Rachel McCulloch

Factor Mobility, Regional Development, and the Distribution of Income

A three-factor model of a small country or region is used to analyze the general equilibrium consequences of three frequently advocated regional development policies--investment subsidies, migration incentives, and educational expenditures. The analysis focuses on policy-induced changes in absolute and relative factor earnings. The results link changes in the distribution of income to the degree of complementarity and substitutability among factors of production and to the pricing scheme adopted by educational institutions. Programs intended to aid lagging regions may produce perverse results, particularly if the cost of education is the same to all individuals regardless of ability.

Consequences of a tax on the brain drain for unemployment and income inequality in less developed countries

Abstract Welfare implications of an income tax paid by emigrant skilled workers are analyzed in a model which assumes international capital mobility and allows for unemployed labor in the modern sector of a developing country. The tax discourages overinvestment in education and also contributes to the welfare of those remaining through the direct revenue effect. However, expected earnings of unskilled workers decline as a result of the tax, while those of non-migrant skilled workers rise. The tax may thus exacerbate domestic income inequality. In addition, modern sector employment, output, and capital stock may fall.

NONDISCRIMINATION AND THE WTO AGREEMENT ON SAFEGUARDS

Most-favored-nation treatment, i.e., nondiscrimination among trading partners, is a fundamental principle of the GATT/WTO system. The WTO Agreement on Safeguards has thus been seen as encouraging use of a preferred form of contingent protection relative to antidumping and other inherently discriminatory measures. In practice, however, safeguard protection may also incorporate discriminatory elements. This paper focuses on three ways that policies conforming to the Agreement on Safeguards may nonetheless discriminate explicitly or implicitly among trading partners. First, the form of the safeguard policy matters: quantitative restrictions discriminate among foreign suppliers by preserving historical market shares more than a safeguard implemented as a tariff. Second, safeguard measures discriminate against faster-growing exporters and new entrants in import markets. Third, formal exemptions for partners in preferential trade agreements and for small developing-country suppliers allow these countries to gain market share at the expense of non-exempted exporters. We provide evidence of these discriminatory effects in actual cases of safeguard protection.

Factor market monopsony and the allocation of resources

Investigates the implications of factor market monopsony power for the allocation of resources between industries. Characteristic of allocation of factors; Impact of the exercise of monopsony of power on the difference in factor intensity between industries; Relationship between the monopsonists production level and factor rewards; Violation of the Stolper-Samuelson theorem in the monopsony case. (Из Ebsco)

Unexpected Real Consequences of Floating Exchange Rates

After a decade of floating exchange rates, international monetary reform is again in the air, and it is thus timely to ask how well (or badly) the current system is functioning. But compared to what? Because the current monetary arrangements came into effect following years of vigorous debate on the merits of exchange rate flexibility, some observers appear to forget that these arrangements were not in reality ‘adopted’, let alone ‘designed.’2 Rather, they were initiated by the collapse of the Bretton Woods regime and given markedly after-the-fact approval by an International Monetary Fund whose members were unable to agree upon an alternative, i.e. any system imposing even minimal restraints on the national policies of members. Since the present time seems no more propitious than the early 1970s for the willing sacrifice of national sovereignty by IMF members,3 any argument for system reform must be solidly grounded in the accumulated experience of floating, not the dogmas of the Bretton Woods era.

The WTO Agreement on Safeguards: An Empirical Analysis of Discriminatory Impact *

Internationalization of the world economy has made trade a key factor in the growth potential of nearly every nation’s economy. Hence, economists have become increasingly interested in the determinants of international trade and competitiveness. Empirical Methods in International Trade captures the many aspects of this trend in globalization through practical techniques well-founded in economic theory. The authors, comprising some of the most influential applied international economists of their generation, use cutting-edge models to develop empirical approaches to critical aspects of economic interchange. These approaches are developed and explained carefully with the goal of making them accessible to a wide audience.

Technology Transfer to Developing Countries: Implications of International Regulation

Technology imports are central to the economic performance and development prospects of poor nations. However, while imported technology has helped some nations to achieve rapid industrialization, critics have pointed to a host of actual and potential abuses in the laissez-faire transfer process. As early as the 1960s, developing countries began to adopt national policies regulating technological imports, with particular attention to transactions with Northern multinational corporations. Some of the same nations have led a drive within the United Nations Conference on Trade and Development to establish an international code of conduct governing North-South technology transfer. This article examines motives for and probable consequences of an international code, focusing on the implications of international policies toward technology transfer for the effectiveness of existing national regulation.

Technology Transfer and the National Interest

Transfer abroad of American technology through the channels of foreign direct investment and licensing has become a focus of increasing concern. The case against technology transfer and the foreign direct investment activities with which it is associated centers on job losses and wage reductions in the industries directly affected. Transfer abroad of advanced technology stimulates foreign competition, lowering world prices of new products and reducing profits, employment, and wage growth in competing domestic industies. Outflows of American capital, often a concomitant of technology transfer, are viewed as an additional force depressing domestic productivity and earnings. Implicit in this case against technology transfer is a simple partial equilibrium analysis of resulting gains and losses. However, this paper uses standard general equilibrium trade theory to show that an anlysis confined to direct effects is of limited value in assessing overall benefits for the economy or even for the domestic labor force. Although technology transfer does usually lead to a contraction of output in the industries directly affected, it also stimulates production in other sectors of the economy as a consequence of changed prodution patterns and increased incomes abroad. Full adjustment to altered sectoral demands may therefore bring about higher real wages or expanded aggregate employment.2 Furthermore, restrictions on technology transfer may induce outflows rather than inflows of internationally mobile capital. In either case, however, a general

International indicators of science and technology: How does the U. S. compare?

Because the basic determinants of innovative success are poorly understood, the data in SI-76 cannot support an unambiguous summary assessment of U. S. science. While some nations now rival the U. S. in relative expenditure for R&D, U. S. absolute expenditure still dwarfs that of any nation except the U. S. S. R., and the U. S. remains preeminent by most measures of technological capacity. However, the technology gap continues to narrow, bringing both costs and benefits to the U. S. Advances abroad threaten the U. S. position in some markets and exacerbate the nations trade adjustment problems. But the nation may also benefit substantially from new opportunities to import as well as export advanced technology.

Why Foreign Corporations are Buying into U.S. Business

More than ever before, foreign companies have been making themselves at home in U.S. markets. The rapid growth of foreign direct investment in the United States reflects the emergence of highly competitive firms based abroad and is thus linked to the loss of U.S. international competitiveness in trade. Two-way flows of direct investment have blurred the distinction, at least among industrial nations, between host and source countries. While the United States remains a major source country as well as the strongest voice for international action to regulate national investment policies, it has also become the worlds most important host to direct investment, with all the domestic political pressures entailed. A key policy question for the 1990s is whether the United States will continue its leadership role in combating investment policies that achieve nationalistic objectives at the expense of global efficiency, or join other host countries in adopting its own nationalistic policies.