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Since the Aid for Trade (AfT) Initiative was launched in 2005, there have been many studies investigating the effects of AfT on trade and foreign direct investment (FDI). Most studies have found positive effects of AfT on exports and imports of recipient countries, as well as on aggregate FDI flows to recipient countries. Lee and Ries (World Dev 84: 206–218, 2016) and Ly-My and Lee (World Econ 42: 2120–2143, 2019) found positive effects of AfT particularly on greenfield FDI to recipient countries. Noting that there are two entry modes of FDI (greenfield and M&A), this study fills a gap in the literature by investigating the effects of AfT on cross-border M&A flows to recipient countries. By using the system GMM estimator with a dataset of 102 countries for 2003–2016, this paper finds evidence that AfT has a positive and significant effect on the US dollar value of M&A investment flows to recipient countries. Specifically, we find that AfT results in an increase in the dollar value of M&A FDI inflows because it increases both the extensive and intensive margins of M&A deals as well as source countries. Our results add to the beneficial effects of AfT on the recipient countries, as there is ample evidence of the benefits of M&A FDI.

This paper presents findings from a study that synthetically assessed the three major transmission channels of international business cycles: trade, foreign direct investment (FDI), and portfolio flows between economies with multiple fixed effects. Results showed that real and financial integration generates heterogeneous impacts on business cycle comovement. Trade integration and greenfield FDI lead business cycle comovements, likely due to deepening intra-industry trade and dense global value chains. Higher debt market integration is associated with more synchronized business cycle comovement, while equity integration leads to business cycle divergence.

In this paper, we investigate six channels through which population aging affects output growth per capita of 35 OECD countries where the old dependency ratio is already quite high. The six channels we consider are changes in: (i) physical capital; (ii) human capital; (iii) average working hours; (iv) labor participation rate; (v) age composition of 15–64 (the share of population aged between 15 and 64 years; and (vi) total factor productivity (TFP). We first confirm findings from previous studies that aging in OECD countries has negative effects on GDP growth per capita. We then find that the most important channel through which the negative effects of aging on economic growth operate is lowered TFP growth. Across our empirical specifications, lowered TFP growth associated with aging explains more than fully the lowered growth rate of GDP per capita. We also find evidence of demographic deficit (decreases in working age population share), but this negative effect of aging is more than nullified by compensating increases in the average working hours and the labor force participation rate. We conclude that because TFP growth rate can be permanently lowered, aging's negative effects on GDP growth per capita are expected to be permanent.

This study empirically examines how COVID-19 damages have impacted foreign direct investment (FDI) using quarterly data of bilateral FDI flows from 173 to 192 countries from the first quarter of 2019 to the second quarter of 2021. We measure the severity of COVID-19 damages using three indicators—the number of confirmed cases, the number of deaths, and the stringency index of government policies that restrict people’s activities. We differentiate FDI flows in terms of two different entry modes—greenfield FDI and cross-border mergers & acquisitions (M&A). FDI flows are measured in terms of the number of cases/deals and the US dollar values.We find heterogeneous effects of COVID-19 damages on FDI according to sectors and entry modes. In the manufacturing sector, COVID-19 damages in host countries have had significant negative impacts on both greenfield FDI and cross-border M&A, whereas those in home countries do not show any significant negative impacts on both types of FDI. In the service sector, on the other hand, COVID-19 damages in both the host and home countries are found to have negative impacts on greenfield FDI, whereas the impact of COVID-19 on cross-border M&A appears to be mostly insignificant.

This study empirically examines how the coronavirus disease (COVID-19) has impacted foreign direct investment (FDI). The authors find heterogeneous effects of COVID-19 on FDI by sector and entry mode. The severity of COVID-19 in host countries negatively affected both greenfield FDI and cross-border mergers and acquisitions in the manufacturing sector. But the situation of home countries did not seem to matter. Greenfield FDI in the service sector was affected by the situation in both host and home countries.

Many studies have found that Aid for Trade (AfT) is effective in promoting the exports and imports of recipient countries. Recently, Gnangnon (The World Economy, 42, 2019 and 396) and Kim (The World Economy, 42, 2019 and 2684) found that AfT also contributes to the export diversification of recipient countries. We extend previous studies by assessing the effects of AfT on import diversification of recipient countries by estimating a two‐step System GMM on a data set of 104 countries in 2003–2016. Our empirical results reveal that AfT contributes to the diversification of both import commodities and import partners. This effect is particularly strong when partner countries are Non‐DAC countries. Our empirical evidence further strengthens the case for AfT because previous literature indicates that both export and import diversification are beneficial.

Using a panel dataset of 105 developing countries for the period 2003–15, this paper assesses the effects of Aid for Trade (AfT) on greenfield FDI flows to the aid‐recipient countries. Particularly, this paper classifies the total dollar value of greenfield FDI flows to each recipient country in terms of four different layers: the extensive and intensive margins of projects as well as the extensive and intensive margins of source countries. Applying the system GMM estimator, this paper finds that AfT not only increases the dollar value of FDI flows to the recipient countries but also helps diversify the greenfield projects and source countries. In addition, this paper finds that AfT has a greater effect for greenfield FDI from donor (developed) countries than from non‐donor (developing) countries. Among the three components of AfT, aid for trade‐related infrastructure and aid for trade policy regulations are found to have positive links with greenfield FDI, irrespective of source‐country groups, yet their effects are larger for developed source countries. In contrast, aid for building productive capacity hinders greenfield FDI flows from non‐donor countries, while it promotes greenfield FDI from donor countries. We offer some explanations for this finding.

Coronavirus disease (COVID-19) has been an unprecedented, once-in-a-century gamechanger for the world. The central focus of Post-COVID Asia is the new world that will emerge after the coronavirus. In particular, this book explores how deglobalization will proceed in the post-COVID world and what kind of impact deglobalization will have on Asian economies. After all, in the last few decades, Asia has leveraged globalization to become the world's fastest-growing, most dynamic region. Therefore, an urgent challenge facing Asian economies is to figure out how to survive and thrive when the globalization which served them so well is giving way to deglobalization. Opportunities have emerged for Asian economies amid the winding down of the third wave of globalization. In fact, the next wave of globalization is already beginning to take shape, in tandem with the Fourth Industrial Revolution, which is full of exciting new technologies. This book offers insights that would help governments, companies and people in Asia to ride the next wave of globalization to power their prosperity. © 2021 by World Scientific Publishing Co. Pte. Ltd.

The Asia–Pacific Economic Cooperation (APEC) forum, whose approach is voluntary and non-binding in open regionalism, has been criticized for its alleged failure to develop a rapid liberalization process and to contribute to a greater level of intra-regional trade in the APEC region. Nonetheless, we find that APEC has been contributing to intra-regional trade creation, particularly in trade in manufactured goods as compared to trade in non-manufactured goods. This finding is robust to the various fixed-effect models and the first-differencing models which are applied to the gravity equation.

The Chinese economy is slowing down and is in the midst of a structural transformation from export-led and investment-led growth to domestic demand-led and consumption-led growth. While there are widespread concerns among China's trading partners about the effect of the slowdown in China's growth on their exports, China's structural changes are also likely to have a significant impact: for example, China will import fewer machines and more cosmetics. The central objective of the present paper is to empirically examine the effect of China's structural transformation on the exports of East Asian economies, which have close trade linkages with China. We find that economies that have failed to increase the share of consumption goods in their exports to China have suffered larger declines in their quantities of exports to China. In addition, economies that have suffered losses in their shares of China's parts and components imports have faced reductions in their shares in China's total imports.

Summary The Aid for Trade (AfT) Initiative was launched in 2005 at the Hong Kong Ministerial Conference where high-income countries pledged to increase their AfT contributions to developing countries. AfT, comprised almost entirely of aid for trade-related infrastructure and building productive capacity, would promote growth by easing supply-side constraints and improving transportation, energy, and communication infrastructure. By lowering costs of operating in recipient countries, AfT may increase both trade and investment. Most research on the effects of AfT on international transactions focuses on trade. The sparse research on investment investigates aid and net foreign direct investment flows based on the international balance of payments. We contribute to the literature by assessing AfT effects on new greenfield investment. Using bilateral data for 25 donor and 120 recipient countries for the period 2003–13, we find that bilateral AfT promotes greenfield investment. Our preferred specification includes bilateral and country-time fixed effects and employs the Poisson Pseudo-Maximum Likelihood (PPML) estimator. Robust effects emerge between the top five donors and more developed recipient countries, cases where aid flows are large. Thus, we see evidence that a critical level of aid is required to encourage greenfield investment. Both aid for infrastructure (particularly, transportation and energy) and building productive capacity are found to exert strong effects. To the extent that greenfield investment creates jobs and generates technology transfer, it appears that AfT is accomplishing its development objectives, at least with regard to the more advanced recipient countries.

Using bilateral flow data among 25 Organizations for Economic Co-operation and Development and 45 high-income and 95 non-high income countries spanning 2003~2012, we empirically investigate how bilateral greenfield investment responds to common membership in Regional Trade Agreements. Unlike the Regional Trade Agreement-trade nexus, there have been very few studies that investigate the effects of Regional Trade Agreements on bilateral Foreign Direct Investment flows. Our chosen model specifications include Poisson Pseudo-Maximum-Likelihood estimator with bilateral and country-time fixed effects. We find that common membership in Regional Trade Agreements discourages greenfield investment in Organization for Economic Co-operation and Development-high income country pairs whereas they promote nonhigh income country pairs. We also find that lead and lagged Regional Trade Agreement common membership discourages greenfield investment in Organization for Economic Co-operation and Development-high-income pairs while it encourages non-high-income country pairs.

The main purpose of this paper is to provide an in-depth analysis of the anatomy of China's automotive exports, relying on the literature on firm and product heterogeneity. For this purpose, we use highly disaggregated HS 8-digit product-category level data collected by the Chinese Customs Office for 2000 and 2008, and we distinguish between foreign firms, domestic public firms, and domestic private firms. We also decompose automotive products into autos and auto parts and components (P/C). We then calculate both the extensive margins – number of products exported – and intensive margins – average value of exports per product – of China's automotive exports. We estimate gravity equations to assess the determinants of China's exports of autos and auto P/C. Overall, our analysis yields a number of new, interesting stylized facts about China's automotive exports by confirming the need for taking into account different types of heterogeneity in analyzing international trade.

Since the World Trade Organization (WTO) Doha Development Agenda (DDA) negotiations started in 2001, the importance of aid for trade (AfT) has been well recognised as a useful tool for facilitating trade, economic growth and social development in developing countries. At the WTO Hong Kong Ministerial Conference in December 2005, the ‘AfT initiative’ was launched and many high-income member countries pledged to increase their AfT contributions, particularly for the least developed member countries (LDC). This paper aims to assess whether and to what extent the WTO's developing member countries have received more AfT. For this purpose, a system generalised method of moments is applied to a sample of 118 recipient countries for the period 2001–10. We find evidence that while LDC WTO members on average receive relatively more AfT than other developing countries, the difference has not increased since launch of the AfT initiative. Among the three categories of AfT, the positive WTO membership effect for LDC members increased for building productive capacity and for trade policy and regulation, but declined for infrastructure.

In this paper we examine the role of investment promotion agencies (IPA) in promoting outward foreign direct investment (FDI) from Japan and Korea. Looking at two home countries enables us to control for both country-pair time-invariant characteristics and host-country time-varying characteristics. Our empirical results suggest that home-country IPA tend to be more effective in promoting outward FDI in politically risky host countries. However, this finding depends on whether the home-country firm is listed or unlisted. More specifically, we find that the positive effect of home-country IPA on outward FDI in politically risky countries is limited to unlisted home-country firms, which tend to be less productive.

Using panel data for 142 countries for the period from 1960 to 2014, we assess the effects of population aging on economic growth. We find that population aging proxied by old-age population share (or old-age dependency ratio) negatively affects economic growth only when it reaches a certain high level and its negative effects grow stronger as population aging deepens. The nonlinear relationship between population aging and economic growth is associated with the historical nonlinear relationship between the shares of old and working-age population. In the early stages of a demographic shift in most countries, as the old-age population share increases, the working-age population share also tends to increase. Only when the share of old-age population is sufficiently high, the increase in the share of old-age population has coincided with the decline in the share of working age population, thereby having a negative relationship with economic growth. These results can clarify why some previous papers failed to uncover a negative relationship between aging population and economic growth. We also find that population aging has hampered economic growth during more recent years, especially in more aged countries which are mostly developed countries.

This paper aims to gauge the impact of the global financial crisis on bilateral holdings of financial assets among East Asian countries. For this purpose, this paper uses the International Monetary Fund's Coordinated Portfolio Investment Survey (CPIS) data. We first present information about financial linkages between the CPIS-participating eight East Asian economies and other East Asian economies before and after the global financial crisis of 2008. We then apply the gravity model to assess the determinants of the cross-border holdings of foreign securities for four major East Asian financial investors – Hong Kong, Japan, Korea and Singapore. We find only few changes in the bilateral holdings of financial assets among East Asian countries in the post-crisis period. In particular, our evidence does not indicate that intra-Asian financial integration has increased noticeably since the global crisis.

In this paper we empirically examine the determinants on utilization of the Korea–ASEAN Free Trade Agreement (KAFTA) by employing a database provided by the Korea Customs and Trade Development Institute. We find that, although three effects, namely preferential margin (margin effect), rules of origin restrictiveness (ROO effect), and average export volume (scale effect), contribute to determining the utilization of the FTA, the scale effect has the greatest impact. Our results suggest that, since firms with relatively small volumes of trade are usually small and medium-size enterprises (SMEs), policy assistance for reducing administrative costs should be geared toward SMEs. Our results further indicate that policymakers should also try to negotiate more extensive tariff reductions on products not only where MFN rates are high but also where shipments are large.

Using highly disaggregated HS 8-digit product-category level data collected by the Chinese Customs Office for 2000 and 2008, we perform an in-depth anatomy of China's imports of manufactured goods. We estimate both the extensive margins – number of products imported per product group or trade partner – and intensive margins – amount of imports per product group or trade partner – of China's imports. Our paper contributes to the literature of firm heterogeneity in international trade in three different ways. First, we distinguish firms into foreign firms and domestic firms, which are further divided into private firms and public firms. Second, we distinguish products into final goods and intermediate goods. Third, we estimate gravity equations from the perspective of dynamics utilizing a dynamic adjustment model. Overall, our analysis yields a number of new stylized facts about China's imports. These, in turn, help us to gain a fuller understanding of China's trade patterns in light of its recent emergence as a globally significant importer.

There is a large and growing empirical literature that investigates the determinants of outward foreign direct investment (FDI). This literature examines primarily the effect of host country characteristics on FDI even though home country characteristics also influence the decision of firms to invest abroad. In this paper, we examine the role of both host and home country characteristics in FDI. To do so, we constructed a firm-level database of outward FDI from Japan, Korea and Taiwan. Our empirical analysis yields two main findings. First, host countries with better environment for FDI, in terms of larger market size, smaller fixed entry costs and lower wages, attract more foreign investors. Second, firms from home countries with higher wages are more likely to invest abroad. An interesting and significant policy implication of our empirical evidence is that policy-makers seeking to promote FDI inflows should prioritize countries with higher wages.

In this paper, we aim to identify the political and financial risk components that matter most for the activities of multinational corporations. Our paper is the first paper to comprehensively examine the impact of various components of not only political risk but also financial risk on inward FDI, from both long-run and short-run perspectives. Using a sample of 93 countries (including 60 developing countries) for the period 1985-2007, we find that among the political risk components, government stability, socioeconomic conditions, investment profile, internal conflict, external conflict, corruption, religious tensions, democratic accountability, and ethnic tensions have a close association with FDI flows. In particular, socioeconomic conditions, investment profile, and external conflict appear to be the most influential components of political risk in attracting foreign investment. Among the financial risk components, only exchange rate stability yields statistically significant positive coefficients when estimated only for developing countries. In contrast, current account as a percentage of exports of goods and services, foreign debt as a percentage of GDP, net international liquidity as the number of months of import cover, and current account as a percentage of GDP yield negative coefficients in some specifications. Thus, multinationals do not seem to consider seriously the financial risk of the host country.

The central objective of this paper is to empirically evaluate the degree of linkages among East Asian equity and bond markets. Using data from the IMF’s Coordinated Portfolio Investment Survey (CPIS), we find that intra-East Asian financial asset holdings of four East Asian countries – Japan, Korea, Hong Kong and Singapore – are larger than the levels predicted by the financial gravity model. However, our analysis suggests that this result is likely to be driven by intra-regional trade linkages and reflect those linkages. Therefore, the salient implication for regional policymakers is that they should continue to promote intra-regional financial integration. This paper also aims to analyse the impact of three different types of country-specific risks – political, economic and financial risks – on investment from the four countries. This analysis yields a clear positive relationship between destination-country risk, in particular political risk, and capital inflows.

The Chinese economy is slowing down and, at the same time, it is in the midst of a structural transformation from an export- and investment-led economy to a domestic demand- and consumption-led growth paradigm. While there are widespread concerns in the People’s Republic of China’s (PRC) trading partners about the effect of the PRC’s growth slowdown on their exports, the PRC’s structural change is also likely to have a significant impact—e.g. the PRC will import fewer machines and more cosmetics. The central objective of our paper is to empirically examine the effect of the PRC’s structural transformation on the exports of East and Southeast Asian economies, which have close trade linkages with the PRC. We find that economies which failed to increase the share of consumption goods in their exports to the PRC suffered larger declines in their exports to the PRC. In addition, economies that suffered losses in their shares of the PRC’s parts and components imports suffered losses in their shares of the PRC’s total imports.

Using highly disaggregated HS 8-digit product-category level data collected by the General Administration of Customs for 2000 and 2008, we comprehensively and systematically assess the People’s Republic of China’s (PRC) exports of two types of manufactured goods (parts and components and final goods) as well as of nonmanufactured goods by different types of firms (foreign firms, domestic private firms, and domestic public firms). Our empirical framework is based on the gravity model, which we find works well for all specifications, and our results are largely consistent with economic intuition. All three different types of firms in the PRC export more to larger countries and less to countries that are farther away, irrespective of the type of product. Replacing the value of exports with the goods-extensive margin (i.e., number of goods) and goods-intensive margin (i.e., value of exports per good), the results again are largely consistent with economic intuition.

This paper aims to establish a firm understanding of the structure and determinants of bilateral portfolio investment among APEC economies. The paper demonstrates that APEC membership has a significantly positive relationship with financial transactions among members. That is, as compared with non-members, APEC member economies purchase more equities and long-term bonds from other APEC member economies. However, the APEC membership effect is not uniform: the positive effect of APEC membership is mainly due to the overshadowing role of East Asian countries. This finding is especially evident for equities, rather than for long-term bonds. This paper also shows that a large part of the regional financial market integration in the APEC region is due to strong linkages of intra-regional goods trade in the region.

This article estimates UK core inflation in a structural Vector Autoregression (VAR) framework. While building on the work of Quah and Vahey (1995), we extend their two-variable VAR model to allow for different dynamics depending on the nature of the shocks that potentially influence the process of core inflation. We also construct a combined measure of core inflation estimates on the basis of their reliabilities. Empirical evidence shows that the new measures demonstrate marked improvement in their eligibility to serve as core inflation estimators. Furthermore, the combined measure is shown to perform best. It appears that the conventional core measures such as the retail prices excluding mortgage interest payments (RPIX) and the Harmonized Index of Consumer Prices (HICP) inflation series are not successful in capturing the underlying trend of inflation, casting some doubt on their current use in the making of monetary policy decisions.

English Abstract: Using the US Treasury International Capital (TIC) data, this paper attempts to analyze the size and trend of foreign investment in the U.S. in the form of equities, bonds and bank lending during the period of 2001-2007. In addition, this paper assesses the determinants of foreign investment in the U.S., using the financial gravity model which includes an East Asian dummy as an explanatory variable. The results show that most East Asian countries have invested more in the U.S. than the optimal level suggested by the gravity model. Such an over-investment is more evident in long-term bond investment than in equity investment or bank lending. Thus, the results confirm that global imbalance does exist between East Asian countries and the U.S.Korean Abstract: 본 연구는 2008년 미국에서 촉발된 글로벌 금융ㆍ경제 위기의 근본원인으로 지적되고 있는 글로벌 불균형을 새로운 각도에서 조명하기 위해 미국 재무부의 TIC (Treasury International Capital) 자료를 이용하여 2001년부터 2007년까지 기간 동안 미국에 대한 외국의 주식, 채권, 은행대출 등 자본투자 규모 및 추세를 분석하였다. 아울러 중력모형을 이용하여 미국에 대한 자본투자의 결정요인을 종류별로 파악하였다. 특히 중력모형에 동아시아 국가 더미를 포함하여 동아시아 국가들의 미국에 대한 자본투자 규모가 적정 규모인지를 분석하였다. 분석 결과 자본이동 측면에서 거의 모든 동아시아 국가들이 미국에 대해 적정 규모 이상의 투자를 하고 있는 것으로 나타났다. 특히 주식투자나 은행대출보다는 장기채권 투자의 형태로 동아시아 국가들이 미국에 적정 규모 이상의 투자를 하고 있는 것으로 나타났다. 이러한 결과는 글로벌 금융위기의 근본 원인으로 지적되고 있는 범태평양 불균형을 실증적으로 확인하는 것이다.

Using data from a survey sample of people 65 years of age and older living in Seoul and Chuncheon, Korea, this paper assesses whether the level of social capital affects elderly individuals' use of medical care. As an econometric model, Heckman's Sample Selection model and the 2SLS method were used to control the endogeneity problem of patient's trust on doctors. The results of our estimations indicate that the level of social capital exerts a positive effect on elderly individuals' use of medical care indirectly, via its positive effect on the level of trust in doctors.

Foreign capital has become increasingly important in financing investment and growth in developing countries. Foreign capital flows, however, can be volatile as is evident from the recent financial crises. It has also recently been noted by researchers that there is little systematic empirical evidence that foreign capital contributes to the economic growth of developing countries. In this context, this paper attempts to theoretically reevaluate the borrowing behaviour of a developing economy that relies on foreign borrowing for its capital formation. In particular, this paper investigates the implications of different lending policies of international financial institutions. It is found that no matter whether the borrowing interest rate increases with the level of foreign debt per capita or with the foreign-capital/total-capital ratio, the economy always moves toward the stationary state. The result holds even when the representative agent regards the interest rate given as constant. This implies that foreign borrowing does help economic growth, irrespective of lending policies of international financial institutions.

This article is one of the first studies to use econometric techniques to examine the factors influencing proficiency of English as a foreign language. Specifically, this article aims to investigate, at cross-country level, the linguistic and nonlinguistic factors influencing the variation of proficiency in the use of English as a second language. As a proxy for English proficiency, we use the average Test of English as a Foreign Language (TOEFL) scores achieved by residents of a total of over 60 countries. The regression results suggest that linguistic factors such as historical affinity and similarity in word order between English and a given language have an influence on the proficiency in English achieved by people whose native language is not English. Among the nonlinguistic factors, expected years of schooling and degree of globalization have a positive relation with proficiency in English. These results seem robust, even when the computer-based TOEFL score is used in place of the paper-based TOEFL ...

The US Phillips curve is modeled with a logistic smooth transition autoregression specification that allows various nonlinear shapes. Using this, the paper derives model-consistent estimates of the NAIRU. The NAIRU is defined as the level of unemployment rate that would correspond to a forecast of no inflation changes over the policy horizon. This paper also investigates the implications of nonlinearities in the Phillips curve for deriving optimal monetary policy rules. The optimal policy rule for interest rates and implied sacrifice ratios are found to be nonlinear as well.

In recent years China, Japan and Korea, the three major economies in East Asia, have been gearing up their efforts to sign free trade agreements with many different regions and countries. One of the main reasons for this is that they fear that with a regionalism movement rising in every corner of the world, their exports are discriminated against and diverted in the trading blocs of other nations. The main purpose of this paper is to investigate whether this is a real fear. We utilise the gravity equation augmented with dummy variables for regional trading blocs in three different specifications. One is the static, standard gravity model to examine the effect of regional blocs on the ‘level’ of exports from these three countries in 2003; the second is the fixed effects and random effects panel models for the period 1993–2003; and the third is the dynamic, partial-adjustment model to examine the effect of blocs on the ‘changes’ in exports between 1993 and 2003. The results show that trade diversion is observed only for China's exports in EU, EFTA and EAEC, but no diversion effect is observed for Japan's and Korea's exports in any of the major trading blocs. On the other hand, trade creation is observed for exports from China in ASEAN, for exports from Japan in ASEAN, CACM, CARICOM, EAEC, EU and NAFTA, and for exports from Korea in ASEAN, CACM, EAEC and MERCOSUR. Thus, Japan's and Korea's fear of discrimination and trade diversion is ungrounded, while China's fear is grounded only to a limited extent.

After a historic low level in the early 2000s, global food prices surged upwards to bring about the global food crisis of 2008. High and increasing food prices can generate an immediate threat to the security of a household’s food supply, thereby undermining population health. This paper aims to assess the precise effects of food price inflation on child health in developing countries. This paper employs a panel dataset covering 95 developing countries for the period 2001–2011 to make a comprehensive assessment of the effects of food price inflation on child health as measured in terms of infant mortality rate and child mortality rate. Focusing on any departure of health indicators from their respective trends, we find that rising food prices have a significant detrimental effect on nourishment and consequently lead to higher levels of both infant and child mortality in developing countries, and especially in least developed countries (LDCs). High food price inflation rates are also found to cause an increase in undernourishment only in LDCs and thus leading to an increase in infant and child mortality in these poorest countries. This result is consistent with the observation that, in lower-income countries, food has a higher share in household expenditures and LDCs are likely to be net food importing countries. Hence, there should be increased efforts by both LDC governments and the international community to alleviate the detrimental link between food price inflation and undernourishment and also the link between undernourishment and infant mortality.

South Korea recently signed a free trade agreement (FTA) with Chile and is currently negotiating or studying bilateral FTAs with about 20 countries. However, some South Koreans oppose such agreements because they fear that trade liberalization would result in costly factor adjustment. Many researchers believe that intra-industry trade expansion generates smaller inter-industry factor adjustment (and therefore lower costs) compared with the costs associated with inter-industry trade expansion. This paper analyzes the extent and nature of intra-industry trade and marginal intra-industry trade in South Korea, to help predict the relative costs it might face upon opening its markets to various countries.

During 1962–1989, South Korea underwent a remarkable economic transformation from being poverty-ridden to attaining the status of newly industrialised nation. This transformation was achieved through the adoption of an outward-oriented, industry-led strategy. It was based, particularly during the 1970s, upon the development of large-scale industrial conglomerates and the attainment of economies of scale and technology to achieve international competitiveness. By the early 1980s, this strategy had resulted in major structural imbalances, a weakened financial sector, heavy concentration in domestic markets, and a repressed development of small and medium enterprises. By the end of the 1980s, despite attempts at economic reform, the structural and financial problems remained and became the country's undoing during the crisis of 1997–1998. This article reviews the question whether Korea's performance during this period can be described as an economic miracle. The empirical evidence is mixed and inconclusive, although the achievements of the Korean economy should not be underestimated.

The purpose of this paper is to assess the relative impact of the US and Japanese business cycles on the Australian economy. Our vector autoregression (VAR) models include real gross domestic products (GDPs) of three countries and world average oil price, which are quarterly covering the period 1959:3–1996:4. In order to take account of a possible structural change, estimates are also made separately for the fixed exchange rate and flexible exchange rate periods. The rolling regression technique is utilised to trace the patterns and extents of changing importance between the US and Japan’s impacts on the Australian economy. We find that over the entire sample period, the business cycles of both the US and Japan have the significant impacts on movements in Australian GDP. Under the recent flexible exchange rates, however, the impact of US output becomes greater, while the Japanese impact becomes smaller and negative. It also appears that US output has significant impacts in both short and longer term, while Japanese output has little impact in the short term, but greater impact in the longer term.

Since the 1997–98 financial crisis, the countries of East Asia have been giving more attention to ways of expanding intra regional trade that include: the establishment of regional trade agreements (RTAs) such as ASEAN+3; plans to establish a free trade area involving the economies of ASEAN and China; as well as moves towards bilateral trade agreements. The trend towards this new regionalism, the reasons for it, its impact upon the region, its future evolution and prospects are of profound regional, and indeed global, significance This paper reviews the new regionalism in East Asia in recent years, and discusses how it relates with the WTO and APEC.

A strand of theoretical and empirical evidence in the literature suggests non-linearity in the output-inflation relationship, viz. a non-linear Phillips curve. We develop a VAR model of output, inflation, and terms of trade augmented with logistic smooth transition autoregression specifications. Empirically, the model captures non-linear features present in the data. Output costs of reducing inflation vary, depending on the economy, size of inflation change, and whether policy makers seek to disinflate or prevent inflation from rising. Thus, inferences based on the conventional linear Phillips curve may provide misleading signals about the cost of lowering inflation and the appropriate policy stance. JEL Classification: C32, E52 Le cout asymetrique en termes de production de la reduction de l’inflation: resultats pour le Canada. Ce memoire a son origine dans les travaux qui suggerent une certaine non linearite dans la relation production-inflation i.e. une courbe de Phillips qui serait non-lineaire. Les auteurs utilisent un modele VAR de la production, de l’inflation et des termes d’echange, enrichi de specifications autogressives definissant une transition logistique souple. Il appert que les couts en termes de perte de production de la reduction de l’inflation varient grandement selon l’etat de l’economie, la taille des changements recherches dans le taux d’inflation, et selon que les autorites cherchent creer une deflation ou simplement a empecher l’acceleration de l’inflation. Voila qui implique que les inferences tirees d’un modele construit sur la courbe lineaire traditionnelle de Phillips peuvent fournir des signaux trompeurs quant aux couts de la reduction de l’inflation et suggerer de mauvaises politiques.