Author Archives: jdingel

Exports & HIV in Africa

Emily Oster finds a downside to exports in Africa – transportation and trade spread epidemics (pdf):

I find a large and significant positive relationship between HIV and exports: a doubling of exports appears to lead to as much as a quadrupling in number of new HIV infections, which suggests that if exports overall had been 25% lower in Africa over the course of the epidemic only about half as many people would have become infected. In addition, this relationship seems to explain at least some of the very large decline in HIV prevalence in Uganda in the 1990s, which is typically attributed to the ABC (Abstain, Be Faithful and use Condoms) campaign, a widely replicated anti-HIV education effort. A decline in the coffee market accounts for between 30% and 60% of the decline in HIV incidence, suggesting the success of the ABC campaign may be overstated…

A central concern with interpretation is the possibility that is not the export-transit mechanism which drives the result but, rather, some omitted variable (for example, GDP) which drives both exports and HIV. Although this is potentially consistent with the primary results, I argue that there is evidence in favor of a causal interpretation of exports. First, the relationship between HIV and exports is stronger in areas with a greater density of roads and areas closer to ma jor cities, which is consistent with the transit mechanism. Second, instrumenting for export volume with world commodity prices also points to a positive and significant relationship. Third, the relationship between exports and HIV is stronger in countries where the major export is more closely linked to trucking. Finally, new HIV infections can be linked directly to truck imports, which strongly points to an effect of transit.

Of course, it’s not international trade per se that increases the spread of HIV. If economic activity within national borders spurred increased use of truckers to transport goods, that would result in the same effect. And the benefits of economic growth may outweigh the costs of higher HIV incidence. Nonetheless, this isn’t good news.

[HT: MR]

Panitchpakdi: Regionalism for development

Former WTO DG and current UNCTAD Secretary-General Supachai Panitchpakdi on “regionalism for development“:

[D]eveloping countries should strengthen regional cooperation with other developing countries, and proceed carefully with regard to North-South bilateral agreements…

Bilateral FTAs often transform formerly non-reciprocal trade preferences between developed and developing countries into symmetric market access regulations; thus, the cornerstone of the post-war international trade system, the special and different treatment of developing countries, is continuously being eliminated…

developing countries often have to accept far-reaching commitments regarding formerly classical domestic policy without being adequately compensated in terms of warranted market access and market success…

Simultaneous participation in many FTAs with different rules and implementation horizons makes policy coordination in developing countries increasingly difficult…

[In South-South PTAs,] initial foreign competition within the region may be less difficult to handle, the technological gap vis-à-vis competitors from more advanced countries outside the region may be easier to close, and the probability of finding a level playing field is greater.  In other words, the regional market often sets less exclusive benchmarks than competition with mature suppliers, so that even production at the infant industry stage can be successfully broadened.

I’m not convinced that preserving SD&T or opening trade between similar countries are critical to economic development, but UNCTAD has a 240 page report that makes the case. I just have to find time to read it!

[HT: Emmanuel]

The renminbi’s depreciation

Brad Setser reports that Chinese exports to India grew by 67.5% in the first three quarters of 2007:

The impact of the RMB’s depreciation (yes, depreciation – the RMB hasn’t appreciated enough v the dollar to offset the dollar’s depreciation against many other currencies) on a host of other emerging economies has been an under-reported story.

The renminbi's depreciation

Brad Setser reports that Chinese exports to India grew by 67.5% in the first three quarters of 2007:

The impact of the RMB’s depreciation (yes, depreciation – the RMB hasn’t appreciated enough v the dollar to offset the dollar’s depreciation against many other currencies) on a host of other emerging economies has been an under-reported story.

The renminbi's depreciation

Brad Setser reports that Chinese exports to India grew by 67.5% in the first three quarters of 2007:

The impact of the RMB’s depreciation (yes, depreciation – the RMB hasn’t appreciated enough v the dollar to offset the dollar’s depreciation against many other currencies) on a host of other emerging economies has been an under-reported story.

The distribution of ag subsidy income

Thomas Hertel, Roman Keeney &  L. Alan Winters explain why agricultural liberalization is so tough to achieve:

The “average” farm household in the United States is little affected by the trade reforms currently being contemplated in Geneva, but these reforms imply significant losses primarily for the very richest households involved in production of highly protected commodities. Meanwhile, in the developing world, many of the benefits of rich country agricultural liberalisation are translated into reduced poverty….

[I]n the United States, farm income accounts for less than 10% of total income of farm households… [O]ur estimates of the impact of Doha on the average farm household’s income suggest that it is statistically indistinguishable from zero! If this is the case, then what is the source of such strong opposition to reform?… In the United States, most farm households earn relatively little from farming, but those large farms producing sensitive products tend to be specialised, with the richest deriving up to 90% of their income from agriculture…

In contrast to the negligible impacts on the average US farm household, full agricultural trade liberalisation would cut the total income of the wealthiest rice farmers by about 19% and that of cotton farmers by 10%… It is these wealthy, highly specialised households in a few heavily protected sectors that stand in the way of serious agricultural reform in the US. Indeed, around one half of producer revenue in the US rice and sugar sectors over the period 2001-2005 were attributable to farm programs., while more than a third of cotton revenues are directly attributable to government programs. This sharp concentration of potential losses among a relatively small number of influential households has made reform in the US difficult indeed.

Read the full column for other important insights into agriculture at the Doha Round.

IMF WEO: No anti-trade arguments here

Clive Crook reports on the IMF’s World Economic Outlook:

The IMF splits globalisation into two components of economic openness: trade and foreign investment. Trade openness actually tends to reduce inequality and financial openness tends to increase it, the report finds. For the developing countries, the two roughly cancel out: their net effect is slightly pro-equality. For the rich countries, the balance is anti-equality: the disequalising influence of cross-border investment outweighs the equalising influence of trade. So although these numbers do provide a rationale of sorts for curbing cross-border flows of investment – harmful as that would be for growth – they offer no support for trade barriers. There is nothing here for the anti-trade lobby. Trade barriers inhibit growth and worsen inequality, in rich countries and in poor countries, says this report.

Read the full column, titled “End global inequality: become a Luddite,” to learn of Crook’s frustration with coverage of reactions to the report.