Douglas H. Brooks

Cross-Border Mergers and Acquisitions and Financial Development:Evidence from Emerging Asia

The paper examines the relationship between cross-border mergers and acquisitions (M&A) and financial development in emerging Asian economies. Bilateral data of cross-border M&A for nine emerging Asian economies during 2000–2009 are analyzed with a sample selection model and panel data model. Estimation results show that the banking sector plays a crucial role in facilitating cross-border M&A while the role of equity markets has increased in importance since, in addition to cash, the issuance of common stock and the exchange of stocks have become a popular form for payment for a deal. Because of the relatively thin market, the corporate bond market plays a limited role in supporting cross-border M&A, which is in contrast to the public bond market. The results also show that financial development in terms of stock and bond markets in the home countries tends to be more important when the target firms reside in more developed countries. In addition to financial development, the paper shows that most of the cross-border M&As are invested in the technology-related and resource-based industries while cheap labor industries are relatively less attractive.

Closing Development Gaps: Challenges and Policy Options

There are significant income and nonincome development gaps around the world. Closing these gaps will require not only increasing and sustaining economic growth in low-income regions, but also policies that close nonincome development gaps directly. Governments need to support private investment and entrepreneurship by investing in human capital and infrastructure; developing the financial sector; improving governance; and eliminating other impediments created by market, institutional, or policy failures. Policy makers should improve access to and quality of health, education, and other social services. This means better targeting and increased public spending on social services that directly benefit the poor; innovative delivery mechanisms informed by rigorous evaluation; and social protection systems. The experience of developing Asia and others has shown that external trade and finance—including foreign direct investment, remittances, and aid—play a critical role. It is therefore imperative that governments continue to promote globalization and regional integration.

Changing Trade Costs between People’s Republic of China and India

This paper calculates the decline in costs involving merchandise trade between the People’s Republic of China (PRC) and India during the period 1980–2008. Drawing from the recent literature, a comprehensive measure of trade costs is derived from a theory-founded gravity model of international trade, which can be computed on the basis of observed bilateral trade flows and gross domestic product data. The analysis reveals that trade costs have declined sharply since the 1980s, accounting for a large and increasing portion of growth in total trade between the two countries. Whereas the reduction of trade costs accounted for less than one third of the increase in trade between the PRC and India during the 1980s, lower costs seem to explain about three quarters of trade expansion during the 1990s, and up to nearly 85% in 2001–2008.

Trade facilitation and regional cooperation in Asia

This insightful book collects empirical analyses and case studies to clarify issues and draw policy recommendations for facilitating greater regional trade through increased cooperation.

Exports and Employment in Indonesia: The Decline in Labor-Intensive Manufacturing and the Rise of Services

1. Introduction, Niny Khor and Devashish Mitra Trade, Structural Changes, and Quality of Employment 2. Trade, Growth, and Structural Changes in Employment in Developing Asia, John Gilbert 3. Trade and the Quality of Employment, Robert Flanagan and Niny Khor 4. Competition, Labor Intensity and Specialization: Structural Changes in Post-crisis Asia, Yothin Jinjarak and Kanda Naknoi 5. Labor Market Institutions, Paul Vandenberg and Moritz Meyer Country Case Studies 6. Exports and Employment in the PRC, Cai Fang and Du Yang 7. Trade and Employment in Hong Kong: Towards a Service Economy, James Vere 8. Indonesia: Dynamics of Trade and Employment, Haryo Aswicahyono, Douglas H. Brooks, and Christopher Manning 9. Trade, Labor Market Institutions and the Pressure on Labor Markets: The Case of Korean Manufacturing, Devashish Mitra and Jeongeun Shin 10. Foreign Labor in Malaysian Manufacturing: Trends, Patterns and Implications for Domestic Wages, Premachandra Athukorala and Evelyn S. Devadason

Asia's Melting Trade Costs

This study calculates the decline in costs involving merchandise trade between the People’s Republic of China (PRC) and India during the period 1980-2008. Drawing from the recent literature, a comprehensive measure of trade costs is derived from a theory-founded gravity model of international trade, which can be computed based on the observed bilateral trade flows and GDP data. The analysis reveals that trade costs have declined sharply since the 1980s, accounting for a large and increasing portion of growth in total trade between the two countries. Whereas the reduction in trade costs accounted for less than one-third of the increase in trade between PRC and India during the 1980s, lower costs seem to explain about three‐quarters of trade expansion during the 1990s and up to nearly 85 per cent in 2001-08.

Accelerating Regional Integration: Issues at the Border

The sharp decline in trade volume and value during the current economic crisis has contributed to lower transportation costs and reduced waiting times at border crossings, reducing the urgency of progress on trade facilitation. Meanwhile, greater trade is expected to play a key role in recovery, and in sustaining growth afterwards. The crisis offers an excellent opportunity to make progress on facilitating intra-Asian trade and boosting the regions contribution to global economic recovery. This paper examines the status of, and challenges to, trade facilitation among the Asian Asia-Pacific Economic Cooperation members, and the roles of hard and soft infrastructure (including logistics) in improving that performance. Analysis with a computable general equilibrium framework indicates that even a relatively modest reduction in trade costs can yield significant gains. Gross domestic product in the region expands and countries move into a more diversified trading pattern. Of particular relevance for policy considerations is that the results vary considerably across bilateral trade routes and commodity categories.

BILATERAL TRADE AND FOOD SECURITY

We analyze the relationship between food security and trade, focusing on food importers’ exposure to sudden market failures from relying on a narrow range of international suppliers. We compute a bilateral import penetration index (BIPI), which gauges the degree to which a country depends on another for food imports. Food trade maps are drawn by the application of a force-directed algorithm that sorts through computed BIPIs and maps the nodes corresponding to the strength of bilateral ties between country pairs, thereby showing importers’ vulnerabilities to disruptions in bilateral channels. Results suggest that measures aimed at diversifying supply sources reduce vulnerability.