The Custom-House

"Is Trade Good for Your Health?"

Theory doesn't tell you what impact more liberal trading rules will have on public health.

Lower tariff and non-tariff barriers to trade may reduce the cost and increase the variety and quality of available health related goods and services.  Increased average incomes may increase the demand for those goods and services.  Ideas and best practice may spread with trade.  If trade creates profit opportunities, and stimulates investment and growth, it may contribute to increased incomes and increased demand for private and public health goods.  Increased foreign investments by multinationals may be associated with better working conditions.

Do rising incomes lead to democracy?

Do rising incomes lead to democracy? Daron Acemoglu and his co-authors fail to find "a significant causal effect of income on democracy": Reevaluating the Modernization Hypothesis.  ( also available as a National Bureau of Economic Research working paper - Reevaluating the Modernization Hypothesis,  August 2007). 

Here's the abstract:

More CFIUS Reform Appraisals

Attorneys dealing with the U.S. process of vetting foreign direct investments for security concerns have been busy explaining what the recent Congressional reforms mean for this process (the CFIUS process, named for the Committee on Foreign Investment in the United States, which does the vetting). 

Carl A. Valenstein, Josh Mecham, Rebecca S. Hartley and Natasha Christensen of Thelen, Reid, Brown Raysman & Steiner have a relatively pessimistic take: United States: Amendments To Exon-Florio Process Made By The Foreign Investment And National Security Act Of 2007 May Have A Chilling Effect On Foreign Investment In The United States (August 23). 

This is a nice article with useful background to the reform, a reasonably detailed description of the changes, and a short concluding analysis.  While many believe the reforms will lead to less politicization of the process, these authors do not:

Finally, because of the enhanced reporting by CFIUS to Congress and, notwithstanding the confidentiality safeguards, the Exon-Florio review process is likely to become more politicized and any foreign investor engaged in a transaction involving critical infrastructure or technology should be prepared in advance not only with a legal but a governmental relations strategy.

Noel J. Francisco and Bevin M.B. Newman of Jones and Day provide a brief description of the changes with no analysis: United States: Congress Reforms CFIUS Review Process (August 22).

There have been other assessments.  Click on the "CFIUS" link in the topics list in the right column for more links.

Sugar Policy Survey

Remy Jurenas surveys U.S. sugar policy(Sugar Policy Issues, Congressional Research Service, July 16, 2007). 

This is a good overview of the broad outlines of U.S. sugar policy, with attention to issues raised in recent trade negotiations and to current debates over the farm bill. 

Here's the abstract - reorganized somewhat:

Congress and trade - where things stand

Daniel Ikenson surveys the status of trade legislation in the current Congress, over at Cato-at-liberty: Summoning the Ghosts of Smoot and Hawley (Cato-at-liberty, August 22).   

This is a very useful overview.  Ikenson is worried, "This Congress, more than any in my lifetime, is apt to upset the apple cart in ways we may regret for years to come."

Another upbeat appraisal of this year's CFIUS reform

David Marchick and David Fagan think this year's reform of the process by which foreign direct investment is vetted for national security issues (done through Treasury's Committee on Foreign Investment in the US, so the "CFIUS" process) was done well: Rational security (TheLawyer.com, August 20).  The authors - attorneys at Covington and Burlington - provide a brief but useful analysis of each of the major revisions. In sum:

Exports and productivity

Reuben Hernandez-Murillo writes about the characteristics of U.S. exporters in the St. Louis Fed's August National Economic Trends: U.S. Exporters: A Rare Breed.

He notes that relatively few U.S. firms are involved in exporting: in 2000, out of 5.5 million U.S. firms, only 4% export, and 10% of these account for about 96% of exports.

He goes on to point out that exporters are distinctive.  Compared to firms that don't export: they have higher value-added per worker, higher total factor productivity, ship larger volumes of products, use more skilled labor, use more capital, use more advanced technology, pay higher wages, and are more innovative.

Data indicates that exporting firms have higher productivity, but not higher productivity growth, implying that it is the more productive firms that begin to export. High entry costs to the export sector may deter less productive firms. Exporting firms do appear to have more rapid growth in employment and output.

Reducing the costs of entering export markets can lead to an increase in aggregate productivity within the economy: