Products

For more than a decade, there have been two important trends in the American economy. The first trend has been toward increasing openness of the economy to the international flows of goods, money, people, and ideas. The second has been very slow or even negative growth in real wages and a widening disparity in the distribution of income, particularly between relatively skilled and unskilled workers. Many observers suspect that these two trends are connected: increasing competition from foreign producers, particularly in low-wage developing countries, may have contributed to stagnation in US real wages and a worsening income distribution. These concerns have led to proposals to slow or reverse the internationalization of the American economy in order to bolster real wages, preserve jobs, and prevent a worsening income distribution. The issue is hotly debated among analysts and policymakers.

This study will provide a fresh and comprehensive analysis of theory and empirical evidence on the relationships among trade, employment and wages, and income distribution. It will explore the full range of options available to policymakers, including slowing the pace of trade liberalization, providing adjustment assistance to trade-impacted workers, and encouraging investment in human and physical capital.

The stakes of the poor in trade policy are large: Free trade can help 500 million people escape poverty and inject $200 billion annually into the economies of developing countries, according to author William R. Cline. This book provides a comprehensive analysis of the potential for trade liberalization to spur growth and reduce poverty in developing countries.

It quantifies the impact on global poverty of industrial-country liberalization, as well as liberalization by the developing countries. Half or more of the annual gains from trade would come from the removal of industrial-country protection against developing-country exports. By removing their trade barriers, industrial countries could convey economic benefits to developing countries worth about twice the amount of their annual development assistance. By helping developing countries grow through trade, moreover, industrial countries could lower costs to consumers for imports and realize other economic efficiencies. The study estimates that free trade could reduce the number of people earning less than $2 per day by about 500 million over 15 years. This would cut the world poverty level by 25 percent. Cline judges that the developing countries were right to risk collapse of the Doha Round at the Cancun ministerial meeting in September 2003 by insisting on much deeper liberalization of agriculture than the industrial countries were then willing to offer.

The study calls for a two-track strategy: first, deep multilateral liberalization involving phased but complete elimination of industrial-county protection and deep reduction of protection by at least the middle-income developing countries, albeit on a more gradual schedule; and second, immediate free entry for imports from "high risk" low-income countries (heavily indebted poor countries, least developed countries, and sub-Saharan Africa), coupled with a 10-year tax holiday for direct investment in these countries.

Shifts in global economic dominance are by nature tectonic and never precipitated by single events. The Great Recession of 2008–09, however, has presented the European Union, its common currency the euro, and the United States with new global challenges. The transatlantic partnership has dominated the world economy since the early 20th century and, based upon US and European values and interests, has designed and sustained all its principal global political and economic institutions. But countries outside the European Union and United States now account for about half of the world economy, and in the aftermath of the Great Recession their share is growing rapidly. Hence their increasing role and concomitant demands for greater influence over global economic governance pose a series of challenges and opportunities to the European Union and the United States, as illustrated by the eclipse of the G-8 by the G-20.

The contributions in this volume by subject area experts from the Peterson Institute for International Economics and Bruegel ponder how or whether the rise of outside actors of potentially equal, or even greater, economic weight will invariably force a rethinking of not only how the European Union and the United States should conduct policy externally towards the new rising economic poles, but also of the substantive contents of the EU-US bilateral economic and political relationship.

The Trans-Pacific Partnership (TPP) is a big deal in the making. With the Doha Round of multilateral trade negotiations at an impasse, the TPP negotiations have taken center stage as the most significant trade initiative of the 21st century. As of December 2012, negotiators have made extensive progress in 15 negotiating rounds since the talks began in March 2010, though hard work remains to finish the deal in the coming year or so. Despite this effort, however, the TPP is not well understood. In part, the reason lies in the dynamism of the TPP initiative. Unlike other free trade pacts, the growing membership as the talks have proceeded, and the broad range, complexity, and novelty of the issues on the agenda have made it difficult to track the substantive detail and progress of the talks.

This Policy Analysis aims to remedy this problem by providing a reader's guide to the TPP initiative. It first assesses how much the TPP countries are alike and like-minded in their pursuit of a comprehensive trade deal. It then examines the current status of the talks, the major substantive sticking points, and the implications of Canada and Mexico joining the talks as well as prospective membership of other countries. The Policy Analysis then looks ahead to how the TPP could advance economic integration in the Asia-Pacific region and the implications for trade relations with China.

It is generally accepted that Social Security must be reformed, but there is little agreement on what should be done to reform the program. US Pension Reform: Lessons from Other Countries looks at the social pension reforms of twelve other countries, assesses the current US Social Security program, and evaluates how these twelve models inform opportunities for adaptation of the current system. The authors consider governments' current fiscal balances in order to contextualize countries' initial financial liabilities and pension program infrastructure.

The book concludes with an integrated reform proposal for Social Security. These prescriptions suggest concrete plans to address issues such as underfunding, benefits for high-income participants and the elderly demographic segment, as well as the creation of an individual account program. This volume forges significant advances and boldly confronts the challenge of reconstructing the US Social Security program.

In this study Howard Lewis III and J. David Richardson explore the gains that workers, companies, and communities achieve from choosing to engage with the global economy. Why Global Commitment Really Matters! follows two earlier Institute publications that explored the benefits of exporting. This study summarizes new research on American importing, international investment, and technology transfers that shows similar benefits.

All types of global commitment seem to generate greater productivity, higher pay, stronger growth, and better survival rates. These in turn rejuvenate entire industries and their workforces and communities as they allow better firms and jobs to supplant those with less desirable traits. Exports, imports, investment, and technology transfer form a family of global commitments that spawns a family of economic rewards. The study shows that exactly the same patterns are being discovered in similar new research abroad. Little of this new research has made its way into the mainstream of public debate over trade and economic policies.The authors supplement their research survey with profiles of real American exporters, importers, multinational companies, foreign affiliates, and technology partners. They also weigh criticisms and alternative interpretations of the research, and examine the problems of those left on the margins of the global economy.

Despite its nuclear capability, in certain respects North Korea resembles a failed state sitting uneasily atop a shifting internal foundation. This instability is due in part to the devastating famine of the 1990s and the state's inability to fulfill the economic obligations that it had assumed, forcing institutions, enterprises, and households to cope with the ensuing challenges of maintaining stability with limited cooperation between the Korean government and the international community. The ineffective response to the humanitarian crisis triggered by the famine resulted in the outflow of perhaps tens of thousands of refugees whose narratives are largely overlooked in evaluating the efficacy of the humanitarian aid program.

Witness to Transformation: Refugee Insights into North Korea uses extensive surveys with refugees who now reside in China or South Korea to provide extraordinary insight into the changing pathways to power, wealth, and status within North Korea. These refugee testimonies provide an invaluable interpretation of the regime, its motivations, and its capabilities and assess the situation on the ground with the rise of inequality, corruption, and disaffection in the decade since the famine. Through the lens of these surveys, preeminent North Korean experts Stephan Haggard and Marcus Noland carefully document the country's transition from a centrally planned economy to a highly distorted market economy, characterized by endemic corruption and widening inequality. The authors chart refugees' reactions to the current conditions and consider the disparity between the perceived and real benefit of the international humanitarian aid program experienced by this displaced population. Finally, the book examines these refugees' future prospects for integration into a new society.

It is often pointed out that "for every bad borrower, and for every failed project, there is also a culpable lender or investor." This observation is particularly apt for the debate now raging in the capital markets: should private bankers and investment managers bear a greater share of the costs when financial crises erupt in emerging economies? Critics who have analyzed the "plumbing" of the world's financial architecture have thus far devoted enormous attention to the demand side—structural weaknesses in emerging markets. They have excoriated the IMF for ineptitude and policy mistakes. But the authors of this study argue that financial leaders of the G-10 nations (industrial nations that were hardly affected by the crises of 1997-98) owe a responsibility—both to their own citizens and the emerging markets—to take a far more vigilant stance.

Dobson and Hufbauer criticize the supply side of world capital markets and ask how G-10 capital suppliers can reform their own financial systems to make the world safe for large-scale international capital flows. They draw a comprehensive picture of international finance through an extensive review of capital flows, the major financial players behind these flows, and the balance between costs and benefits of international capital movements. The authors analyze the implications of changing the rules of the game and recommend specific policy measures.

By the year 2000, world trade in merchandise goods and commercial services will probably exceed $8 trillion, or $2 trillion more than in 1995. By that date, the World Trade Organization (WTO) may well have more than 130 member countries that account for about 95 percent of world trade. The millennium also will mark an important milestone for the WTO: new WTO negotiations on agriculture and services will be under way with the goal of achieving the progressive liberalization of remaining barriers to trade.

This monograph explores how WTO members should prepare for these negotiations. It discusses the Singapore ministerial meeting and its importance in starting WTO deliberations, examines how the agenda of such talks should be crafted to meet these challenges to the trading system, proposes initiatives to achieve further trade reforms and to extend WTO obligations to other trade-related aspects of government policy, and explores whether such new initiatives are feasible—that is, whether there is sufficient political support for new trade reforms in the major trading nations. The text concludes with some recommendations on how the new WTO initiative could be launched and implemented over the next five years.