Ben Muse

Doha at Davos

Dan Drezner links to, and quotes from, Financial Times and Bloomberg stories on the informal meeting of trade ministers during the Davos World Economic Forum: Those trade ministers mean business!!

The Latin bid for U.S. IT services business

Can Latin American companies compete with India in selling IT services to the U.S.?   Geri Smith explores the topic in a Business Week "Online Extra": Can Latin America Challenge India?.

Sir John Cowperthwaite, 1915-2006

As Financial Secretary of colonial Hong Kong from 1961 to 1971, Sir John Cowperthwaite was instrumental in laying the groundwork for the Hong Kong miracle. 

He died a few days ago at 90.  Here's his obituary from the Telegraph: Sir John Cowperthwaite:

WiFi in Mauritius

Laurie Goering reports that Mauritius is likely to become the first country completely covered by WiFi: 'Mauritius Set to Become First 'Cyber-island'  (Digital Communities, Jan 26, 2006):

Growth in the 1990s

The World Bank has a new review - available on the web - on the growth experiences of the 1990s: Economic Growth in the 1990s: Learning from a Decade of Reform .

The World Bank's Poverty Reduction and Economic Management (PREM) Network has prepared a study on development lessons of the 1990s. The report reviews the growth impact of the main policy and institutional reforms introduced in the 1990s, presents a broad perspective on the events, country experiences, academic research and controversies of the decade, and reflects on how they alter our thinking about economic growth. Economic Growth in the 1990s: Learning from a Decade of Reform can be purchased from our online bookstore.                                  

The report complements  a series of lectures by leading development practitioners such as Larry Summers, President of Harvard University and Former U.S. Secretary of the Treasury, and Fernando Henrique Cardoso, Former President and Former Minister of Finance of Brazil, discussed their experience as policy makers at the forefront of policy implementation in the 1990s.

I learned about this from New Economist: Rodrik on the 'augmented' Washington consensus.  The New Economist post points to a review by Dani Rodrik, and is worth a look.

Challenges of WTO Participation

Countries don't just show up in Doha, Cancun, Geneva, or Hong Kong and being negotiating.  They don't just decide one night to bring an accusation against a foreign nation in the WTO dispute settlement process.  Nations don't reach consensus instinctively on how to respond to changing trade environments.

Trade issues are complex.  A lot of economic and legal analysis and research, planning, soul-searching, advocacy, lobbying, agonized decision-making, canvassing of constituents, coordination or conflict between government departments and agencies, searches for allies, and more, take place behind the headlines. 

In many instances, trade process participants are poor countries, with limited analytical, legal, or administrative resources.  (Alan Beattie showed how hard it is for a poor country to participate last December in his story about the travails of Zambia's Trade Minister, Dipak Patel: Dipak Patel and Doha .)

For the last few evenings I've begun reading the new book, Managing the Challenges of WTO Participation, edited by Peter Gallagher, Patrick Low, and Andrew Stoler.  Challenges promises to provide insights into the work behind the headlines.

A trip to Tawi-Tawi

When winter comes, and it gets cold in Alaska, with short days, and long, dark, dark nights, I day-dream about warm, sunny Mauritius.... and Tawi-Tawi.

Roehlano Briones, Philippine economic consultant, got to go to Tawi-Tawi, and reports: Developing the fringes: Tawi-Tawi as a freeport zone .

This could take quite a while

The Doha Round negotiations are beginning to jerk forward again with informal trade minister meetings at the Davos World Economic Forum.  Are we likely to see progress this year?

Simon Evenett  (of the University of St. Gallen) doesn't see the Doha Round ending until 2009 if things don't come together shortly: The WTO Ministerial Conference In Hong Kong: What Next?.

There are reasons to worry about the prospect of a deal in 2006:

How can the U.S. move the Doha Round forward?

The Doha Round is moving forward slowly.  That might not be so bad, but time is running out.  The Hong Kong meeting of member nation ministers didn't accomplish much.

Claude Barfield surveys the views of some knowledgeable observers ("The Doha Round: Bang or Whimper?") and comes down on the pessimistic, "whimper," side.

Agricultural interests in the E.U. are a key stumbling block to progress.  Large developing countries are also reluctant to make the industrial and services concessions that might give the E.U. a pretext to compromise.   

Two short papers look at political steps the U.S. could take to put pressure on the large developing countries, and/or the E.U., to move the negotiations forward.

You've just become Finance Minister of Mauritius. What now?

It's 1982. 

Your party, after years in opposition, has won the election and taken office as a part of a coalition.  You...have been made Minister of Finance.

But things are not good.  Growth in the economy's three key sectors (sugar, the export processing zone, and tourism) has stalled, unemployment is high, real wages have been dropping, the budget deficit is very high, and Mauritius is involved in a structural adjustment program with the IMF and World Bank.

What are you going to do?

Let Philip English set the stage and put you on it, in the World Bank publication: Mauritius. Reigniting the Engines of Growth. A Teaching Case Study.

Here's the teachers note: Mauritius.  Reigniting the Engines of Growth.  A Teaching Case Study.  Teaching Notes.

What you can't know in 1982 is that great days are ahead.

How much does it cost to commit a terrorist act?

In their new book, Financial Statecraft: The Role of Financial Markets in American Foreign Policy, Benn Steil and Robert Litan estimate the costs of commiting recent terrorist acts:

International Economic Law Blog

Joel Trachtman of the Fletcher School of Law and Diplomacy, and Petros Mavroidis of Columbia, are co-blogging at the International Economic Law and Policy Blog .

The blog is sponsored by the WorldTradeLaw.net

I learned about it from Daniel Drezner .

Service offshoring improves U.S. productivity

Offshoring of services (sending traffic ticket data processing work to Liberia, for example) increases U.S. productivity.  That's what Mary Amiti and Shang-Jin Wei find in this new National Bureau of Economic Research working paper: Service Offshoring and Productivity: Evidence from the United States  (NBER #11926; January 2006). 

From the abstract:

The practice of sourcing service inputs from overseas suppliers has been growing in response to new technologies that have made it possible to trade in some business and computing services that were previously considered non-tradable.

This paper estimates the effects of offshoring on productivity in US manufacturing industries between 1992 and 2000, using instrumental variables estimation to address the potential endogeneity and errors in measurement of offshoring.

It finds that service offshoring has a significant positive effect on productivity in the US, accounting for around 11 percent of productivity growth during this period. Offshoring material inputs also has a positive effect on productivity, but the magnitude is smaller accounting for approximately 5 percent of productivity growth.

Finding new and better ways of doing things, whether they involve new technologies or new ways of organizing production, is essential to U.S. income growth.

More on Mauritian Growth

Mauritius has had one of the fastest growing economies in Africa.

Brian Chernoff and Andrew Warner (C&W) start by explaining how unlikely this fast growth was, in this draft article on Mauritian growth (in preparation for a conference on growth in another small island economy - Iceland)  Sources of Fast Growth in Mauritius: 1960 – 2000 (1st draft, Center for International Development at Harvard University, May 2002):

Mauritius is a small remote tropical island in a forgotten section of the Indian Ocean. From the perspective of current research on the sources of fast economic growth, Mauritius’ endowments would not have seemed particularly favorable for growth back in the 1960’s or early 1970’s. It is geographically remote. Its climate is tropical, with attendant disease burdens and problems with tropical agriculture. The size of the domestic market is tiny, with little scope for exploiting domestic economies of scale. It had rapid population growth in the 1960’s and seemed to be at risk of a Malthusian trap.  And its main export product at the time, sugar, was subject to all the risks of the international sugar market, not only international price risk but also the risk from devastating cyclones. Its export sector in the 1960’s was anything but diversified, with sugar dominating exports. It was thus a natural resource intensive economy subject to the curse of natural resources. Mauritius also had a history of colonial domination by several powers and as a result its population was a mixture of several ethnic groups, with all the social and political risks of ethnic strife.

Mauritian growth has been impressive since 1970.  C&W calculate that annual GDP growth averaged about 1% in the 1960s, about 5% from 1970-1982, and about 6% thereafter.  It was relatively variable up to the mid-eighties, relatively stable after:

 

(Adapted from Chernow and Walters)