on the extent of governmental distortions to agricultural incentives in particular in the two economies since the late 1940s, both directly and indirectly (and negatively) via manufacturing protection.

Deregulation as (Welfare Reducing) Trade Reform: the Case of the Australian Wheat Board

State trading enterprises are distinguishable from private, commercial firms by the nature of their exclusive rights and objectives. Deregulation of the Australian Wheat Board is used to illustrate the effects of these rights and objectives on trade and welfare. Theoretical models are specified and the effects measured through calibrated, partial equilibrium models. It was found that the successive deregulations of the Australian Wheat Board caused it to switch from being equivalent to an export subsidy to, today, being equivalent to an export tax. At the same time, deregulation has not necessarily been welfare enhancing. Copyright 2007, Oxford University Press.

Openness and growth in East Asia after the Asian crisis

Abstract Openness with respect to trade in goods, services and foreign direct investment has a positive marginal effect on growth. The fast-growing East Asian economies were early openers, and this contributed to their fast growth. However, East Asian countries are not relatively open today. This factor, together with the convergence effect of fast growth in the past, imply that their economies will slow down. Their growth prospects are further reduced by growing geographic discrimination against their goods and services in world markets, and the slow down of the Japanese economy.

Log export restrictions and trade policies in the Philippines: bane or blessing to sustainable forest management?

Since the 1990s, the Philippines has begun to adopt the tenets of sustainable forest management (SFM) with respect to the use and management of its forests. Consequently, government policies affecting the forestry sector have been evolving, to reflect the new forest management paradigm. Although the country’s forest policies have been mostly economic-oriented, such policies are now directed at multiple goals including social and environmental goals, either through deliberate considerations or on an ad hoc basis. Most of the policies affecting the forestry sector have been implemented since the 1970s. Such policies include the partial ban on log exports as well as trade policies directed at the exportation of logs and lumber and the importation of pulp. In the 1970s, the forestry sector was notably 1 of the top 10 sectors with respect to export earnings, mainly from the exportation of raw logs. For a country concerned with addressing poverty and deforestation problems, these socio-economic contributions seemed invaluable. However, the negative effects of logging on the forest resource overshadowed the economic benefits derived from such activities. The forest resource base was greatly reduced; consequently, the government implemented a log export ban policy aimed at mitigating deforestation problems. This export ban was also directed at improving the efficiency and competitiveness of the wood processing industry. With the global adoption of SFM and the mounting pressure from lending institutions for policy reforms as instruments of growth and development, the issue is revisited to examine whether these Philippine government policies promote or discourage such multiple goals. This article discusses the repercussions of the log export ban and trade policies on the Philippine government’s multiple targets for the economy and for the environment. Using an aggregation of the global trade analysis project model, a computable general equilibrium model, the impacts of these resources and trade policies are analysed. D 2003 Elsevier B.V. All rights reserved.

Partial- and General-Equilibrium Measures of Trade Restrictiveness

New partial-equilibrium forms of the Trade Restrictiveness Index and the Mercantilist Trade Restrictiveness Index have recently been used by the World Bank and others. In this paper we examine the bias in the partial-equilibrium forms due to the neglect of general-equilibrium effects. We propose “semi-general-equilibrium” measures that capture those general-equilibrium effects due to vertical input–output relations without the need for a computable general-equilibrium model. These measures also incorporate nontariff measures. Australian data are used to compute the semi-general-equilibrium measures. These estimates indicate that the partial-equilibrium forms generally underestimate the true value of the indices, and by a large margin in some cases.

The Optimal Time to Remove Quarantine Bans Under Uncertainty: The Case of Australian Bananas*

Import restrictions on biological materials are used widely as protection against exotic invasive pests and pathogens. While a scientific risk assessment is needed to justify an import ban under the WTO SPS Agreement, economics plays little role in determining the choice of import regime. Using a real option framework, we model the uncertain and irreversible costs from lifting an import ban and derive decision rules about the optimal timing, when ex ante research and development yields positive but uncertain benefits. The insights gained are applied to Australias current import policy for bananas.

State Trading Enterprises as an Impediment to Improved Market Access: The Case of the Korean Rice Market

The trade and welfare effects of tariffs are well known. Less well known, and more difficult to analyze, are the economic effects of state trading enterprises (STEs). Despite STEs in importing countries having the potential to limit market access, they are no longer on the agriculture agenda in the Doha Round Negotiations in the WTO, because some Members have asserted that importing STEs do not distort international trade. We evaluate this assertion through the use of a theoretical model of an STE, which is calibrated to data for the Korean rice market. We show that this STE does distort international trade by restricting market access relative to a Cournot benchmark, and that it affects the domestic and international distribution of social welfare. This finding permits the conclusion that an important opportunity is being missed in the negotiations to improve market access, because importing STEs are not on the agenda.