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2261. Blazing New Trails: Villagers' Committee Elections in P. R. China

Author:
Linda Jakobson
Publication Date:
01-1999
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
Though the Chinese Communist Party clings to its monopoly on power and fully intends to avoid “walking down the road of the Soviet Union,” it is implementing revolutionary political reform in the countryside. For the past decade, multi-candidate elections, in which candidates need not be members of the Communist Party, have been held in hundreds of thousands of Chinese villages. Abdicating its prerogative to appoint village chiefs, the Party has conceded that elected ones are more effective. The grassroots-level governance reform (jiceng zhengquan gaige) not only empowers ordinary citizens and encourages them to take part in the decision-making process. It also institutionalizes the concepts of accountability and transparency.
Topic:
Democratization and Government
Political Geography:
China, Asia, and Soviet Union

2262. The Korean Peninsula: Is Kim Dae-jung's Pursuit of a Korean Confederation Realistic?

Author:
Linda Jakobson
Publication Date:
01-1999
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
In the spring of 1999 Swiri-fever swept South Korea. Millions flocked to see the first domestic action film considered up to international standards. “Swiri,” a slick Hollywood-style spy thriller, revolves around the complex issue of Korean unification that lies at the heart of Korea's future. Since the inauguration of President Kim Dae-jung in February 1998, South Korea has debated unification more openly than ever before.
Topic:
Conflict Prevention, Civil Society, Humanitarian Aid, International Cooperation, and International Political Economy
Political Geography:
Asia, South Korea, North Korea, and Korea

2263. The Crisis in Asia: An Empirical Assessment

Author:
Warwick McKibbin
Publication Date:
12-1999
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
The economies of South East Asia and Korea have been shaken by a financial and economic crisis that has enveloped the region since mid 1997. There are competing explanations for the cause of the crisis however most commentators would agree that a major shock that impacted on the countries has been a dramatic increase in the perceived risks of investing in these economies. This paper explores the impact of a re-evaluation of the risk in the Asian economies focussing on the differential real consequences of a temporary versus more permanent rise in risk. It contributes to our understanding of the possible consequences of the Asia crisis by applying a global simulation model that captures both the flow of goods as well as international capital flows between countries. The real impacts on the Asian economies of a rise in risk perceptions in the model are large and consistent with observed adjustment. However the spillovers to the rest of the world are relatively small because the loss in export demand that accompanies the crisis in Asia is offset by a fall in long term interest rates as capital flows out of Asia into the non-Asian OECD economies. Thus strong domestic demand in economies such as the US induced by the general equilibrium effects of the reallocation of financial capital can more than offset the consequences of lower export growth. The analysis also highlights the impacts on global trade balances reflecting the movements of global capital and points to both potential problems and lesson for policymakers over the coming years.
Topic:
Economics, Emerging Markets, and Globalization
Political Geography:
China, Israel, East Asia, and Asia

2264. The Global Economic Impacts of Trade and Financial Reform in China

Author:
Warwick McKibbin and KK Tang
Publication Date:
12-1999
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Despite the setbacks from the recent Asian currency crisis, the ascendancy of Asia as an economic centre of world economic activity is likely to continue into the 21st century. A key issue that will shape the role of Asia, and indeed the shape of the world economy in the 21st century, is the economic development of China. To date China has successfully weathered the currency storm in Asia and continues on a program of economic reform. If anything, the problems of Japan and Korea provide powerful lessons for other countries undergoing rapid economic growth and structural change. These lessons include the importance of a well developed financial sector with lending and investment decisions based on market signals rather than government directives. Whether China can further integrate smoothly into global markets and sustain the fast growth of the last few decades will be a crucial development in the world economy. In this paper, we explore the impacts of continued Chinese economic reform with a focus on the role of international financial flows both in the adjustment within China as well as in the transmission of Chinese reforms to the rest of the world.
Topic:
Economics, Emerging Markets, and Globalization
Political Geography:
China, Israel, East Asia, and Asia

2265. Regional and Multilateral Trade Liberalization: The Effects on Trade, Investment and Welfare

Author:
Warwick McKibbin
Publication Date:
12-1999
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
This paper explores the impact on economies of trade liberalization under alternative regional and multilateral arrangements: unilateral liberalization; liberalization as part of the ASEAN regional grouping; liberalization as part of the APEC regional grouping; or liberalization as part of a multilateral trade liberalization regime. The paper is based on a Dynamic Intertemporal General Equilibrium model (DIGEM) called the Asia-Pacific G-Cubed Model. It is shown that the long run gains from a country's own liberalization tend to be large relative to the gains from other countries liberalizing although this varies across countries. It is also shown that there is a significant difference between the effects on GDP (production location) and the effects on consumption per capita of the alternative liberalization approaches across countries. The timing of liberalization is also shown to matter. With open capital markets the gains from credibly announced trade liberalization are realized before the reforms are put in place because there is a rise in global investment which raises the global capital stock. In addition there is a reallocation of capital via financial market adjustment. This paper also demonstrates that for some economies, there can be short run adjustment costs to trade liberalization because resources cannot be instantly reallocated across sectors in an economy. These adjustment costs from own liberalization can be reduced if more countries also liberalize. The nature of the dynamic adjustment suggests that other macroeconomic policies may play an important role during the early period of phased-in trade liberalization.
Topic:
Economics, Emerging Markets, and Globalization
Political Geography:
China, Israel, East Asia, and Asia

2266. Rapid Economic Growth in China: Implications for the World Economy

Author:
Warwick McKibbin and Yiping Huang
Publication Date:
12-1999
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Rapid growth of the Chinese economy in the past decade and its potential for strong growth into the foreseeable future have caused anxieties in the rest of the world. Some commentators see Chinese growth wholly in terms of competition for trade and investment opportunities with other developing economies and a major cause of structural adjustments in the advanced industrialized economies. In particular there have been warnings of severe consequences for international agricultural markets. In this paper we use a dynamic general equilibrium model called the G-CUBED model (developed by McKibbin and Wilcoxen) to explore possible future paths of the Chinese economy based on projections of population growth, sectoral productivity growth, energy efficiency and technical change in the Chinese economy. This model captures not only the composition of the direct trade impacts of developments in the Chinese economy but also the implications of the endogenous flows of financial capital on macroeconomic adjustment in the world economy. The study focuses on the period from 1990 to 2020. Rather than being a problem for the world economy, we find strong growth in China is beneficial for the world economy directly through raising world incomes.
Topic:
Economics, Emerging Markets, and Globalization
Political Geography:
China, Israel, East Asia, and Asia

2267. The Transmission of Productivity and Investment Shocks in the Asia Pacific Region

Author:
Warwick McKibbin
Publication Date:
12-1999
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
An important aspect of macroeconomic interdependence in the Asia Pacific region is the adjustment of trade and current account balances in response to changes in saving and investment rates in individual economies. Greater trade flows, reliance on imported intermediate goods as well as more integrated capital markets imply that shifts in private or public saving and investment rates in an economy in the region can potentially have large impacts on other economies. This paper explores the quantitative nature of these linkages by focusing on a number of shocks within the context of a new dynamic multi-sector global model called the Asia-Pacific G-Cubed Model (AP-GCUBED). This model integrates sectoral adjustment with macroeconomic interdependence including explicit treatment of capital flows to explore the implications of a variety of productivity and investment shocks in the Asia Pacific Region. The first shock considered is a permanent decline in private investment in Japan. The second shock is a temporary rise in total factor productivity growth in China. The fall in Japanese investment is found to have a significant effect on trade flows and financial flows in the region whereas the rise in Chinese productivity has a quite different effect on the region.
Topic:
Economics, Emerging Markets, and Globalization
Political Geography:
China, Israel, East Asia, and Asia

2268. Drug Trafficking on the Great Silk Road: The Security Environment in Central Asia

Author:
Martha Brill Olcott
Publication Date:
12-1999
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
To address drug proliferation and trafficking in the context of non-traditional security threats and to try to find ways out of the potentially explosive situation, the Carnegie Endowment for International Peace sponsored a meeting of representatives of the five Central Asian states, Russia, Azerbaijan, Turkey, the United States, the United Nations Drug Control Program (UNDCP), the Organization for Security and Cooperation in Europe (OSCE), and the Aga Khan Development Network, held in Bishkek, Kyrgyzstan in May 1999. This paper analyzes the situation in the region based on the conference proceedings and aims to raise international awareness of the seriousness of the problem. It also advocates the need for a concerted effort within the region and without to help these countries fight this evil.
Topic:
Security and International Law
Political Geography:
Russia, United States, Turkey, Asia, and United Nations

2269. Replacing Potemkin Capitalism: Russia's Need for a Free-Market Financial System

Author:
Kurt Schuler and George A. Selgin
Publication Date:
06-1999
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
On August 17, 1998, Russia devalued the ruble and stopped payment on its government debt, creating a financial crisis that continues today. Some observers have blamed the financial crisis, and the poor performance of the Russian economy generally, on government policies that they claim are rigidly laissez faire. However, a closer look at the Russian financial system reveals that it remains fundamentally socialist, though it has superficial capitalist features.
Topic:
Debt, Economics, Government, and Financial Crisis
Political Geography:
Russia, Europe, and Asia

2270. Blunder in the Balkans: The Clinton Administration's Bungled War against Serbia

Author:
Christopher Layne
Publication Date:
05-1999
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
The Clinton administration has made one miscalculation after another in dealing with the Kosovo crisis. U.S. officials and their NATO colleagues never understood the historical and emotional importance of Kosovo to the Serbia n people, believing instead that Belgrade's harsh repression of the ethnic Albanian secessionist movement in Kosovo merely reflected the will of President Slobodan Milosevic of Yugoslavia. The administration's foreign policy team mistakenly concluded that, under a threat of air strikes, the Yugoslav government would sign a dictate d peace accord (the Rambouillet agreement) to be implemented by a NATO peacekeeping force in Kosovo. Even if Milosevic initially refused to sign the Rambouillet agreement, administration leaders believed that Belgrade would relent after a brief “demonstration” bombing campaign. Those calculations proved to be disastrously wrong.
Topic:
Conflict Resolution, International Relations, Foreign Policy, NATO, and Ethnic Conflict
Political Geography:
Russia, United States, China, Europe, Eastern Europe, Asia, Kosovo, Yugoslavia, Serbia, Balkans, and Albania

2271. U.S. Assistance for Market Reforms: Foreign Aid Failures in Russia and the Former Soviet Bloc

Author:
Janine R. Wedel
Publication Date:
03-1999
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Since the fall of the Berlin Wall in 1989 and the subsequent breakup of the Soviet Union in 1991, the governments of the United States and other Western countries have provided massive aid to promote a transition to the free market in Central and Eastern Europe and the former Soviet Union. But aid for market reforms in the region has been largely ineffective. Whether provided in the form of technical assistance, grants to political groups or nongovernmental organizations, loans and guarantees to the private sector, or direct financial aid to post-communist governments, that aid has been plagued by a number of problems. The failed $22.6 billion bailout of Russia by the International Monetary Fund in July 1998 only confirmed the flawed nature of the aid-for-reform approach.
Topic:
Economics and Emerging Markets
Political Geography:
Russia, United States, Europe, Eastern Europe, Asia, and Soviet Union

2272. IMF Model and Resource-Abundant Transition Economies: Kazakhstan and Uzbekistan

Author:
Richard M. Auty
Publication Date:
11-1999
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The IMF model of the economic transition stresses the role of macro policy reform. It concludes that rapid reform to a market economy is preferable to slow reform because late reformers experience very steep transition recessions and severe contractions in government revenues. However, the predictive power of the IMF model has weakened through the late-1990s. This is because it under-estimates the role of initial conditions that include the natural resource endowment as well as institutional capital and the legacy of produced capital. This paper demonstrates how the predictive power of the IMF model can be improved by taking account of the impact of natural resource abundance for the transition. Resource abundance can feed corruption and diminish the urgency of reform, thereby intensifying the adverse effect of a retarded transition. It can also amplify the contraction of the non-booming tradeable sector due to Dutch disease effects. These adverse features are likely to be more severe where the resource endowment creates point source socio-economic linkages, as in mining, as opposed to the diffuse linkages associated with crop production by yeoman farmers. The detrimental effects of resource abundance are also likely to be more severe where institutional capital is deficient. Consistent with such a resource-constrained variant of the IMF model; resource-abundant Kazakhstan and Uzbekistan both delayed their reforms and both exhibit high levels of corruption relative to the transition economies as a whole. Also, economic recovery in Kazakhstan is slower than the original IMF model predicts because investment in minerals strengthened the exchange rate and retarded economic diversification. In the case of Uzbekistan, a natural resource endowment that yielded especially buoyant crop revenues (that eased the foreign exchange constraint) helps to explain why the growth collapse is less than the unadjusted IMF model predicts for such a slow reformer. This explanation is still too simple, however. Uzbekistan also benefits from robust social capital and limited obsolete industry, both of which retard the decline in government revenue. Finally, the resource-constrained IMF model suggests that the Uzbek policy of gradual reform represses exports and intensifies economic distortions. This will lock the economy into a staple trap and lead to a growth collapse, as the experience of many resource-abundant developing market economies testifies
Topic:
Emerging Markets, Environment, and International Organization
Political Geography:
Kazakhstan, Asia, Uzbekistan, and Dutch

2273. Wage Reform, Soft Budget Constraints and Competition

Author:
Jian Sun
Publication Date:
02-1999
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Since the beginning of the Chinese economic reforms in 1978, there has been a series of effort to reform the labour compensation practice in state-owned enterprises to strengthen the link between pay and productivity. Despite the reforms, however, rapid increases in wage rates occurred in state-owned enterprises. Moreover, although state-owned enterprises have much lower productivity gains than non-state enterprises, they pay substantially higher wages and have faster wage growth.
Topic:
Economics, Globalization, Industrial Policy, and International Political Economy
Political Geography:
China and Asia

2274. The Asian Currency Crisis: Origins, Lessons and Future Outlook

Author:
Abdur Chowdhury
Publication Date:
02-1999
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
What started in the summer of 1997 as a regional economic and financial crisis in East and Southeast Asia had developed into a global financial crisis within the span of a year. This crisis followed the crisis in the European Monetary System in 1992–3 and the Mexican peso crisis in 1994–5. However, unlike the previous two crises, the scale and depth of the Asian crisis surprised everyone. One obvious reason for this is East and Southeast Asia's track record of economic success. Since the 1960s, no other group of countries in the world has produced more rapid economic growth or such a dramatic reduction in poverty. Given so many years of sustained economic performance the obvious question is: how could events in Asia unfold as they did?
Topic:
Economics and International Political Economy
Political Geography:
Europe, Asia, and Southeast Asia

2275. Japanese Entrepreneurship: Can the Silicon Valley Model Be Applied to Japan?

Author:
Katsuhiro Nakagawa
Publication Date:
12-1999
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
Since 1992, the Japanese economy has been utterly stagnant, with signs of weak performance at every turn. Since 1997, Japan's economy has experienced negative growth, a situation unprecedented in the postwar era. Most large Japanese corporations have engaged in extensive restructuring during this period, which has in turn contributed to 4.8 percent unemployment—higher than rates in the United States. Further, in 1998, the closure rate of small companies (3.8 percent) exceeded the start-up rate of new business ventures (3.7 percent).
Topic:
Security
Political Geography:
United States, Japan, and Asia

2276. Accessing Venture Capital in India

Author:
Rafiq Dossani
Publication Date:
10-1999
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
In the 1970s, IT exports from India began with “body-shopping,” also known as contract programming. In such contracts, the amount of code was specified in the contract and there was relatively little risk. Until 1991, this was the main form of IT exports, and it was per- formed exclusively by Indian firms. Foreign firms were deliberately excluded as a matter of government policy. It was a difficult business environment. Indian firms that were exporting bodies, as well as firms that operated only in the domestic market, found themselves operat- ing in a closed economy, featuring high tariffs on hardware imports and non-tariff barriers on software imports. Quite by accident, this situation led to a growth of skills that would be of great value to India a few years later. India's UNIX talents, now globally in demand due to the growth of the Internet, developed because the country's closed economy forced Indian computer makers to develop their own hardware and software design skills. Sridhar Mitta noted that, in 1983, the United States used an Intel 386 microprocessor as the base for a simple personal computer, whereas India employed the same microprocessor with the UNIX operating system to power mainframes that controlled large enterprises. India's closed environment also spurred the country's IT industry to develop advanced skills in system design, architecture, protocol stacks, compilers, device drivers, and boards.
Topic:
Security
Political Geography:
United States, India, and Asia

2277. Assessing U.S. Bilateral Security Alliances in the Asia Pacific's "Southern Rim": Why the San Francisco System Endures

Author:
William T. Tow
Publication Date:
10-1999
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
At the turn of the century, the United States' postwar alliance network remains a key component of its international security policy. That policy is fundamentally based on maintaining military superiority over current and potential rivals in the Eurasian landmass.
Topic:
Security
Political Geography:
United States, Eurasia, Asia, and San Francisco

2278. Containment by Stealth: Chinese Views of and Policies toward America's Alliances with Japan and Korea after the Cold War

Author:
Yu Bin
Publication Date:
09-1999
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
At the height of the Cold War, the dominant Western theories of alliance building in interstate relations argued that alliances tend to be motivated more by an external need to confront a clearly defined common adversary than by the domestic attributes of alliance partners. The newly reinvigorated U.S.-Japan alliance, however, together with the newly expanded NATO, seems to depart from the conventional pattern by emphasizing shared democratic values and by maintaining a high degree of ambiguity regarding the goals and targets of the alliance. Although these new features of American-led military alliances provide an anchor in an other- wise highly fluid situation in the post–Cold War world, many Chinese foreign-and defense-policy analysts believe that U.S. alliances with Asian countries, particularly with Japan, pose a serious, long-term challenge, if not a threat, to China's national security, national unification, and modernization. The ambiguity of the revised U.S.-Japan security alliance means that it is at best searching for targets and at worst aiming at China.
Topic:
Security
Political Geography:
United States, Japan, Asia, and Korea

2279. Crisis and Aftermath: The Prospects for Institutional Change in Japan

Author:
Rafiq Dossani
Publication Date:
08-1999
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
Impelled in large part by the nearly decade-long stagnation of the Japanese economy, institutions in Japan are undergoing fundamental changes. When Professors Masahiko Aoki, of the Stanford University Department of Economics, and Henry Rowen, director of the Asia/Pacific Research Center, were talking about these changes, they realized that an international conference on the subject would be useful and informative. With funding from the Asia/ Pacific Research Center and the Institute for International Studies, a distinguished group of speakers, commentators, and participants was brought together for a one-day conference to look at institutional changes in three distinct sectors of Japanese society: the political system, the bureaucracy, and corporations.
Topic:
Security
Political Geography:
United States, Japan, and Asia

2280. Nesting the Alliances in the Emerging Context of Asia-Pacific Multilateral Processes: A U.S. Perspective

Author:
Douglas Paal
Publication Date:
07-1999
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
As Americans consider their options for protecting and advancing their interests in Asia in the twenty-first century, it is natural that there will be wide-ranging views and vigorous debate. Recent events such as the 1996 Taiwan crisis, the Asian economic meltdown in 1997, and the exchange of state visits by presidents Bill Clinton and Jiang Zemin in 1997 and 1998 have intensified, then moderated and redirected, much of the debate over a very short span of time. Two years ago, for example, the Chinese were worrying aloud about American efforts to “encircle” China. Now they talk about “building a constructive strategic partnership with the U.S.” Despite these ups and downs, however, the fundamental choices for the United States have remained largely the same.
Topic:
Security
Political Geography:
United States, China, America, Taiwan, and Asia