Mia Mikic

Asean and Trade Integration

This paper reviews the progress in trade-related areas of ASEAN Economic Community to be established by 2015. It provivdes empirical evidence and qualitative analysis on how the process of trade integration worked and what could have been done for it to have worked better. Where appropriate it elaborates on forces or institutions driving the process of integration. The paper uses descriptive statistics and some off-the-shelf indicators to track progress in trade integration which is the main pillar of building ASEAN Economic Community. Second part of the paper examines the progress in building effective integration with the other trading partners. Three difference but inter-related issues are analyzed. 1) ASEAN in world economy in terms of relative size, discrimination of other partners in trade, and treatment that ASEAN obtains in importing markets of developed countries compared to average of all developing countries; 2) the WTO membership and negotiation positioning of individual ASEAN members, and 3) the role of bilateral and plurilateral preferential trade agreements of ASEAN member countries and of the ASEAN as a bloc.

Tourism's contribution to the Yugoslav economy.

Abstract Tourism is an important sector of the post-industrial economies of the developed nations. This article concentrates on the contribution of tourism to the balance of payments in Yugoslavia. Current methods of assessing the value of tourism transactions are inadequate and make international comparisons impossible. The complexity involved in defining ‘tourism’ has led to the accumulation of meaningless data. The IMFs standard balance-of-payments model is described, and the ways in which Yugoslavias measurements of tourism income and expenditure could be standardized according to IMF recommendations and thus become use- ful in economic policy formulation.

Trade Implications of the ASEAN+ Agreements for Other Asian Countries

ASEAN integrative efforts envisioned through building ASEAN community have been supported by political and security, economic and sociocultural cooperation “that are closely intertwined and mutually reinforcing for the purpose of ensuring durable peace, stability and shared prosperity in the region” (ASEAN, 2003, p. 1). The ultimate goal of fostering economic integration among ASEAN member states (AMS) is to establish an effective ASEAN Economic Community (AEC), which will, by end of 2015, transform ASEAN “into a region with free movement of goods, services, investment, skilled labor, and freer flow of capital” (ASEAN, 2008, p. 5).

The Index of Asia-Pacific Regional Integration Effort

The Asia-Pacific region is not typically seen as one geographic or socio-economic space. Yet, 58 regional economies occupying the space of 28 million square kilometers from Turkey in the West, Russian Federation in the North, French Polynesia in the East and New Zealand in the South belong to the Economic and Social Commission of Asia and the Pacific (ESCAP). This commission provides a forum for member states that promotes regional cooperation and collective action, assisting countries in building and sustaining shared economic growth and social equity. In 2013, ESCAPs members adopted the Bangkok Declaration to enhance efforts towards deeper regional economic integration. Yet this document neither proposes a concrete modality or modalities of achieving deeper integration, nor provides a sense of distance of individual countries to a perceived integrated Asia-Pacific.This paper aims to comprehensively quantify recent integration efforts of economies in the Asia-Pacific region. We provide an index of integration effort based on twelve metrics that measure the relative distance of a given economy to the region as an economic entity. Generally, we find that while the region has trended towards becoming integrated in general, both the level of integration and integration effort are inconsistent among Asia-Pacific economies. We discuss potential applications and extensions of the index in developing our perspective of the region’s economic and social dynamics.

International Factor Movements and Multinational Corporations

Thus far we have studied the principles behind international trade: what motivates the flows of goods between countries, and what are the welfare effects of these flows to individuals, countries and the world as a whole. Without any doubt international trade is still the major force promoting economic integration in the world. But it is not the only one: the international movements of resources may serve equally as well or, in some cases better, to integrate economies. Our attention now turns to the international flows of the two most used resources: labour and capital.

Economic Analysis of Tariffs

This chapter’s topic is tariffs, one of the many instruments of trade policy. Tariffs used to be the most popular tool utilised by policy makers. However the multilateral negotiations success in targeting tariffs for trade liberalisation has meant that other instruments of regulating trade flows have become relatively more popular. In principle, however, economists still prefer tariffs over other trade policy instruments as tariffs are considered to be the most transparent of all tools. The effects of some of the non-tariff barriers used are studied in Chapter 9.

Empirical Analysis of the Effects of Integration

There have been many empirical studies that have attempted to measure the effects of economic integration. While most of these studies tried to estimate the growth of trade attributable to the formation of the integration per se, others attempted to measure the changes in welfare. The main goal of such measurements has always been to provide an empirical foundation on which to base discussions as to whether economic integrations are ‘good’ or ‘bad’. The problem is that the results obtained were not conclusive enough to provide strong support for either view. While in the last decade or so the techniques available for studying economic integration have improved significantly with the usage of computable general equilibrium models (CGE), it is still difficult to obtain reliable results. Today it is more important then ever to have these results in order to solidify the discussion on regionalism. However not many new studies look at the effects on non-members’ welfare. For example most of the studies completed on the effects of CUSTA or NAFTA were concerned with changes in the patterns of trade and the welfare of members rather than the welfare of non-members. The prospects of Western Hemisphere Free Trade Area (WHFTA), and any defensive or retaliatory bloc in the Pacific are seen as detrimental for world welfare (see for example Bhagwati, 1993, p. 161) but there are no reliable empirical results to support such a claim. While this chapter cannot survey all the issues involved in the empirical analysis of the effects of economic integration, we do summarise the main features of the methods used in empirical measurement, and outline earlier research.

The Measurement of Protection

There are two main strands of measurement in the area of protection that we should discuss. One is concerned with the extent of protection provided to a product or an industry. To understand the issue of the extent of protection better we conceptually differentiate between nominal and effective protection. While the nominal rate of protection is concerned with a single product or industry, the effective rate estimates the level of protection of a single product or industry but taking into account the nominal protection of the activities delivering inputs to the industry concerned. We know from our simple analysis of tariffs that a protection of one industry usually means a ‘dis-protection’ of others. This happens through (instantaneous and costless) reallocation of resources: factors of production leave other activities and move to the sheltered one. The effects of one industry’s protection on all activities of an economy can be estimated by general equilibrium analysis. Such a measure is known as the true protection.

The Political Economy of Trade Policy

The underlying assumption employed in our analysis of the arguments for trade barriers in Chapter 10 was that the government, in setting the level of protection, was benevolent and that it acted to maximise the welfare of the nation via the representative consumer. Under such an assumption, among many trade barriers discussed, only a few can (as the first best or, more often, the second best policies) advance the national welfare compared with the free trade situation. These cases of nearly justified trade intervention may include the correction of a distortion (that is, closing a gap between marginal cost and marginal benefit), revenue collection or terms of trade correction. The latter is rightly seen as a ‘beggar-your-neighbour policy’, thus inviting retaliation from trading partners. In most cases, however, as our analysis clearly demonstrated, protectionist policies result in a net national welfare loss. Why then do, protectionist policies in practice exist? The most common explanation is that the national welfare loss due to protectionist policies is relatively small. Moreover the loss is dispersed across a large number of economic agents (consumers) preventing them effectively making a stand against such protectionist policies. A similar characterisation can be made of those producers who get hurt through the implementation of protectionist trade policies. On the other hand, we find some groups of economic agents (producers) rationally spending resources with the objective of influencing the suppliers of protection, government, in its decision regarding the level and the instruments of protection.

Modern Theories of Trade — 1: External Economies of Scale

The trade models examined in previous chapters have provided us with an understanding of how differences in national resources, technology or tastes lead countries to specialise in production and engage in mutually beneficial trade. On the basis of these models we can expect that: n n(1) n nCountries with the greatest differences in resources, technology or tastes (such as Japan and Ecuador) should trade more heavily than countries that are less dissimilar. n n n n n(2) n nTrade should result in specialisation. Specifically, products being exported and imported by a country should belong to distinctly different product groups or industries (such as bananas and TV sets).