Income Distribution and Sustainable Economic Development in East Asia : A Comparative Analysis Medhi Krongkaew and Ragayah Haji Mat Zin

[Working Paper No. 02/2007] This paper synthesizes the major findings from eight selected East Asian country studies (China, Indonesia, Korea, Malaysia, Philippines, Singapore, Thailand, and Vietnam) regarding the relationship between economic growth and income distributions in these economies in the last decade. It discusses the sources of their different patterns of economic growth and income distributions, the impact of particular economic policies on income distribution, as well as the policy responses to emerging situations in these countries. It is seen that in varying ways, economic growth has generated different levels of increase in average income and fall in the incidence…

The U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA): Issues, Implications and Lessons for the Smaller Economies of Latin America and the Caribbean Esteban Perez Caldentey

[Working Paper No. 01/2007] This paper examines selected issues, implications and lessons of the United States-Central American Free Trade Agreement between the Central American Countries, the Dominican Republic and the United States. The paper argues that CAFTA will solidify the existing export specialization of the Central American countries and the Dominican Republic, which is mainly based on assembly plant products. The current export specialization has weak linkages with both internal and external demand, and therefore, is most likely not bound to improve growth prospects. In addition, CAFTA is part of a "new breed" of free trade agreements whose main goal…

The Revised Basel Capital Accord: The logic, content and potential impact for developing countries Smitha Francis

[Working Paper No. 09/2006] Basel II is yet another attempt by the global financial community to remedy the woes associated with unhindered financial liberalization. While developing countries will come under pressure from different quarters for implementing Basel II, the drive towards implementation is in complete disregard of the serious issues that have been raised regarding its adverse implications. Apart from an increase in the cost of financing development implied by Basel II for a variety of reasons, ironically, new forms of regulatory biases and resultant systemic instabilities may be generated by its proposed implementation. This will worsen the existing conflicts…

Macroeconomic Policy, Inequality and Poverty Reduction in India and China C.P. Chandrasekhar & Jayati Ghosh

[Working Paper No. 05/2006]  The two "success" stories of globalisation, India and China, characterised by the high and sustained rates of growth of aggregate and per capita national income, the absence of major financial crises and substantial reduction in income poverty, along with their significant impact on global inequalities make a good case for a comparison of the nature of macroeconomic policies in these two countries, and the extent to which these have been "pro-poor". This paper attempts such an examination, assessing the growth performance and its impact on poverty and inequality in these two countries, and also specifically addressing…

The Free Trade Agreement between the USA and Chile: An Instrument of US Commercial Interests Rodrigo Pizarro

[Working Paper No. 02/2006] The endorsement of a free trade agreement between Chile and the United States is not built upon the concept of trade gains. The agreement constitutes an important part of the institutional peg to the structural reforms begun by the military government, and thus is an additional restriction to make it impossible to rethink the current development strategy. In the best-case scenario, trade benefits to Chile from the FTA will be marginal, even if we add the possibilities of attracting foreign investment. On the contrary, there seems to be direct costs, in intellectual property for instance, and…

US Bilateralism in Southeast Asia: A Sectoral Analysis of Market Access Issues in the Proposed Thai-US Free Trade Agreement Smitha Francis & Murali Kallummal

[Working Paper No. 04/2006] Expected market access gains in the US together with competition for FDI have driven the proposed Thai-US FTA. But the small margins of preference in tariffs Thailand may obtain will not make a significant difference in its market access in the US, especially as the US is simultaneously negotiating comparable FTAs with several of Thailand’s competitors within and outside the region and thus existing MNC production configurations are unlikely to be affected. Moreover, the presence of non-tariff measures like TBT and SPS measures applied by the US in its strategic sectors would not only hinder Thailand’s…

Technology and Employment in an Open Underdeveloped Economy Prabhat Patnaik

[Working Paper No. 01/2006] The process of trade and financial liberalisation under a capitalist economy, which links the pace of technological and structural change to that of the advanced capitalist world, must necessarily lead to increase in unemployment, a constant wage rate at subsistence and increase in absolute poverty for a larger section of the work force. This trend is further strengthened by the demand pattern of the classes whose income shares increase in this scenario. A socialist economy, in comparison, can opt for an alternative trajectory of development through control over the pace of technological change, brought about through…