97U5(06 SWP303 Trade Restrictions and International Price Instability Malcolm D. Bale Ernst Lutz WORLD BANK STAFF WORKING PAPERS Number 303 PUB HG 3881.5 .W57 W67 no.303 c.2 WORLD BANK STAFF WORKING PAPERS Number 303 Trade Restrictions and International Price Instability Malcolm D. Bale Ernst Lutz The World Bank Washington; D.C., U.S.A. Copyright (© 1978 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing October 1978 Second printing February 1985 This is a working document published informally by the World Bank. To present the results of research with the least possible delay, the typescript has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accepts no responsibility for errors. 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The full range of World Bank publications, both free and for sale, is described in the Catalog of Publications; the continuing research program is outlined in Abstracts of Current Studies. Both booklets are updated annually; the most recent edition of each is available without charge from the Publications Sales Unit, Department T, The World Bank, 1818 H Street, N.W., Washington, D.C. 20433, U.S.A., or from the European Office of the Bank, 66 avenue d'lena, 75116 Paris, France. When this paper was first published Malcolm D. Bale and Ernst Lutz were members of the Development Economics department of the World Bank. ISBN 0-8213-0523-9 ABSTRACT In this paper the effects of international trade distortions on world price instability is evaluated in a two country, one commodity, equi- librium model, where random disturbances are present in supply and demand functions of both countries. Different cases of trade inter- vention are presented and the conditions stated under which price instability :Ls increased, decreased or left unchanged. TRADE RESTRICTIONS AND INTERNATIONAL PRICE INSTABILITY Price instability has been an issue of long concern to economists and has recently received increased attention mainly due to economic events taking place in the world during the 1970's. Much of the discussion has occurred in relation to agricultural commodities where random prices, reflecting stochastic fluctuations in sujpply and demand, are often of major significance. At different phases of price fluctuations different groups become more vocal and more con- cerned about price movements-rising prices affect consumers and importing nations whereas falling prices are of vital interest to producers and exporting countries. It is, perhaps, from such interactions and competing interests that the demands of developing countries for an international buffer fund to stabilize major export commodities have arisen. Instability originates basically from two sources: Real sources and policy-induced ones. Natural random factors influence both supply and demand of commodities. Production is affected by weather, disease, technological change, and input availab:Llity, while demand varies due to fluctuating income and taste changes. Stochastic demand and supply in turn cause prices to fluctuate. Price variability can be decreased through stabilization policies via buffer stocks and price forecasting, or it can be increased via policy measures affecting foreign trade. While it has long been recognized that international trade distortions which partially or totally insulate an importing country from the rest of the world have the effect of throwing the total price adjustment burden onto the rest of the world--often increasing the amount of price instability compared to that which would prevail under free trade--there has been little formal analysis of this phenomena. Both Johnson and Shultz have recently stated that trade barriers increase price instability in world markets while Shei and Thompson -2- simulated the impact of US export controls and a change in Soviet import policy on world wheat prices in a quadratic wheat trade model. The question of price instability induced by trade restrictions is particularly topical. Several recent international fora (UNCTAD, FAO) have dis- cussed the effects of price instability on export receipts in developing countries and its consequent effect on development, many countries are studying commodity buffer stock plans in order to stabilize prices, and GATT members are currently attempting to liberalize trade at the Geneva multilateral trade negotiations. Thus gaining insights into the causal effect of trade restrictions on price instability has considerable pragmatic appeal. The purpose of this paper is to formally examine the effects of different trade intervention policies on international price instability. Our results show that some trade barriers have no impact on world price instability while other types of restrictions transfer different degrees of instability from one country to the other. The paper begins by presenting a diagramatic analysis of a two-country, one commodity equilibrium model of trade showing that price instability generated by random supply fluctuations in the importing country can be amplified by various trade restrictions. In the third section the analysis is generalized so that random stochastic disturbances of supply and demand functions in both exporting and importing countries are considered simultaneously. A rigorous presentation is given of how and to what extent distortions affect price instability. Finally, some concluding coments are offered. DIAGRAMATIC ANALYSIS For conceptual purposes we present a few specific diagramatic illustrations of the general model. Consider Figure 1 where the domestic markets of the two countries are shown on each side and where the excess supply and demand schedules FiRure 1: TRADE MIDDEL WITH QUOTA EXPORTENG COUNTMA TRADE SEC1O-n kvO&IGCUN1XaY price price price S 2 2~~~~~~~~ p2.- P P P4~~~~~~~~~ 4 P p3 3 p3 I I quantlty quantlty quantE ED * 2~~~~~~~~~~~~~~~~~ quantity quan~tity quantity - 4 - are shown in the market clearing diagram in the middle of. the figure. It is assumed for the moment that random disturbances occur on the supply side of the importing country only, thus giving two supply schedules, S and S With no trade the price in the exporting country is constant whereas price in the importing country varies between P1 and P2. If free trade is now allowed price varies in both countries between P and P --i.e. price variability has increased in the 3 ~4 exporting country and decreased in the importing country. This is an intuitively obvious conclusion since the importer with the fluctuating supply schedule is, under free trade, sharing.its variability with the rest of the world. Now consider the imposition of a quota by the importing country. For expositional.convenience set the quota at q q2 the free trade imports under S2. The effect of the quota as viewed from the exporting country is to change the two excess demand curves to FBE and GDE. Thus the world price to the exporter is stabilized at P Consumers in the importing country view the quota as causing the excess supply curve to become perfectly inelastic at B. The excess supply curve therefore becomes ABC, and prices in the importing country fluctuate between P3 and P --the same absolute 3 5 instability as under no trade.-/ That is, a quota imposed by an.importer with unstable supply schedules does not contribute to world price instability, but does add to instability in the importers domestic market compared to the free trade situation. Completing the same exercise where unstable supply curves exist in the exporting country while the importer experiences stable supply response, it can be shown that by imposing.a quota the importer increases instability in the other country (rest of the world). Now consider the case of a specific tariff imposed by an importing country with a randomly disturbed supply schedule. This is shown in Figure 2. Under free trade price is more stable than under no trade while in the exporting 1/ The difference between P and P times the quota quantity is the economic rent accruing to the owners of quota rights. Tigure 2: TRADE MIL WITH SPECIFIC TARIFF IOlImEC cOumT TRADE SECTOR IIMPORTING COUNTRY price priLce price AS s ES~~~~~~~~~~~~~~~~S p~~~~~~~~~ NEDt D2+t\ quantity quantity quatity country, trade results in an increase in price instability. The importing country now imposes a specific tariff on the good. The exporting country views this as a leftward shift in the demand curve of the importing country, thus the relevant excess demand curves become EDt and EDt. Absolute price variability remains unchanged at P3 P4 although price and quantity traded are reduced. The importing consumers regard the specific tariff as a leftward movement in the excess supply curve of the exporter, giving prices in the importing country of P and P The absolute level of price variability is unchanged from the free 5 6 trade price variability of P1P2. That is, a specific tariff does not change the price variability in either country. This is the case regardless of where the disturbances originate. In order to simultaneously consider random disturbances in the supply and demand functions of both the exporting and importing countries, it is necessary to formulate a mathematical model. The following section thus generalizes the diagramatic analysis assuming zero transportation costs and fixed exchange rates. Alternatively flexible exchange rates may be conceptualized as being captured in the random disturbance terms of the functions. - 7 - MATHEMATICAL FRAMEWORK Consider the following linear two-country model where demand in countries 1 and 2 is given by (1) di' ai b iP + SV i 1, and supply is given by (2) si - l + 81P + ci i 2 and whtere: di d emand in country i l- supply in country i P price The teirms a,, bi, ai, Si are fixad parameters, and 6 and i denote random variablesi distributed as N (0, a ) and N (0, ag ), respectively. Free Trade Under free trade, aggregate excess dtemand is zero, i.e. (3) Edi - Esi - O, i - 1, 2. IL i From (3), the equilibrium price can be found to be a1 - al + 6 - % (4) P - Z , i - 1, 2, i b + Bi and hence the variance of the free trade world market price is a a ai+ E i (5) ap 3Z 2 i - 1, 2. w i (bi+ i) Specific Tariff The price P2 in country 2 (the importing country) is equal to the price P1 in country 1 (the exporting country) plus the tariff, t, i.e. (6) P2 - P1 + t. Inserting into (3), and solving for P1, P2. we obtain (b2 + a2) (7) Pi3 Pw - t b- + b -+81+8 b1 +2 + 1 +2 (b1 + 81) (8) P2 PW + t b + b 2 + B1 + B2 It is clear from (7) and (8) that the price variance in both countries is equal to that in (5), i.e. equal to the free trade variance. The introduction of a specific tariff does not change the degree of price instability, or in other words, a specific tariff transmits fluctuations so that a shock in one part of the system is absorbed by the whole system.- Ad Valorem Tariff An ad valorem tariff means that it is proportional to the export price and hence the following condition holds: (9) P2 P1 ( + t) where: t - the tariff rate inserting (9) into (3), the price in the exporting country is found to be ai -a + ....g (10) P1 , i-1, 2 i bi + ai + t(b2+ 82) and hence a + a (11). ap i2 i - 1 2. i (bi + 3i + t(b2 + a2)] It is clear from (11) that for t > 0, ai < ap , i.e. the imposition ,1 w of an ad valorem tariff (by an importing country) reduces the price variability in the exporting country. This is the case because the ad valorem tariff dis- courages imports when the export price is rising and thus it has a stabilizing effect. The price variance in country 2 is (12) p2 map1 (l + t). Comparing op with the variance of price prevailing under free trade 2 we find (13) ap [k + t(b + a1]2 - 2 >1, op+ k w where: k - b + b + 1 + a 2 2 Thus, we can conclude that an ad valorem tariff increases the price instability in the (importing) country which imposes the tariff. Also, the variance of price increases with an increasing tariff rate and with increasing slopes of the supply and demand function in the exporting country. - 10 - Fixed Quota The imposition of a quota, q, in a two-country trading world results in the following equilibrium prices and price variances. a1 -a1 +6 qa +0 1_1 1 1 (14) - , ap - 2 b + 1 (b1+ 81) and a2 a2 2 2 q 2 2 (15) P2 ' , p b2+ 2 "2 (b2 +8B2)2 Thus, it is clear that under a quota system no instability is transmitted and that all disturbances are absorbed in the country where they originate as in the no trade case. Comparing the variance of price in the exporting country under a quota system with that under free trade it is found that (16) aP > aP for (ad + a ) [(b2 + 82) + 2(b1 I 8)(b2 2)] (a6 E 2 2 (b + 1)2 > 0. It can be concluded that (16) holds for a majority of cases. The same could be shown for p . The reason is, that, in system where disturbances are not correlated, free trade tends to even out fluctuations. As our results show, with a pure tariff, instability is transmitted freely among countries whereas under a pure quota it is not transmitted at all. Variable Quota There are several possibilities for defining a-variable quota policy. We assume here a system that guarantees domestic producers in the importing country a constant: market share. The quoti is therefore defined as (17) Q - cd2 where o < c < 1. An equivailent variable quota policy for the exporting country would detearmine a constant share of production to be exported. Using (17) the equilibrium price for the importing country is found to be a2(l - c) -2 + 62(1 - c) - 2 (18) P 222(1-)b- b2(l - c) + 82 and hence the variance is cra ( C20a (19) a - 62(l-c) + £2 1P2 2 + b2(l C))] The price variance for a variable quota policy is larger than the price variance under a fixed quota if (20) 8206 (82(c - 2) + 2b2(1 - c)] + b2 ae (b2(2 - c) + 202] > 0. 2 2 The algebraic expression in (20) increases for increasing b2 and a 0 and for decreasing 82 and 6. It seems that condition (20) would hold in most 22 cases. Thus, a variable quota as defined above would generally increase the price variance in the importing country as compared to the trade or the fixed quota case. The imposition of a variable quota in the importing country affects the exporting country such that - 12 - a14 ca2 al+ 61+ C6 (21) P1 1 b b 1 2 1 1 I1+ 2 + 1 and Ca + C2 a6 + a c (24) 0 , 1 _ 2a1 Pi (b1 + cb2 + 81)2 It can be shown that a variable quota results in a reduction of the price variance in the exporting country as compared to the cases of no trade or the fixed quota for (23) b °(a a ) (cb +2b+2) - c a (b + 8 2 > 0. 2 6 1+ e 2 1 1262 Condition (23) seems to hold in most cases. In this case we obtain the interesting result that the imposition of a variable quota by the importing country generally results in a transmission of instability from the exporting to the importing country. Price FixinR In most state trading nations, but also in some other countries, internal prices are fixed by government policy. Trade is strictly controlled by the government which allows only specific quantities to be imported which vary from year to year. For the cases where external prices rise above the internal price, a ban on exports coupled with import subsidies is needed to maintain the policy. If the price in the importing country is fixed at P2, the equilibrium price in the exporting country is Za + a + 6 + ci 2 (b +82 ii i i gi 2 (2 62 (24) P - ,i -1, 2 b1 +1 - 13 - and the price variance is a;+ a,;+ as+ 61 2 E E2 (25) ap =2 1 ~(b1 +8B)2 From (25) it can be concluded that all instability in the importing country has beert exported to the exporting nation. Comparing ap with the variance of price under free trade, it is found that (26) ap (b + b2 + 1 + 82) __ * 2 apw (b + 81) It is clear that this nation increases when supply and demand in the importing country become more- inelastic. Variable Levy As long as the export price is below the price in the importing country, the imposition of a variable levy has the same effect on instability as in a pure case of price fixing. In a case where the export price rises above the price d'etermined by the importing country, the latter would import the comodity as in the free trade case up to the self-sufficiency price. Since the export price can most of the time assumed to be below the priee in the importing country, the latter can shift almost all internally'created instability onto the external market. - 14 - Table 1: TEE EFFECTS OF TRADE POLICIES ON PRICE INSTABILITY IN EXPORTING AND IMPORTING COUNTRIES Degree of Price Instability in Comparison with the Instability under Free Trade / Trade Policy of Importina Country Exporting Country Importing Country Specific Tariff same same Ad Valorem Tariff smaller larger Fixed Quota generally larger generally larger Variable Quota generally larger generally larger No Trade generally larger generally larger Price Fixing larger smaller (-O) Variable Levy larger smaller Trade Policy of Exporting Country Specific Tariff same same Ad Valorem Tariff smaller larger Fixed Quota generally larger generally larger Variable Quota generally larger generally larger No Trade generally larger generally larger Price Fixing smaller (-O) larger Export Controls smaller larger 2/ By using the degree of price instability under free trade as a basis for comparison we do not intend to imply that it is optimal in a welfare sense. - 13 - CONCLUDING COMMENTS In this paper we have demonstrated that various trade intervention policies have a very different effect in altering instability in one country and transmitting it to the rest of the world. The purpose of the article is to present a comprelhensive analysis of different trade restrictions and to show how, and to what extent, they affect price instability.4/ The notion of the equivalence between tariffs and quotas is widespread in the literature on trade theory. Bhagwati showed that for the equivalence to hold the assumuption of universal competitiveness must be used and that equivalence characteristics break down when monopoly elements are introduced. More recently, Dasgupta and Stiglitz found that under uncertainty, a pure tariff is unambigously superior to a pure quota in generating a given level of govern- ment revenue. In relation to the transmission of instability from one country to the other, tariffs and quotas are also non-equivalent. One of our results is that with a pure tariff, instability is transmitted freely between countries whereas under an otherwise equivalent pure quota, it is not transmitted at all. One of the limitations of this analysis is the linearity assumption used. It is clear that, for example, the introduction of a fixed tariff in a nonlinear framework would result in a slightly different degree of price instability as compared to free trade, since at the new equilibrium price levels the elasticities would be different. Nevertheless we think that for our purposes the linearity assumption is not too restrictive and that the same analysis 4/ An extension of this work, not considered here, involves a determination of the welfare consequences of each of these actions. Some cases are already discussed in the literature. Bieri and Schmitz have analysed a case of tariffs and marketing boards, Hueth and Schmitz determined che welfare gains from price stabilization for free trade within a linear framework, Just et. al. (1978) used a general nonlinear analysis for the free trade case, and Just et. al. (1977) developed the distribution of the welfare gains from price stabilization with price fixing. For a review of the price stabilization literature the reader is refered to Turnovsky's excellent survey. - 16 - within a general nonlinear framework (if it were possible) would produce only minor quantitative differences with no effect on our basic conclusions. What is the practical importance of this work? Governments seem interested in price stability, particularly for agricultural commodities. Yet they are primarily interested in internal stability rather than in global stability. In achieving internal price stability by various means governments throw adjustment onto the rest of the world. We have quantified the impact such actions will have on'world price stability. Empirical calculations of these effects should be an important issue in trade negotiations. Not only may it be possible to appeal to a barrier-imposing cotintry's international responsibility but it is possible to demonstrate that for a given level of protection some trade intervention policies generate a smaller impact on instability in the international community than others. There are other uses of the model. It can also be used to determine a mix of trade restricting measures by different countries simultaneously. Thus, also retaliation could be analysed and the resulting equilibrium price levels (if any) and the degrees of instability could be determined. References 1. Bhagwati, J. "On the Equivalence of Tariffs and Quotas." In R. E. Baldwin (ed.) Trade, Growth, and the Balance of Pavments. Chicago: Rand McNally, 1965. 2. Bieri, J. an,d A. Schmitz, "Export Instability, Monopoly Power and Welfare", J. Int. Econ. 3 (1973): 389-96. 3. Dasgupta P. tnd J. Stiglitz, "Tariffs vs. Quotas as Revenue Raising Devices under Uncertainty", American Economic Review 67 (1977) 975-81. 4. Hueth, D. and A. Schmitz, "International Trade in Intermediate and Final Goods: Some Welfare Implications of Destabilized Prices", Quart. J. Econ. 86 (1972) 35:l-65. 5. Johnson, D. G. "World Agriculture, Commodity Policy, and Price Variability", Amer. J. Ar., Econ. 57 (1975): 823-38. 6. Just, R. E., E. Lutz, A. Schmitz, and S. Turnovsky, "The Distribution of Welfare Gainsi from International Price Stabilization under Distortions", Amer. J. Ar. Econ. 59 (1977): 652-61. 7. Just, R. E., E. Lutz, A. Schmitz and S. Turnovsky, "The Distribution of Welfare Gains from Price Stabilization: An International Perspective". J. Int. Econ. (In press). 8. Shei, S-Y. arLd R. L. Thompson, "The Impact of Trade Restrictions on Price Stability in the World Wheat Market", Amer. J. AMr. Econ. 59 (1977): 628-38. 9. Shultz, T. W., "On Economics, Agriculture and the Political Economy," in Decision Making in Agriculture, T. Dams and K. E. hunt, editors, Alden Press, Oxford, U.K., 1978 10. Turnovsky, S. J. "The Distribution of Welfare Gains from Price Stabilization: A Survey of Some Theoretical Issues", in Stabilizing World Commodit= Markets, F. Gerard Adams and Sonia A. Klein, Lexington Books, 1978. W orld Bank The Developing Countries and Export Promotion Policies International Shipping Barend A. de Vries Pu DcaUons Harald Hansen Staff Working Paper No. 313. 1979. 80 of Related Staff Working Paper No. 502. 1981. 151 pages. pages (including 12 annexes, 38 tables, Stock No. WP 0313. $3. Interest bibliography). Stock No. WP 0502. $5. - NEW Exports of Capital Goods and NEW Related Services from the Republic of Korea Economics and the Politics of Larry E. Westphal, Yung W. Rhee, Protection: Some Case Studies Linsu Kim, Alice Amsden Adjustment to External Shocks of Industries Examines Korea's spectacular export in Developing Economies Vincent Cable growth-from $50 million of goods in Bela Balassa Looks at factors which effect an indus- 1962 to $25 billion in 1982. Five kinds Staff Working Paper No. 472. 1981. 31 try's attitude toward protection by of project-related exports are character- pages (including appendix). analyzing four of Great Britain's indus- ized (overseas construction, plant ex- Stock No. WP 0472. $3. tries: footwear, knitwear, cutlery, and ports, direct investments, consulting consumer electronics. Case studies ex- services, licensing and technical agree- Adjustment Policies and amine import competition from devel- ments). Discusses the role,of theseex Adjustment Policies anid oping countries and adjustment o- ports in Korea's strategy for develop- Problems in Developed Countries tions exercised within each industry. ment. Shows how these strategies Martin Wolf Study includes some explanations for conform to the country's dynamic Staff Working Paper No. 349. 1979. 236 protectionist behavior among indus- comparative advantage by enlarging its pages (including references). tries and a discussion of the politics of industrial base. Stock No. WP 0349. $10. decisionmaking in regard to trade pol- Staff Working Paper No. 629. 1983. 80 icy. pages. Staff Working Paper No. 569. 1983. 80 ISBN 0-8213-03104. Stock No. WP 0629. Britain's Pattern of pages. $3. Specialization in Manufactured ISBN 0-8213-0199-3.Stock No. WP 0569. On Exports and Economic Goods with Developing S3. Growth Countries and Trade Protection Gershon Feder. Vincent Cable and Ivonia Rebelo Effects of Non-Tariff Barriers Staff Working Paper No. 508. 1982. 24 Staff Working Paper No. 425. 1980. 61 to Trade on Prices, pages (including appendix, references). pages (including 3 appendixes). Employment, and Imports: The Stock No. WP 0508. $3. Stock No. WP 0425. $3. Case of the Swedish Textile and Clothing Industry India's Exports Carl Hamilton Martin Wolf NEW Staff Working Paper No. 429. 1980. 63 Despite improved performance, the pages (including appendix, bibliography). growth of India's exports continues to Bureaucracies and the Political Stock No. WP 0429. $3. lag behind need, potential, and the Economy of Protection: achievements of several of its competi- Reflections of a Contin;ental Energy, International Trade, a export perfoyrexanmcines thndia' over- European and Economic Growth and 1970s, with emphasis on the cen- Patrick Messerlin Alan S. Marnne and Sehun Kim tral role of incentives. The major prob- Analyzes three factors that influence Staff Working Paper No. 474. 1981. 30 lems and policies are discussed, as the "bureaus" (bureaucrats) in their pages (including 2 appendixes, references). well as current strategic options. decisions affecting protectiornism in Stock No. WP 0474. S3. Oxford University Press. 1982. 224 pages France. (including index). Staff Working Paper No. 568. i983. 64 LC 82-6309. ISBN 0-19-520211-2. Stock pages. No. OX 520211, $22.50 hardcover. (A ISBN 0-8213-0198-5. Stock No. WP 0568. European Community specially priced edition is available in India $3. Protection against from Oxford University Press branches.) Manufactured Imports from Capital-Importing Oil Developing Countries: A Case Industrial Country Policy and Exporters: Adjustment Issues Study in the Political Economy Adjustment to Imports from and Policy Choices of Protection Developing Countries Alan H. Gelb E. Verreydt and J. Waelbroeck J. M. Finger Staff Working Paper No. 475. 1981. 38 Staff Working Paper No. 432. 1980. 25 Staff Working Paper No. 470. 1981. 22 pages (including 9 tables). pages. pages (including references). Stock No. WP 0475. $3. Stock No. WP 0432. $3. Stock No. WP 0470. $3. Italian Commercial Policies in in the EEC markets but have less effect NEW the 1970s in keeping out non-EEC imports. Enzo R. Grilli Staff Working Paper No. 567. 1983. 48 Real Wages and Exchange Staff Working Paper No. 428. 1980. 47 pages. Rates in the Philippines, 1956- pages. ISBN 0-8213-0197-7. Stock No. WP 0567 78: An Application of the Stock No. WP 0428. $3. $3. Stolper-Samuelson-Rybczynski Output and Employment Model of Trade Changes in a "Trade Sensitive" Deepak Lal NEW Sector. Adjustment in the U.S. Explains the movements of real wages Footwear Industry in the Philippines in terms of a simple Korea's Competitive Edge: John H. Mutti and Malcolm D. regression model. Examines the coun- try's postwar economic performance Managing Entry into World Bale and draws some tentative conclusions Markets Staff Working Paper No. 430. 1980. 21 for economic policy. Yung Whee Rhee, Bruce Ross- pages (including footnotes, references). Staff Working Paper No. 604. 1983. 60 Larson, and Garry Pursell Stock No. WP 0430. $3. pages. How did Korea manage to expand its Patterns of Barriers to Trade in ISBN 0-8213-0213-2. Stock No. WP 0604. exports from less than $100 million a Sweden: A Stud in the $3. year in the early 1960s to more than y $20 billion a year in the early 1980s? Theory of Protection Shadow Prices for Trade To find out about the underpinnings Lars Lundberg Strategy and Investment of Korea's competitive edge, the au- Staff Working Paper No. 494. 1981. 35 Planning in Egypt thors asked more than 100 major Ko- pages (including 3 appendixes). John Page, Jr. rean exporters what had been impor- Stock No. WP 0494. $3. g rN tant for them in institutional support, S.aff Working Paper No. 521. 1982. 212 in technological development, and in The Political Economy of pages. marketing overseas. The findings Protection in Belgium ISBN 0-8213-0009-1. Stock No. WP 0521. show that there is a strong interaction P. K. M. 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S3. clusions: developing countries are StffWrkn Pape No._427__180__3 competitive with the Federal Republic pages (including bibliography). of Germany in a far wider range of Stock No. WP 0427. $3. NEW products than had been previously Public Assistance to Industries thought. Suggests probable trends, es- Public Assistance to Industries pecially toward developing countries. NEW and Trade Policy in France Concludes that the faster income in Bernard Bobe developing countries grows, the faster The Political Economy of Describes the institutional structure these countries will become competi- Protection in Italy: Some through which trade police is deter- tive in an even wider range of goods. Empirical Evidence mined. Focuses on the evolution of Innovation, though a key factor, can- Enzo GrillFr ancd Mauro La Noce 10e's intemnational commerce in the not determine comparative advantage, Enzo Grilli an Maura La Noce1970s and assesses probable trends for because innovations spread rapidly This analysis is based on a model that the future. through the world economy. specifies the demand side of the mar- ket. Examines 35 industrial subsectors Staff Working Paper No. 570. 2983. 64 Staff Working Paper No. 571. 1983. 84 in terms of EEC tariff protection and pages. pages. Italy's domestic subsidy assistance. ISBN 0-8213-0200-0. Stock No. WP 0570. ISBN 0-8213-0201-9. Stock No. WP 0571. Finds that tariffs protect Italian exports $3. $3. The Structure of Protection in Trade and Employment Why the Emperor's New Developing Countries Policies for Industrial Clothes Are Not Made in Bela Balassa and others Development Colombia: A Case Study in The Johns Hopkins University P'ress, 1971, Keith Marsden Latin American and East Asian 394 pages (including 5 appendixes, index). In the last decade, the developing Manufactured Exports LC 77-147366. ISBN 0-8018-1257-7, Stock countries have proved that they can David Morawetz No. JH 2257. $25 hardcover. compete intemationally in exporting Focuses on the exports of a particular manufactured goods, as well as pri- commodity (clothing) from a particular mary products and services. This pa- Latin American country (Colombia) in per examines three sets of issues: (a) an attempt to understand why Latin Testing for Direction oif whether good export performance s America has been so much less Exports: India's Exports of attributable to special characteristics of cessful at expor-ting manufactured Manufactures in the 1970s the most successful countries or goods to date than East Asia. It is the Ashok Khanna whether their success can be readily first study to go into great detail in ex- replicated in other countries; (b) amiining the price, and especially the Tests the hypothesis that the exports whether the penetration of the mar- non price, ant export suc of a developing country with an ad- kets of industrial countries has cessu vanced manufacturing sector will differ reached, or will soon reach, a limit; cess. among destinations: the capital inten- and (c) whether trade in manufactures Oxford University Press, 1981. 208 pages sity of exports will be greater to the among the developing countries can more labor abundant destinations, and expand further. Concludes with a dis- LC 81-9547. ISBN 0-19-520283-X, Stock the labor intensity of export will be cussion of the contribution of small No. OX 520283, S22 hardcover. greater to the more capital abundant. enterprises to the creation of employ- Worker Adjustment to destinations. India's exports Of manu- ment and the alleviation of poverty. Liberalized Trade: Costs and factures for 1973 and 1978 are used for 1982. 70 pages (including annex). Assistance Policies the analysis. ISBN 0-8213-0017-2. Stock No. BK 0017. Graham Glenday, Glenn P. Staff Working Paper No. 538. 1983. 41 $5.ekn,ad onC vn pages. Jenkins, and John C. Evans ISBN 0-8213-0132-2.Stock No. WP 0538. Staff Working Paper No. 426. 1980. 87 $3. Trade in Non-Factor Services: pages (including 2 appendixes, bibliog- Past Trends and Current Issues raphy). Andre Sapir and Ernst Lutz Stock No. WP 0426. $3. Staff Working Paper No. 410. 1980. 140 World Trade and Output of The Tokyo Round: Resiults and pages (including 4 annexes). Manufactures: Structural Implications for Developing Stock No. WP 0410. $5. Trends and Developing Countries Countries' Exports Ria Kemper Trade i Services: Economic Donald B. Keesing Staff Working Paper No. 372. 1980. 38 Determinants and Staff Working Paper No. 316. 1979. pages (including annex). .74 pages (including statistical annex). Stock No. WP 0372. $3. Development-Related Issues Stock No. WP 0316. $3. Andre Sapir and Ernst Lutz Ted nItmtoa rd Staff Working Paper No. 480. 1981. 38 Trends in International Trade pages (including appendix, references). in Manufactured Goods and Trade Adjustment Policies and Stock No. WP 0480. $3. Structural Change in the Income Distribution in Three Industrial Countries Ircom e Distrouion Bela Balassa with the assistance of Archetype Doevelopig Trade Policy for Developing Kenneth Meyers Economies - Countries Examines recent trends in trade in laime de Melo and Sherman Donald B. Keesing manufactured goods between the in- Robinson World Bank Staff Working Paper No. 353 dustrial and the developing countries. Staff Working Paper No. 442. 1980. 91 August 1979, vii + 264'pages (including Analyzes (a) the implications of these pages (including appendixes, references). references) trends for structural change in the in- Stock No. WP 0442. $3. Stock No. WP-0353. $10. dustrial countries and (b) changes over time in the current dollar value and the commodity composition of trade in Trade Policy Issues for the manufactured goods. Recommends Trade among Developing Developing Countries in the teational trade amned at promoting in Countries: Theory, Polilcy 1980s change. Issues, and Principal Trends Isaiah Frank . Staff Working Paper No. 611. 1983. 44 Staff Working Paper No. 479. 1.981. 116 World Bank Staff Working Paper No. 478. pages. pages (including 2 appendixes, references). August 1981. 52 pages. ISBN 0-8213-0251-5.Stock No. WP 0611. Stock No. WP 0479. $5. Stock No. WP-0478. $3. $3. 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