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With international trade increasingly undertaken within vertically fragmented supply chains, this paper considers the impact of changes in trade costs on domestic output. In the context of the UK’s exit from the EU we show that the negative impact on UK output will depend on changes in both domestic and export competitiveness. Since for many firms the majority of their sales are to the domestic market, the domestic competitiveness impact may be quantitatively more important. The impact on output will be more significant the greater the integration of firms in international supply chains, and the greater the asymmetric impact of leaving the EU on UK firms relative to EU firms.

African animal trypanosomiasis or nagana, caused principally by infection of the protozoan parasites

With increasing drug resistance in tuberculosis (TB) patient populations, there is an urgent need for new drugs. Ideally, new agents should work through novel targets so that they are unencumbered by preexisting clinical resistance to current treatments. Benzofuran 1 was identified as a potential lead for TB inhibiting a novel target, the thioesterase domain of Pks13. Although, having promising activity against Mycobacterium tuberculosis, its main liability was inhibition of the hERG cardiac ion channel. This article describes the optimization of the series toward a preclinical candidate. Despite improvements in the hERG liability in vitro, when new compounds were assessed in ex vivo cardiotoxicity models, they still induced cardiac irregularities. Further series development was stopped because of concerns around an insufficient safety window. However, the demonstration of in vivo activity for multiple series members further validates Pks13 as an attractive novel target for antitubercular drugs and supports development of alternative chemotypes.

When the UK leaves the EU, trade arrangements between the UK and EU will change. Most of the options for future UK‐EU relationships currently under discussion imply increased trade barriers, which will reduce trade and also have effects on output and prices. In this paper, we use a multi‐market partial equilibrium model to analyse the vulnerability of 122 manufacturing industries to Brexit. In all five Brexit scenarios we model, there is an overall reduction in UK manufacturing output. Output grows in some industries but at the expense of higher consumer and intermediate goods prices. High tech and medium–high tech sectors are more at risk of a decline in domestic production than lower tech sectors. In most areas of the country, demand for high‐skilled workers falls more than for medium and low‐skilled workers.

A potent, noncytotoxic indazole sulfonamide was identified by high-throughput screening of >100,000 synthetic compounds for activity against Mycobacterium tuberculosis (Mtb). This noncytotoxic compound did not directly inhibit cell wall biogenesis but triggered a slow lysis of Mtb cells as measured by release of intracellular green fluorescent protein (GFP). Isolation of resistant mutants followed by whole-genome sequencing showed an unusual gene amplification of a 40 gene region spanning from Rv3371 to Rv3411c and in one case a potential promoter mutation upstream of guaB2 (Rv3411c) encoding inosine monophosphate dehydrogenase (IMPDH). Subsequent biochemical validation confirmed direct inhibition of IMPDH by an uncompetitive mode of inhibition, and growth inhibition could be rescued by supplementation with guanine, a bypass mechanism for the IMPDH pathway. Beads containing immobilized indazole sulfonamides specifically interacted with IMPDH in cell lysates. X-ray crystallography of the IMPDH-IMP-inhibitor complex revealed that the primary interactions of these compounds with IMPDH were direct pi-pi interactions with the IMP substrate. Advanced lead compounds in this series with acceptable pharmacokinetic properties failed to show efficacy in acute or chronic murine models of tuberculosis (TB). Time-kill experiments in vitro suggest that sustained exposure to drug concentrations above the minimum inhibitory concentration (MIC) for 24 h were required for a cidal effect, levels that have been difficult to achieve in vivo. Direct measurement of guanine levels in resected lung tissue from tuberculosis-infected animals and patients revealed 0.5-2 mM concentrations in caseum and normal lung tissue. The high lesional levels of guanine and the slow lytic, growth-rate-dependent effect of IMPDH inhibition pose challenges to developing drugs against this target for use in treating TB.

Crystallography has guided the hybridization of two series of Trypanosoma brucei N-myristoyltransferase (NMT) inhibitors, leading to a novel highly selective series. The effect of combining the selectivity enhancing elements from two pharmacophores is shown to be additive and has led to compounds that have greater than 1000-fold selectivity for TbNMT vs HsNMT. Further optimization of the hybrid series has identified compounds with significant trypanocidal activity capable of crossing the blood-brain barrier. By using CF-1 mdr1a deficient mice, we were able to demonstrate full cures in vivo in a mouse model of stage 2 African sleeping sickness. This and previous work provides very strong validation for NMT as a drug target for human African trypanosomiasis in both the peripheral and central nervous system stages of disease.

High-throughput screening of 3.87 million compounds delivered a novel series of non-steroidal GR antagonists. Subsequent rounds of optimisation allowed progression from a non-selective ligand with a poor ADMET profile to an orally bioavailable, selective, stable, glucocorticoid receptor antagonist.

Book Review: Stephen J. Ball - Education policy and social class: the selected works of Stephen J. Ball, London, Routledge World Library of Educationalists, 2006. ISBN 0-415-36398-5.

Objective: Although it is commonly assumed that clinical trials are more costly than standard therapy, there have been no previous studies of the cost of conducting phase II trials in lung cancer. We retrospectively analyzed two National Cancer Institute of Canada phase II trials in previously untreated small cell lung cancer (SCLC) to determine the costs of conducting the trials in a cancer treatment centre. Both studies were clinical trials undertaken as part of the NCIC’s Investigational New Drug program: IND 69 and IND 50 evaluated docetaxel (taxotere) and gemcitabine, respectively. Methods: data management costs in a Canadian cancer treatment centre were determined from the time estimates provided by data managers to complete various protocol related tasks. Nursing and pharmacy personnel measured the time and supplies necessary to prepare and administer the chemotherapy. Physician fees were determined from the type and number of care visits required by the clinical protocols. Laboratory tests and imaging studies were costed according to the Ontario Health Insurance Plan (OHIP) Schedule of Fees and Benefits. To estimate whether phase II trials are more costly than standard treatment, we determined the cost of four cycles of VP-16-cisplatin, a standard treatment for SCLC. Results: The total cost of performing the docetaxel study was $18 443 for an average cost per case of $1317 and an average cost per treatment cycle of $683. The gemcitabine study cost more, due to the fact that the drug proved to be active against SCLC and more cycles of therapy were administered to a larger number of patients. Laboratory and administration costs were also higher, because of the drug administration schedule. The total cost of this study was estimated to be $64 670 and the average cost per patient entered was $2230 with an average cost per treatment cycle of $898. In comparison, the estimated cost of four cycles of VP-16-cisplatin chemotherapy was $3948 or $987 per treatment cycle. The major cost drivers in the clinical trials were laboratory and imaging tests which made up 17 and 39%, respectively, of the costs of the taxotere study, and 29 and 27%, respectively, for the gemcitabine study. Data management costs contributed 21 and 13% of the total costs, respectively. Conclusion: As the main cost drivers in these phase II clinical trials are laboratory and imaging tests, the cost of clinical trials could potentially be reduced by ensuring that only essential tests are required by protocol. Not surprisingly, the cost of conducting a trial of an active agent is greater than for an inactive agent, because more patients are treated and each patient receives more treatment. The implications for the per-case funding of phase II clinical trials are discussed.

2. Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 2.1. Description of the centre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 2.2. Allocation of expenditures to the radiation program . . . . . . . . . . . . . . . . . . . . . 88 2.2.1. Direct treatment-related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 2.2.2. Non-treatment related direct costs. . . . . . . . . . . . . . . . . . . . . . . . . . . 89 2.3. Cost allocation within the radiation program to treatment function . . . . . . . . . . . . 89 2.4. Computation of activity costs (cost per fraction) . . . . . . . . . . . . . . . . . . . . . . . 90 2.5. Sensitivity analyses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

The reduction in trade barriers in Europe through the Single Market Programme (SMP) was intended to increase competition in European markets, and hence welfare and efficiency. The paper examines how the SMP has affected trade patterns and what can be learnt from this regarding the impact on competitive behaviour. Combining an econometric and computable general equilibrium methodology, it is argued that (1) the SMP has indeed had a strong impact on competitive behaviour; (2) the extent of the impact depends both on changes in the intensity of competition as well as on changes in the nature of competitive interaction; (3) while all economies experience potentially large welfare gains from the SMP, it is the smaller economies that experience the larger gains, but this in turn suggests that they experience a greater degree of restructuring.

It is high time that the European Union had a coherent and sustainable European policy. Such a policy should comprise a strategy for the adaptation and extension of the EU of twelve. (sixteen with the EFTA states currently applying) to include other European countries as comparable members; the refinement of its various relationships with other southern and eastern neighbours; and the reappraisal of those fundamental values and shared interests that justify collective action by the EU. This article is mainly focused on policy towards central and eastern Europe, but it touches on a much broader issue about the adaptability of the west European integration model to a now very diferent Europe.

A computable general equilibrium (CGE) model is developed to examine the impact of international trade on the labour market. The model confirms the general conclusion that the effects of trade on labour demand or relative wages are small. It is argued that the ‘mainstream’ empirical trade model, of which the CGE model is one version, is unsuitable for providing accurate estimates of the labour market effects of trade, because its structure does not provide an appropriate model of either the skill endowments of the economy or the skill intensity of production.

This paper offers a new treatment of the labour market effects of international trade, based on a model in which intra-industry trade is explained on Heckscher-Ohlin principles. The model is more consistent with stylised facts about North-South trade than the traditional Heckscher-Ohlin model of inter-industry trade. Applying the model to trade between Italy and ‘non-advanced countries’ and inferring the factor content of intra-industry trade from the inter-sectoral relationship between factor intensity and average unit values of exports, we find that the labour market effects of intra- industry trade add significantly to the estimated factor market impact of trade.

The economic and political transformation of the Central and East European countries (CEECs) has been accompanied by a dramatic change in their trade orientation and in the nature of their trade relations with the European Union (EU).1 Before 1989 CEEC trade was more oriented towards the intra-CEEC market, but the collapse of the Council of Mutual Economic Assistance (CMEA) has led to a dramatic fall in trade amongst the CEECs and to a rapid growth of trade with the EU, which now accounts for the lion’s share of CEEC trade.

Introduction by Paul R. Krugman 1. The Non-Optimality of Optimal Trade Policies: The U.S. Automobile Industry Revisited, 1979-1985 Kala Krishna, Kathleen Hogan, and Phillip Swagel Comment: Garth Saloner 2. Trade Policy Under Imperfect Competition: A Numerical Assessment Anthony J. Venables Comment: David G. Tarr 3. Strategic Trade Policy in the European Car Market Alasdair Smith Comment: James Levinsohn 4. Deregulation of Scandinavian Airlines: A Case Study of the Oslo-Stockholm Route Victor D. Norman and Siri P. Strandenes 5. Industrial Policy in the Transport Aircraft Industry Gernot Klepper Comment: Heather A. Hazard 6. Trade and Industrial Policy for a 'Declining?' Industry: The Case of the U.S. Steel Industry Richard G. Harris 7. Strategic Manpower Policy and International Trade David Ulphand and L. Alan Winters 8. Industrial Organization and Product Quality: Evidence from South Korean and Taiwanese Exports Dani Rodrik 9. Import Surveillance as a Strategic Trade Policy L. Alan Winters Comment: James E. Anderson

Much of the literature on trade policy under oligopoly is concerned with establishing the welfare effects of small changes in some particular policy instrument, such as export subsidies or import tariffs. The welfare effects of these instruments are derived from their effects on the economy’s terms of trade, and on the scale of operation of ‘distorted’ domestic activities. Typically the literature makes little attempt to distinguish whether a policy is changing welfare through the terms of trade or through distortions. Furthermore, there has been little exploration of the interaction between different policy instruments. For example, how is the case for trade policy altered if other policy instruments are being used to manage domestic distortions? This approach is in marked contrast to the theory of policy developed for perfectly competitive economies. Here the method is to isolate the effects of policy on terms of trade and on distortions, and consequently to derive a theory of policy targeting. Trade policy should be used to manipulate the terms of trade and other instruments used to counter domestic distortion.

EC trade with Eastern Europe Jim Rollo and Alasdair Smith Despite agreements to open trade with Eastern Europe, the European Community has retained a substantial degree of protection against imports of ‘sensitive’ products, notably agricultural products, textiles and clothing, and steel. This article investigates how sensitive these products really are. It is true that the targeted products are important to the EC economy, particularly in the poorer or declining regions. Yet trade with Eastern Europe only amounts to a very small proportion of the size of these sectors. When a large increase in imports is simulated, the overall effects on the Community are not insignificant, but are well within the range of the normal experience of economic change. Even without taking into account the fact that Eastern markets for EC goods would also grow, trade liberalization is welfare-increasing, particularly far Eastern Europe. Thus ‘contingent protection’, which may seriously deter investment in Eastern Europe, may simply be protectionism in any sector in which Eastern Europe is successful.

The break-up of the Soviet Union Claudia Senik-Leygonie and Gordon Hughes This article looks at profitability and trade in the republics of the former Soviet Union. Looking at individual industries, republic by republic, there emerges a picture of some highly profitable sectors along with others with negative value-added. The most profitable industries, mostly associated with oil and gas extraction, are the least protected, the least intensive in labour and already the most developed. The least efficient industries include food processing and light industry and are the most protected ones. Trade patterns, both within the former Soviet Union and with the rest of the world, are unrelated to comparative advantage. Consequently sizable gains from trade are potentially available, and the relevant industries are identified. When the single trade balance constraint is replaced by constraints at the republic level, it is clear that Russia stands to benefit from not having to cover with its surpluses the deficits of the other republics. Russia again, along with Kazakhstan and Ukraine, should benefit from a shift to market-based terms of trade.

Trade with Eastern Europe Carl B. Hamilton and L Alan Winters Previous economic policy in the Soviet Union and Eastern Europe sought to restrict international trade with market economies. Hence, liberalization and reform should now lead to a huge increase in such trade. This will have a major impact both on the reforming economies and on their new trade partners. First, we develop an empirical model of trade flows between existing market economies, and use this to forecast long-run trade flows as the former Soviet Union and Eastern Europe are reabsorbed into the world economy. Second, we provide a more detailed analysis of one key sector, agricultural trade. We compare and contrast three regime changes: reform in the East, admission of the East to the EC CAP and worldwide success on agricultural liberalization in the GATT. Third, we adduce evidence of high quality human capital in Eastern Europe and argue that this will tend to confer a comparative advantage in quite sophisticated products. We conclude by stressing that since trade cannot be permanently and profoundly unbalanced, Western market economies can enjoy potential gains from trade only if they allow market access to emergent producers from the former Soviet Union and Eastern Europe.

A simple compact but general revealed-preference type of argument is used to derive results on the gains from trade, from terms of trade changes, and from exogenous resource growth. The approach extends to the welfare evaluation of public sector production. The relation between the sufficiency conditions for welfare improvement derived from this approach and the necessary and sufficient conditions derived in an alternative approach are briefly discussed. Most of the argument is conducted in the context of a representative-individual economy, though it is shown to extend in an essentially unchanged way to cases where redistribution is an issue.

If any type of direct income redistribution is permitted, a very weak condition ensures that it will not be desirable or necessary to permit production inefficiency in the process of a Pareto- improving tax reform. Inefficiency arises in models which make an implausible set of assumptions about the range of policies available to the government.

This paper presents a model of the multinational corporation focusing on a foreign firm which wishes to operate in a particular country. The firm must choose between direct investment and production in the country and production of the product elsewhere, followed by its export into the country concerned. The paper considers how government policy may influence this choice. Foreign direct investment may serve as a deterrent to entry, in the style of Dixit (1980). The effects of trade policy on foreign direct investment are very different in this oligopolistic model than in a competitive model. Depending on the nature of the oligopolistic equilibrium, tariffs may or may not induce foreign direct investment, they may or may not change the market structure, and they may have pro- or anti-competitive effects. In particular, it is possible for a tariff to deter foreign direct investment, contrary to the conventional wisdom.

This paper studies the effects of changes in the internal market of the European Community in a partial equilibrium model of imperfect competition with economies of scale. The model is numerically calibrated to data on ten industries and the effects of two policy changes are simulated. The first is a reduction in intra-EC trade barriers; the second is the elimination of firms' ability to price discriminate between different national markets. The simple reduction in intra-EC trade barriers generates modest welfare gains, but much more substantial gains are associated with integration of national markets into a single European market.

In an overlapping-generations model with stochastic population changes, a social security scheme with a fixed level of payments to the retired can be interpreted as providing social insurance against the risks of demographic change.

The objective of this paper is to illuminate the connections between the theory of commercial policy and the theory of optimal taxation. The standard theory of distortions, trade and welfare is presented in a framework that is more general than usual. Although the arguments used are mathematical they are not as rigorous as is usual in the literature on optimal taxation: the existence of optimal policies is always assumed, as is the differentiability of production and utility functions, supply and demand functions, and foreigners’ offer functions.

Publisher Summary In a major survey of the theory of international trade, dynamic trade theory calls for further, systematic analysis and synthesis, and notes the negligible dent made so far by intermediate and capital goods in the theoretical models employed by analysts of international trade. This chapter surveys the progress that has now been made in incorporating capital goods into trade theory and discusses the dynamic models of trade and growth. Within this model, it is possible to develop a treatment of welfare economics that broadly follows the well-known static theory of the gains from trade although with some important features peculiar to intertemporal theory. Few positive-economic results are obtainable within such a general model. The chapter also provides two alternative ways of simplifying the general model so as to obtain useful results: reducing the number of goods, factors, and time-periods ill the model, or considering only steady states. Results in particular cases, which turn out to be similar to the standard results in models without capital, may not be sufficient to show that capital makes no difference. The chapter provides steady-state analysis: when a comparative dynamic result in steady state is formally very similar to a comparative static result in a timeless model it tempts to give the former result the same title as the latter, but such terminology may sometimes be misleading.