Author Archives: jdingel

“Targets like 0.7 percent are like the Vatican’s tithe or the Islamic zakat.”

Jagdish Bhagwati did a Q&A session with the IHT. Here’s his comment on Jeff Sachs:

My worry is that such a technocratic approach will – if aid flows are increased precipitously (right now, there is no evidence that they will), and aid is seen to be wasted and misused – turn the spring in aid into winter. He will then have done for Africa, in the public eye, what he did for Russia with his technocratic shock therapy: an outcome that every serious Africanist scholar I have talked to fears.

Read the full interview for his thoughts on Africa’s absorptive capacity and other issues.

Preferential trade disappoints Japanese exporters

A story in the WTO Reporter, passed along by Richard Baldwin, says that trade “preferences” aren’t what they used to be:

The Japan-Thailand economic partnership agreement took effect Nov. 1, but in a technical twist, Thai tariffs on more than a quarter, or about 2,500 Japanese export goods, remain unchanged or end up being higher than the general tariffs that Thailand previously charged…

The Japan External Trade Organization is telling exporters to make sure to compare Thai general tariff rates with those under the Japan-Thai EPA and choose the lower ones, Harino said, admitting that it is “very complicated” work…

The two countries commenced EPA talks in 2004, and during the intervening period to date, Bangkok lowered its general tariffs on many industrial products, such as auto engines, auto parts, and tires. Of some 10,000 Japanese export items that would qualify for Japan-Thai EPA tariff cuts, approximately 25 percent would be either unchanged or end up being higher than WTO-based MFN general tariff rates until next March.

The Laffer curve for tariffs

“When tariffs come down, tariff revenue tends to go up.” – EU Commissioner Peter Mandelson urging ACP countries to liberalize.

There does seem to be some evidence supporting this claim, such as this early 1990s paper by Lant Pritchett and Geeta Sethi. Is there anything more to suggest that ACP countries really are to the right of the revenue-maximizing tariff rate?

Speaking of the Laffer curve for tariffs, check out Doug Irwin’s work on the 1880s debate in the United States.

[HT: Singleton]

Greg Mills: “The New Imperialists”

Greg Mills sees Paris Hilton and “white, generally loud” humanitarians in “a shabby-chic uniform of T-shirt, jeans and sandals” heading to Africa and decries them as “the new imperialists“:

It perpetuates perceptions of helplessness and a victim mentality. At a time when many have realized that African development depends on Africans determining their own policies and making those choices, such actions transfer power and emphasis away from the continent’s decision-makers.

[HT: Tom Palmer]

Greg Mills: "The New Imperialists"

Greg Mills sees Paris Hilton and “white, generally loud” humanitarians in “a shabby-chic uniform of T-shirt, jeans and sandals” heading to Africa and decries them as “the new imperialists“:

It perpetuates perceptions of helplessness and a victim mentality. At a time when many have realized that African development depends on Africans determining their own policies and making those choices, such actions transfer power and emphasis away from the continent’s decision-makers.

[HT: Tom Palmer]

Baker on dollar decline

Dean Baker defends President Bush:

So who is to blame for the falling dollar in this story? The answer is simple: Robert Rubin and the people who let it become overvalued in the first place. The high dollar of the second Clinton administration produced beneficial short-term effects (at least for people who did not have to compete against imports), but had inevitable long-term costs. We are now experiencing these long-term costs in the form of the decline of the dollar, which will lead to higher inflation and quite likely higher interest rates.

In this particular case, President Bush and his tax cuts are innocent bystanders. If anything, the expected effect of his tax cuts should be to raise the value of the dollar because the resulting budget deficits lead to higher interest rates in the United States.

In short when looking for people to blame for the falling dollar, the spotlight should be focused on the people who gave us the high dollar. It was a story of short-term gain for long-term pain, just like the Bush tax cuts, except the impact of the overvalued dollar is considerably larger.

UPDATE: knzn defends Rubin, arguing that hot air (the ‘strong dollar’ mantra) doesn’t hold much sway in foreign exchange markets.

Easterly on Bottom Billion

William Easterly did not like Paul Collier’s The Bottom Billion (pdf):

The image of the trap is reinforced by Collier’s alarming statement that the bottom billion are falling further behind the rest of us. So is there a poverty trap—ie, the poorest countries are condemned to the worst growth? No, this is yet another statistical misunderstanding.
If you pick out who are in the poorest 1 billion today, naturally they would be disproportionately likely to be those that had the worst growth of incomes over the previous decades…

So if you want to test whether there is a poverty trap, you need to look at whether those who were poor at the beginning of any period you want to look at were more likely to have poor economic growth than the rest afterwards. The answer is no.

Easterly is rather harsh in his review, but ends with a great quip: “Economists should not be allowed to play games with statistics, much less with guns.”

European firms and international markets

If you’re in Brussels, you might want to attend the Wednesday launch of a report by CEPR and Bruegel on firms in international trade.

The Happy Few: The Internationalisation of European Firms

New Facts Based on Firm-level Evidence


Report Launch, Hotel Silken Berlaymont, 11-19 Boulevard Charlemagne, Brussels

November 7th, 2007, 13:30 – 15:00

The panel includes report authors Gianmarco Ottaviano and Thierry Mayer, plus Stefano Scarpetta (OECD) and Gert-Jan Koopman (DG Enterprise, European Commission).

UPDATE: Ottaviano and Mayer briefly summarize the report over at VoxEU.

DeLong on global imbalances

Brad DeLong brings good news:

As long as imbalances of world trade and capital flows unwind slowly and smoothly, the magnitude of any global economic distress should be relatively small… The prospect of a truly hard landing — one where global investors wake up one morning, suddenly realize the US current accounts cannot be sustained, dump dollars and crash the global economy — is becoming less likely with each passing day.

And warnings:

Under two scenarios — both concerning China — the unwinding of global imbalances could cause regional if not global depression… Today, the principal source of international economic disorder is made in China, owing to factions inside its government that hope to avoid a more rapid appreciation of the yuan’s value.

Via Thoma.