Author Archives: jdingel

US cotton programs not WTO-compliant

The WTO has once again ruled in favor of the Brazilian complaint against US cotton subsidies, finding that US reforms have not brought its subsidies into compliance with previous WTO dispute settlement panel decisions.

15.2 (pdf): “The Panel considers that to the extent that the measures taken by the United States to comply with the recommendations and rulings adopted by the DSB in the original proceeding are inconsistent with the obligations of the United States under the covered agreements, these recommendations and rulings remain operative.”

Addendum: FT story.

Sachs-Warner?!

Why are people still using the Sachs-Warner index in empirical work? It’s a dummy variable, and it’s not driven by the tariff and NTB components. Surely by now someone must have built and made readily available a cross-country data set that better describes trade policy. And if not, that’s a project worth pursuing, right?

Is the dollar dive reducing global imbalances?

The FT on the dollar: adjustment or affliction?

But the growing evidence that the dollar’s decline will not be followed by a narrowing of global imbalances, merely a shifting of them around the world, gives cause for real concern.

Normally cool heads in central banks and international organisations are uttering notes of alarm. Mervyn King, governor of the Bank of England, warned last month, for example, that the big upward movements in other Group of Seven leading countries’ currencies against the dollar, while many oil states and China maintained a de facto dollar peg, were causing “great currency tensions”.

“I came away from the IMF meetings in Washington recently more concerned about the implications of these tensions precisely because the unwinding of the imbalances is not just a hypothetical prospect out there, but is happening now,” he said.

Arbitrary Development Numbers: MDGs

William Easterly has a new paper exposing silly development bureaucracy numbers: the Millennium Development Goals.

Measuring social and economic progress is not at all as straightforward as the discussion of the MDGs makes it seem. Setting targets in a particular way will make some regions look better and others look worse depending on a number of choices that any target-setting exercise must make. These choices include the following:

1. Choice of benchmark year

2. Linear vs. nonlinear relationships with time or per capita income

3. Absolute changes versus percentage changes

4. Change targets versus level targets

5. Positive vs. negative indicators

There has been very little discussion of these choices that were made in setting the MDGs. Sometimes, the choices made just seem a priori to make no sense; other times, they seem arbitrary and it is unclear on welfare grounds which measure to prefer; finally, the choices do not seem consistent across the seven MDGs. Unfortunately, as this paper will argue, many of the choices made had the effect of making Africa’s
progress look worse than is justified compared to other regions.

For example, for the poverty goal, countries are given credit when a citizen exits poverty, but met with silence if a citizen moves from near-poverty to a comfortable life. And why are the targets set vis-a-vis 1990, when the grading was announced in 2000? To meet targets, “17 African countries… would need 6 percent per capita growth over 2005-2015”: failing to meet the target is merely failing to produce a miracle.

Read the full paper. See a prior installment in arbitrary development numbers.

[HT: Pienso]

What’s new about foreign auto plants in the US?

Daniel Altman thinks it’s notable that Fiat and Volkswagen are thinking about building automobile plants in the United States. But that’s far from remarkable. Toyota has been building plants in the American South for years.

So if this story is newsworthy, it must be so because there is something distinct about European investment in the States or because it highlights the magnitude of the dollar’s fall. It’s not news that America has run a trade deficit for years, which is the same as saying its enjoyed significant net capital inflows for years, including investments in automobile plants.

What's new about foreign auto plants in the US?

Daniel Altman thinks it’s notable that Fiat and Volkswagen are thinking about building automobile plants in the United States. But that’s far from remarkable. Toyota has been building plants in the American South for years.

So if this story is newsworthy, it must be so because there is something distinct about European investment in the States or because it highlights the magnitude of the dollar’s fall. It’s not news that America has run a trade deficit for years, which is the same as saying its enjoyed significant net capital inflows for years, including investments in automobile plants.

What's new about foreign auto plants in the US?

Daniel Altman thinks it’s notable that Fiat and Volkswagen are thinking about building automobile plants in the United States. But that’s far from remarkable. Toyota has been building plants in the American South for years.

So if this story is newsworthy, it must be so because there is something distinct about European investment in the States or because it highlights the magnitude of the dollar’s fall. It’s not news that America has run a trade deficit for years, which is the same as saying its enjoyed significant net capital inflows for years, including investments in automobile plants.

Congress frustrated by MCC independence

The NYT reports that some members of Congress are unhappy with the Millennium Challenge Corporation’s rate of progress – it hasn’t spent fast enough. They want to grab the MCC’s unspent billions and make it come back to Congress when it needs money. This attack on the MCC’s independence undermines its founding purpose and has serious consequences:

If the agency gets the lesser Senate amount, under the current rules requiring the money up front, Burkina Faso, a West African country that has spent more than two years qualifying for and drafting its $560 million to $620 million plan, will get nothing, agency officials said. Tanzania and Namibia are ahead of it in line…

In small, poor countries like Burkina Faso, every burp and hiccup of an aid agency like the Millennium Challenge Corporation is news — and often front page news. David Weld, the agency’s country director for Burkina Faso, said he did not know how he could face people there if Congress did not come through with enough money to help them.

“What type of message does that send to Burkina Faso, a country that has spent a huge amount of political capital and money on this process?” he asked. “What does that tell the Togos, the Nigers that want to become eligible? It tells them: Do everything like Burkina Faso, make all these reforms, spend millions of your own money, and then maybe at the end we might be able to sign a compact with you — or maybe not.”